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Ecolab Q2 Profit Rises 16%

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Ecolab reported a profit of $213.1 million, or 69 cents a share, versus a year-earlier profit of $184.5 million, or 62 cents a share.

| August 5, 2013

Ecolab's second-quarter earnings rose 16% as the company recorded improving revenue and stronger-than-expected results from chemical maker Champion Technologies, which it acquired late last year.

"We successfully strengthened our underlying business momentum through good new business gains, effective deployment of new program launches which enabled us to further help our customers meet their operating and sustainability goals, and continued delivery of committed synergies," said Chief Executive Douglas M. Baker Jr. "In addition, our newly-acquired Champion business performed above our expectations which added to an already strong performance."

Ecolab reported a profit of $213.1 million, or 69 cents a share, versus a year-earlier profit of $184.5 million, or 62 cents a share. Excluding special gains and charges and discrete tax items, earnings were up at 86 cents from 72 cents. The company in April had projected adjusted per-share earnings of 81 cents to 85 cents.

Revenue rose 13% to $3.34 billion. Analysts polled by Thomson Reuters recently projected revenue of $3.39 billion.

Gross margin narrowed to 10.6% from 11%. Input costs rose 13% while interest expense rose 3.6%.

Ecolab agreed late last year to buy Champion Technologies for roughly $2.16 billion in a deal that will push the cleaning-products company deeper into the chemical market for the energy industry. Earlier this year, Ecolab said it would sell part of Champion to Clariant AG (CLN.VX) under an agreement with the U.S. Justice Department aimed at maintaining a competitive market for chemicals used in oil and gas wells in the Gulf of Mexico.

On Tuesday, Ecolab again raised its view for the year, and now expects adjusted per-share earnings between $3.48 and $3.56, compared with its prior forecast for per-share earnings of $3.45 to $3.55. For the current quarter, the company forecast adjusted per-share earnings of $1 to $1.05, in line with the $1.03 recently expected by analysts.

Minnesota-based Ecolab's traditional product lines include disinfectants and detergents for restaurants, hospitals and other institutions. The company expanded into water treatment chemicals used by the energy industry and paper industry with its $5.6 billion-purchase of Nalco in 2011. Ecolab viewed the purchase of Houston-based Champion as an extension of Nalco's earnings business.

Shares of Ecolab closed Monday at $92.10 and were inactive premarket. The stock has risen 28% since the start of the year.

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