Ecolab posted third-quarter adjusted profits that met Wall Street expectations Monday, but it also suffered sales declines, foreign currency woes and a $125 million charge related to the messy devaluation of Venezuela's currency and Ecolab's remaining business there.
In facing the Venezuelan currency woes head on, Ecolab becomes the latest U.S. company to take a large hit to asset valuations there. It joins Kimberly Clark, Ford Motor Co. and Brink's Co. in taking large charges associated with doing business in the inflationary country.
Venezuela aside, it proved a mixed quarter for Ecolab, the St. Paul-based cleaning chemicals firm that caters to hotels, restaurants, hospitals and oil and gas companies.
Third quarter sales fell 7 percent to $3.4 billion. Analysts expected sales of $3.54 billion. While sales to food, beverage, industrial and institutional customers did well during the quarter, sales from oil and gas customers did not, experiencing a double-digit percentage decline.
Total net profit fell 29 percent to $258 million, or 86 cents a share, for the quarter ended Sept. 30.
Excluding one-time items for Venezuela, currency translations, pension costs and higher income-tax rate, adjusted earnings rose 4 percent to $384 million, or $1.28 per share, in line with analysts' estimates.
Ecolab downgraded its full-year 2015 forecast reflecting unfavorable currency exchanges, Venezuela and lower income from its energy division, which provides separation and anti-corrosion chemicals to oil and gas drilling, processing and handling firms.
While energy prices and spending are down worldwide, Ecolab CEO Doug Baker told analysts Monday that the depressed environment may present an opportunity to make small strategic acquisitions in the sector.