Zacks Commentary

Nalco Holdings, a subsidiary of Ecolab Inc. (ECL), was declared the 2012 Water Technology Company of the Year during the 2012 Global Water Awards, held in Rome. The award was conferred by renowned industry analyzer, Global Water Intelligence.

The Global Water Awards recognize significant achievements within the worldwide water industry. The winners were chosen by members of the International Desalination Association (“IDA”), the Water Desalination Report and Global Water Intelligence subscribers.

The Illinois-based company was awarded for its automated and advanced water technology solutions namely the 3D TRASAR technology and the Nalco 360 Service. The 3D TRASAR technology has been designed to identify and remove all kinds of operational threats related to cooling systems such as fouling, scale, corrosion and biological growth. Nalco 360 Service tracks client water systems and provides round the clock solutions to product-related problems.

With Nalco’s performance being applauded on a global platform, the recognition also adds value to Ecolab, indicating that the merger is a step ahead in the right direction. Ecolab, in December 2011, closed its $8.3 billion acquisition of Illinois-based water treatment services major Nalco Holding.

Ecolab offers its products and services to the hospitality, foodservice, institutional and industrial markets across more than 160 countries. The company continues to invest in strategic areas such as product innovation, health care, water and energy and global pest elimination to spur growth.

Ecolab remains focused on bringing new technologies aimed at reducing food safety risks. Moreover, the company is aggressively pursuing acquisitions to expand into emerging markets. Latin America remains a key growth engine for the company’s overseas operations.

Although we are impressed by Ecolab’s strong international exposure, we remain cautious about aggressive competition from the likes of Clorox (CLX) and Church & Dwight (CHD). Also, raw material price inflation and high delivered product costs remain headwinds.

We are currently Neutral on Ecolab, supported by a short-term Zacks #3 Rank (Hold).