Ecolab cuts 1,000 jobs, stock shoots up

Ecolab Inc.'s stock rose more than 5 percent Thursday morning, one day after it announced major job and cost cutting actions.

St. Paul-based Ecolab (NYSE: ECL) said late Wednesday afternoon it was restructuring its businesses and will cut 1,000 positions, including about 100 in Minnesota. The reduction impacts about 4 percent of the company's 26,000 person workforce.

The cuts included "just under 50" jobs at both its downtown St. Paul headquarters and its research center in Eagan, according to company spokesman Mike Monahan. The types of jobs that are affected range "across the board" he said, but proportionately, more of the jobs are in "non-customer facing areas." Employees were told of the layoffs Wednesday.

The cleaning products manufacturer also said it’s speeding up a cost-cutting plan to reduce the number of products it sells by 40 percent. It also is reducing its number of plant and distribution centers, closing two small “non-strategic” health care business and writing down some investments it has in energy management.

The company said in a news release after the market closed Wednesday that it would take a special charge in the fourth quarter of about $19 million related to the cost cutting moves. The actions are expected to save the company $70 million to $80 million annually.

Ecolab also maintained its year-end earnings estimates of between $1.85 and $1.87 per share, excluding special gains and charges.

Douglas Baker, Ecolab’s chairman, president and CEO, said in a statement the restructuring should lower the company’s overall operating costs for both the near and long term. He said it also helps the company “capitalize on the opportunities we see in our core Institutional and Food & Beverage businesses and enable us to focus on driving our successful global Pest Elimination expansion, Healthcare Infection Prevention business and Water and Energy growth initiatives.”

The company's stock was up $1.77 per share, or 5.4percent, to $34.78 per share in mid-day trading Thursday.

Earlier Thursday, analyst Andrea Wirth at Robert W. Baird & Co. in Chicago upgraded Ecolab's stock from neutral to outperform. In a note to investors, Wirth said the upgrade was based on the company's attractive valuation, announcement reiterating its guidance and forecast of 4 to 5 percent organic growth.

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