Nalco, a unit of Ecolab (ECL - Analyst Report), recently completed the installation of its 20,000th 3D TRASAR technology systems for cooling water, boiler water and membrane operations. This marks a keystone in Nalco’s operations in the market for water and energy services.
The company’s 3D TRASAR technology evaluates system parameters and problems and implements remedial measures. This implies optimum efficiency in cooling water, boiler water and membrane operations at manufacturing facilities.
The first system was installed in 2004 to promote water conservation and energy utilization and to improve production efficiency. The 3D TRASAR technology has played a pivotal role in saving almost 438 billion gallons (1.66 trillion liters) of water to date. The estimated amount is sufficient to meet the annual water needs of at least 17 million people.
The last 3D TRASAR technology system was set up at the bottling facility of Nestlé Waters North America in Hawkins, Texas. Management at Ecolab believes that its technology will catalyze Nestlé’s efforts towards sustainable water management.
The 3D TRASAR technology can help to curtail water and energy wastage as well as the total operating costs of Nestlé. The installation is expected to boost Nestlé’s business value, based on a higher energy return on investment. Thus, the company will have the advantage of both economic and environmental gains.
Ecolab is the world leader in development and provision of products and services for food services, water, energy and the healthcare industry. It acquired Nalco, a leader in water and energy services, in December 2011. The merger has enabled the combined entity to address major trends such as growing food demand and food safety, water scarcity, rising energy demand and an aging population’s need for health care. According to Ecolab, the integration process is moving in the right direction as the company is able to deliver on growth and cost synergies.
While Ecolab has strong international exposure and recovery across its end-markets, aggressive competition is a matter of concern. The company’s U.S. Cleaning & Sanitizing and International divisions face stiff competition from Clorox (CLX - Analyst Report) and Church & Dwight (CHD - Snapshot Report).
However, the dilutive impact of the hefty restructuring expenses on the company’s bottom line remains an overhang. We currently have a long-term Neutral recommendation on Ecolab. The stock retains a Zacks #4 Rank, which translates into a short-term Sell rating.