Ecolab action to combat Venezuelan uncertainty
The firm will stop consolidating the results of its Venezuelan operations in Q1 2016 income statement but said it does not directly affect the local operations of the Venezuelan businesses.
The deconsolidation will result in an estimated $120m pretax special charge in Q4 2015 because it is writing off all assets in the country.
Ecolab told us that the decision can be reversed if conditions improve.
“This does not affect day-to-day operations of our Venezuela businesses. We intend to stay in Venezuela, maintain our business and grow as economic conditions improve. We will continue to support key customers and we want to retain our workforce so that we can serve key customers effectively.”
Ecolab previously announced 2015 special charges totaling $155m related to Venezuela’s bolivar devaluation.
Sales for the Venezuela business were $200m in 2015 which include food and beverage operations.
Douglas M. Baker, Jr., Ecolab’s chairman and CEO, said: “Continued deteriorating economic conditions and currency exchange control regulations have significantly limited the ability of our Venezuelan businesses to maintain normal operations.
“We expect these conditions to remain challenging for the foreseeable future, and we are deconsolidating the operations to reflect our diminished ability to influence effective control over business operations in Venezuela.”
Ecolab will announce results for its fourth quarter 2015 on February 23.
