Analysis of Reportable Segments
Ecolab Inc. operates in 3 segments: Global Industrial; Global Institutional & Specialty; and Global Healthcare & Life Sciences.
Segment Profit Margin
Ecolab Inc., profit margin by reportable segment
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Global Industrial | 16.35% | 18.56% | 15.34% | 14.06% | 14.80% |
| Global Institutional & Specialty | 14.00% | 9.00% | 19.91% | 19.73% | 20.77% |
| Global Healthcare & Life Sciences | 13.46% | 17.46% | — | — | — |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The segment profit margin data reveals varying trends across different reportable segments over the analyzed periods.
- Global Industrial
- The profit margin for this segment exhibited a generally positive trend from 2017 through 2020, increasing from 14.8% in 2017 to a peak of 18.56% in 2020. However, in 2021, there was a decline to 16.35%, indicating some contraction after the peak. Despite this decrease, the 2021 margin remains higher than the levels observed in 2017 through 2019, suggesting an overall improvement over the five-year period.
- Global Institutional & Specialty
- This segment's profit margin showed relatively stable performance between 2017 and 2019, with minor fluctuations around the 20% mark (20.77% in 2017 to 19.91% in 2019). A significant decline is evident in 2020, with the margin dropping sharply to 9%. There is some recovery seen in 2021, with the margin rising to 14%, although it remains substantially below the earlier levels. This suggests the segment faced considerable challenges during 2020, possibly linked to external factors impacting profitability.
- Global Healthcare & Life Sciences
- Data for this segment is only reported for 2020 and 2021, showing a decrease from 17.46% to 13.46%. The absence of prior years' data limits the ability to establish a longer-term trend, but the available information indicates a contraction in profit margin over the two-year period.
Overall, the Global Industrial segment demonstrates a pattern of growth followed by a moderate decline, maintaining relatively strong margins by the end of the period. The Global Institutional & Specialty segment experienced pronounced volatility and decline, particularly around 2020, with partial recovery thereafter. The Global Healthcare & Life Sciences segment shows a downward trend in the last two years, although the limited data restricts comprehensive analysis.
Segment Profit Margin: Global Industrial
Ecolab Inc.; Global Industrial; segment profit margin calculation
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Operating income (loss) | 1,031,000) | 1,106,000) | 854,700) | 768,100) | 722,000) |
| Net sales | 6,304,900) | 5,959,900) | 5,569,900) | 5,462,400) | 4,878,500) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 16.35% | 18.56% | 15.34% | 14.06% | 14.80% |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Segment profit margin = 100 × Operating income (loss) ÷ Net sales
= 100 × 1,031,000 ÷ 6,304,900 = 16.35%
The analysis of the annual data for the Global Industrial reportable segment reveals several notable trends over the five-year period from 2017 to 2021.
- Net Sales
- Net sales exhibited a consistent upward trajectory, increasing steadily each year. Starting at approximately $4.88 billion in 2017, sales grew to about $6.30 billion by 2021. This reflects a robust growth trend, indicating an expanding market presence or increased demand within this segment.
- Operating Income (Loss)
- Operating income also showed a positive trend with a marked increase from $722 million in 2017 to a peak of $1.11 billion in 2020. In 2021, operating income slightly declined to $1.03 billion, which still represents substantial growth compared to the earlier years. This pattern suggests effective cost management and operational efficiency improvements, though the slight decrease in the final year might indicate emerging challenges or increased expenses.
- Segment Profit Margin
- The segment profit margin, expressed as a percentage of net sales, fluctuated over the period but showed an overall increasing tendency with some variability. The margin began at 14.8% in 2017, dipped slightly to 14.06% in 2018, then recovered and peaked at 18.56% in 2020 before decreasing to 16.35% in 2021. The peak in 2020 coincides with the highest operating income and may reflect heightened operational leverage or pricing power during that period. The subsequent margin decline, despite increasing sales, suggests either rising costs or pricing pressures impacting profitability.
In summary, the segment demonstrated strong revenue growth and generally improving profitability over the period, with some signs of margin compression in the latest year analyzed. The overall trend points to positive performance with a need to monitor cost dynamics and competitive factors influencing the profit margin going forward.
Segment Profit Margin: Global Institutional & Specialty
Ecolab Inc.; Global Institutional & Specialty; segment profit margin calculation
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Operating income (loss) | 556,900) | 321,900) | 1,042,200) | 1,026,900) | 985,700) |
| Net sales | 3,978,200) | 3,577,200) | 5,235,500) | 5,204,500) | 4,744,900) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 14.00% | 9.00% | 19.91% | 19.73% | 20.77% |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Segment profit margin = 100 × Operating income (loss) ÷ Net sales
= 100 × 556,900 ÷ 3,978,200 = 14.00%
- Operating Income (Loss)
- Between 2017 and 2019, the operating income showed a consistent upward trend, increasing from $985.7 million to $1.0422 billion. However, in 2020, there was a significant decline to $321.9 million, reflecting a substantial reduction in operating profitability. In 2021, the operating income partially recovered to $556.9 million but remained considerably lower than pre-2020 levels.
- Net Sales
- Net sales exhibited growth from 2017 through 2019, rising from $4.7449 billion to $5.2355 billion, indicating a positive sales environment during this period. In 2020, net sales dropped sharply to $3.5772 billion, representing a noticeable contraction. This contraction lessened in 2021, with sales increasing to $3.9782 billion, yet still falling short of the 2019 peak.
- Segment Profit Margin
- The segment profit margin mirrored the trends observed in operating income, maintaining a relatively stable range between 19.73% and 20.77% from 2017 to 2019. In 2020, the margin decreased drastically to 9%, highlighting decreased efficiency or increased costs. By 2021, an improvement to 14% was observed, showing partial restoration but still not reaching the earlier profitability margins.
- Overall Trends and Insights
- A clear disruption occurred in 2020, likely driven by extraordinary events or market conditions, which severely impacted both sales and profitability metrics. Despite the downturn, the partial recovery in 2021 indicates resilience and a positive trajectory towards normalization. The earlier years demonstrate strong and stable financial performance, with consistent growth in net sales and operating income alongside healthy profit margins.
Segment Profit Margin: Global Healthcare & Life Sciences
Ecolab Inc.; Global Healthcare & Life Sciences; segment profit margin calculation
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Operating income (loss) | 160,900) | 207,600) | —) | —) | —) |
| Net sales | 1,195,400) | 1,189,100) | —) | —) | —) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 13.46% | 17.46% | — | — | — |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Segment profit margin = 100 × Operating income (loss) ÷ Net sales
= 100 × 160,900 ÷ 1,195,400 = 13.46%
- Net Sales
- Net sales in the Global Healthcare & Life Sciences segment showed a slight increase from 1,189,100 thousand US dollars in 2020 to 1,195,400 thousand US dollars in 2021. This indicates stable revenue generation with marginal growth over the one-year period.
- Operating Income
- Operating income decreased from 207,600 thousand US dollars in 2020 to 160,900 thousand US dollars in 2021. This represents a notable decline in operating profits despite the slight growth in net sales.
- Segment Profit Margin
- The segment profit margin experienced a decrease from 17.46% in 2020 to 13.46% in 2021. This reduction in profitability suggests increased costs, lower efficiency, or changes in pricing that impacted the segment's ability to convert sales into operating income.
- Overall Analysis
- While the segment maintained steady sales figures with minimal growth, profitability metrics declined significantly. The decrease in operating income and profit margin implies pressure on earnings, necessitating further investigation into cost structures or competitive dynamics within the segment. The data points to challenges in sustaining profit levels relative to sales revenue in the most recent year.
Net sales
Ecolab Inc., net sales by reportable segment
US$ in thousands
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Global Industrial | 6,304,900) | 5,959,900) | 5,569,900) | 5,462,400) | 4,878,500) |
| Global Institutional & Specialty | 3,978,200) | 3,577,200) | 5,235,500) | 5,204,500) | 4,744,900) |
| Global Healthcare & Life Sciences | 1,195,400) | 1,189,100) | —) | —) | —) |
| Global Energy | —) | —) | 3,334,000) | 3,501,800) | 3,199,300) |
| Other | 1,226,900) | 1,093,300) | 907,500) | 877,600) | 823,500) |
| Corporate | 139,400) | 102,400) | —) | —) | —) |
| Subtotal at fixed currency | 12,844,800) | 11,921,900) | 15,046,900) | 15,046,300) | 13,646,200) |
| Effect of foreign currency translation | (111,700) | (131,700) | (140,600) | (378,100) | 192,100) |
| Consolidated reported GAAP | 12,733,100) | 11,790,200) | 14,906,300) | 14,668,200) | 13,838,300) |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The segment net sales data exhibits distinct trends across various divisions over the analyzed periods. The Global Industrial segment consistently shows growth year over year, increasing from approximately $4.88 billion in 2017 to about $6.30 billion in 2021. This reflects steady expansion, with no significant declines during the period.
The Global Institutional & Specialty segment follows a growth pattern from 2017 through 2019, reaching a peak near $5.24 billion. However, a marked decrease occurs in 2020 to approximately $3.58 billion, with a partial recovery to roughly $3.98 billion in 2021. This decline in 2020 might be indicative of external impacts affecting this segment specifically, followed by signs of recuperation.
The Global Healthcare & Life Sciences segment has data only from 2020 onwards, showing marginal growth from about $1.19 billion in 2020 to approximately $1.20 billion in 2021, indicating a stable but nascent presence within the portfolio during these years.
The Global Energy segment demonstrates some fluctuation with sales increasing from roughly $3.20 billion in 2017 to $3.50 billion in 2018, then decreasing to about $3.33 billion in 2019. Data for 2020 and 2021 are missing, which precludes analysis of recent trends for this segment.
Other sales categories show continuous year-on-year increases, growing from approximately $823.5 million in 2017 to nearly $1.23 billion by 2021. This steady growth suggests a diversification or expansion in smaller or miscellaneous market sectors.
Corporate sales appear only in 2020 and 2021, with increases from approximately $102.4 million to $139.4 million. This indicates either a reclassification or increased reporting in corporate-related revenues or gains in the latter years.
The subtotal at fixed currency reflects an overall increase from about $13.65 billion in 2017 to near $15.05 billion in 2019, followed by a notable decline in 2020 to approximately $11.92 billion and a rebound to $12.84 billion in 2021. This trend largely mirrors the patterns observed in the Global Institutional & Specialty segment and the absence of data for Global Energy during the more recent years, indicating overall volatility in net sales during this interval.
Foreign currency translation effects generally exert a negative influence from 2018 onward, reducing reported values by several hundred million dollars annually, which slightly dampens the apparent growth patterns when consolidated into the GAAP figures.
Consequently, consolidated reported GAAP net sales peak in 2019 at approximately $14.91 billion, decline sharply in 2020 to around $11.79 billion, and partially recover to about $12.73 billion in 2021. This overall pattern suggests that external factors, potentially including economic or market disruptions, significantly impacted sales in 2020, with only partial recovery evident by 2021.
Operating income (loss)
Ecolab Inc., operating income (loss) by reportable segment
US$ in thousands
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Global Industrial | 1,031,000) | 1,106,000) | 854,700) | 768,100) | 722,000) |
| Global Institutional & Specialty | 556,900) | 321,900) | 1,042,200) | 1,026,900) | 985,700) |
| Global Healthcare & Life Sciences | 160,900) | 207,600) | —) | —) | —) |
| Global Energy | —) | —) | 379,100) | 358,500) | 338,500) |
| Other | 187,300) | 131,500) | 167,300) | 161,300) | 149,300) |
| Corporate | (318,600) | (347,500) | (409,100) | (307,100) | (208,600) |
| Subtotal at fixed currency | 1,617,500) | 1,419,500) | 2,034,200) | 2,007,700) | 1,986,900) |
| Effect of foreign currency translation | (18,900) | (23,800) | (20,400) | (60,700) | 32,900) |
| Consolidated reported GAAP | 1,598,600) | 1,395,700) | 2,013,800) | 1,947,000) | 2,019,800) |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The operating income data across the reportable segments reveals several noteworthy trends and shifts over the analyzed periods.
- Global Industrial
-
This segment showed a consistent upward trend from 2017 through 2020, increasing from approximately 722 million USD to a peak of 1.106 billion USD. In 2021, however, there was a decline to about 1.031 billion USD, representing a decrease from the previous year's high, though the value remained substantially above the 2017 level.
- Global Institutional & Specialty
-
Operating income for this segment was relatively stable and slightly increasing from 2017 to 2019, rising from 985.7 million USD to approximately 1.042 billion USD. There was a dramatic decline in 2020 to 321.9 million USD, followed by a partial recovery in 2021 to 556.9 million USD. Despite the rebound, 2021 income remained about half of the 2019 peak, indicating a significant disruption affecting this segment.
- Global Healthcare & Life Sciences
-
Reported data for this segment is only available starting from 2020, with an operating income of 207.6 million USD in that year, followed by a decrease in 2021 to 160.9 million USD. This limited timespan restricts trend analysis, but the observed drop suggests challenges or reduced profitability in the latter year.
- Global Energy
-
This segment's operating income showed steady growth from 2017 through 2019, increasing from 338.5 million USD to 379.1 million USD. No data is available for 2020 and 2021, preventing analysis of more recent performance.
- Other
-
The Other category experienced gradual increases from 149.3 million USD in 2017 to 167.3 million USD in 2019, then a decline to 131.5 million USD in 2020, followed by a rise to 187.3 million USD in 2021. This pattern indicates some volatility, with recovery after a temporary dip.
- Corporate
-
Corporate expenses exhibited a consistent increase in magnitude (more negative values) from 2017 through 2019, deepening from -208.6 million USD to -409.1 million USD. In 2020 and 2021, these expenses decreased somewhat in absolute terms to -347.5 million USD and -318.6 million USD respectively, suggesting partial cost control or reallocation efforts.
- Subtotal at Fixed Currency
-
The subtotal of segment operating income at fixed currency demonstrated marginal growth from 1.987 billion USD in 2017 to a peak of approximately 2.034 billion USD in 2019. This was followed by a considerable decline in 2020 to 1.419 billion USD, with a subsequent partial recovery to 1.617 billion USD in 2021. This overall pattern indicates a significant impact on segment operating income starting in 2020, with incomplete recovery by 2021.
- Effect of Foreign Currency Translation
-
The foreign currency translation effect fluctuated, contributing positively in 2017 (32.9 million USD), then negatively in subsequent years, with the most substantial adverse impact observed in 2018 (-60.7 million USD). These fluctuations modestly affected consolidated results each year.
- Consolidated Reported GAAP
-
The consolidated GAAP operating income closely mirrors the subtotal at fixed currency adjusted for foreign currency impacts, showing initial growth from roughly 2.02 billion USD in 2017 to just over 2.01 billion USD in 2019. This was followed by a sharp drop to approximately 1.40 billion USD in 2020, and then an increase to about 1.60 billion USD in 2021. The decline and partial rebound mirror the operating trends at the segment level, highlighting overall business challenges beginning in 2020 and gradual improvement into 2021.