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Ecolab Says COVID-19 Impact Will Be Net Unfavorable On FY20 Results

While reporting its financial results for the first quarter on Tuesday, Ecolab Inc. (ECL) said it expects the major COVID-19 impacts will be felt over the next few quarters and will be net unfavorable on both its top and bottom lines for the year. However, the company said its forward earnings guidance remains suspended.

The company noted that its second quarter will likely see the largest sales impact as it realizes both lower consumption, particularly in its restaurant and hotel segments, and channel destocking. However, as these factors remain very fluid, Ecolab is unable to reliably model its sales and therefore is not providing earnings forecasts.

Ecolab also said it expects to generate positive cash flow throughout the year, adding that it has a large cash reserve and strong balance sheet as additional backstops.

While the company has taken strong cost control measures, it is accelerating its investments in digital connectivity and artificial intelligence capabilities, as well as new hygiene technologies. The company projects these areas will be even more important during and after COVID-19.

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