Jul. 29--Ecolab executives, who reported a 29 percent decline in the company's second-quarter net income on Tuesday, said they aren't assuming that an economic recovery will occur in the second half of this year. But they are seeing some signs of economic stability.

They stressed that they've been building Ecolab's business by landing new customers during the recession. Sales at St. Paul-based Ecolab, maker of cleaning and sanitizing products, dropped 8 percent in the quarter to $1.4 billion, but those sales were flat when measured in local currencies in markets around the world.

"We see our business improving," CEO Doug Baker told analysts Tuesday. However, "we are not counting on any material improvement from the economy."

Ecolab produced net income of $99 million on the strength of new accounts, higher prices and cost-cutting.

In the United States, Ecolab's health care business and its Kay division, which sells cleaning products and services to fast-food restaurants, both increased sales by 13 percent during the quarter.

Meanwhile, sales at Ecolab's GCS Service, which provides repair services to restaurants, supermarkets and other companies, fell 15 percent in the quarter. Ecolab's sales in Europe, the Middle East and Africa slipped by 4 percent in local currencies during the quarter, but that drop was 21 percent when exchange rates were taken into account.

"While it appears the economy may have stabilized, we have not seen an upturn in our major markets and are not counting on a recovery this year," vice president Michael Monahan said in a Tuesday conference call. Ecolab now expects full-year earnings of $1.96 to $2.02 a share. Previously, the company projected $1.95 to $2.05 per share.

For the second quarter, analysts had estimated earnings would be 48 cents a share. Ecolab's earnings were 41 cents a share when special gains and charges, such as restructuring, were included. When those special items were excluded, Ecolab's earnings were 50 cents.

The H1N1 virus triggered higher sales of some health care products in the second quarter. Monahan said Ecolab sold more infection prevention products, such as disinfectants and personal hygiene and care products. Baker added that Ecolab will have a major supply of those products available for the fall season in case the flu virus spreads to a much larger population around the world.

Ecolab stock closed at $40.04 Tuesday, down 38 cents.

Liz Fedor --612-673-7709

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