3M (NYSE: MMM) today reported record third-quarter earnings of $1.65 per
share, an increase of 8.6 percent versus the third quarter of 2011.
Operating income was $1.7 billion and operating income margins for the
quarter were 22.4 percent.
"The 3M team delivered another strong operating performance in the third
quarter," said Inge G. Thulin, 3M chairman, president and CEO. "In the face of the current slow-growth economy, our
businesses continued to grow organically and generated record
profitability. All six of our businesses posted 21 percent-plus
operating margins in the quarter, so we continue to execute well in
2012."
Sales were $7.5 billion, down 0.4 percent year-over-year. Organic
local-currency sales grew 2.2 percent and acquisitions added 0.5 percent
to sales. Currency impacts reduced sales by 3.1 percent year-on-year.
On a business segment basis, organic local-currency sales increased 4.3
percent in Health Care, 3.3 percent in Industrial and Transportation,
1.4 percent in Consumer and Office, 1.3 percent in Display and Graphics,
0.7 percent in Safety, Security and Protection Services and 0.1 percent
in Electro and Communications. On a geographic basis, organic
local-currency sales grew 10.5 percent in Latin America/Canada, 2.3
percent in the United States, 0.8 percent in EMEA (Europe, Middle East
and Africa) and were down 0.1 percent in Asia Pacific.
Third-quarter net income was $1.2 billion and earnings were $1.65 per
share. Total-company operating income margins were 22.4 percent for the
quarter, and free cash flow was $987 million.
Thulin continued, "Regardless of economic conditions, we will remain
focused on things within our control. 3M's unique combination of
technology strength, manufacturing excellence and global capability will
enable us to deliver sustainable increases in sales, earnings and cash
flow."
3M also updated its 2012 performance expectations. Reflecting current
economic realities, the company now expects full-year earnings to be in
the range of $6.27 to $6.35 per share, including $0.03 per share of
anticipated acquisition-related costs. 3M previously expected a range of
$6.35 to $6.50 per share, which did not include acquisition-related
costs. The company anticipates full-year organic local-currency sales
growth of 2 to 2.5 percent and that currency translation will reduce
sales by approximately 2.5 percent for the year. 3M expects that
full-year operating income margins will be in the range of 21.5 to 22
percent.
Third-Quarter Business Segment Discussion
Industrial and Transportation
Sales of $2.6 billion, down 0.5 percent in U.S. dollars. Organic
local-currency sales increased 3.3 percent and foreign currency
translation reduced sales by 3.8 percent.
On an organic local-currency basis:
Sales growth was strongest in automotive OEM, aerospace and
automotive aftermarket; renewable energy declined year-on-year.
Sales rose in all regions, with strongest growth in the U.S. and
Latin America/Canada.
Operating income rose 9.4 percent to $575 million; operating income
margin of 22.4 percent.
Health Care
Sales of $1.3 billion, up 1.4 percent in U.S. dollars. Organic
local-currency sales increased 4.3 percent, acquisitions added 0.4
percent and foreign currency translation reduced sales by 3.3 percent.
On an organic local-currency basis:
Sales growth was led by food safety, health information systems
and skin/wound care.
Positive sales growth in all major geographies, led by Latin
America/Canada and Asia Pacific.
Operating income increased 9.0 percent to $400 million; operating
income margin of 31.7 percent.
Consumer and Office
Sales of $1.1 billion, up 1.6 percent in U.S. dollars. Organic
local-currency sales increased 1.4 percent, acquisitions added 2.5
percent and foreign currency translation reduced sales by 2.3 percent.
On an organic local-currency basis:
Growth was strongest in the DIY and consumer health care
businesses; sales declined in stationery and office supplies.
Sales rose in Latin America/Canada and Asia Pacific, were flat in
the U.S. and declined in EMEA.
Operating income was flat year-on-year at $244 million; operating
income margin of 21.9 percent.
Display and Graphics
Sales of $936 million, flat year-over-year in U.S. dollars. Organic
local-currency sales increased 1.3 percent, acquisitions added 0.8
percent and foreign currency translation reduced sales by 2.1 percent.
On an organic local-currency basis:
Double-digit sales increases in architectural markets; sales also
increased in commercial graphics and traffic safety systems.
Sales of optical films increased sequentially at a double-digit
rate, but declined slightly year-over-year.
Sales grew in Latin America/Canada and the U.S., and declined
slightly in EMEA and Asia Pacific.
Operating income increased 11.2 percent to $199 million; operating
margin of 21.2 percent.
Safety, Security and Protection Services
Sales of $926 million, down 2.9 percent in U.S. dollars. Organic
local-currency sales increased 0.7 percent, divestitures reduced sales
by 0.1 percent and foreign currency translation reduced sales by 3.5
percent.
On an organic local-currency basis:
Sales growth was strongest in infrastructure protection and
personal safety; sales declined year-on-year in roofing granules
and security systems.
Sales increased in Latin America/Canada and EMEA and declined in
the U.S. and Asia Pacific.
Operating income declined 2.8 percent to $196 million; operating
margin of 21.1 percent.
Electro and Communications
Sales of $820 million, down 2.1 percent in U.S. dollars. Organic
local-currency sales increased 0.1 percent and foreign currency
translation reduced sales by 2.2 percent.
On an organic local-currency basis:
Sales increased in electrical markets and declined year-on-year in
both the telecom and consumer electronics-related businesses.
Sales rose in Latin America/Canada, the U.S. and EMEA, and were
down year-on-year in Asia Pacific.
Operating income of $186 million, up 2.5 percent; operating margin of
22.7 percent.
