News Column

3M Delivers Record Q3 Earnings of $1.65 per Share

Oct. 23, 2012
3M

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.



Source: Copyright Business Wire 2012


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