Filter News

3M Company Announces Second-Quarter Results; Company Delivers Sales Of $7.7 Billion And All-Time Record Earnings Of $2.02 Per Share

Published: Jul 23, 2015

Second-Quarter Highlights:

  • Operating income margins of 23.9 percent, up 1.1 percentage points year-on-year
  • Organic local-currency sales growth of 1.8 percent, positive across all geographic areas
  • Returned $2.3 billion to shareholders via dividends and gross share repurchases
  • Announced acquisition of Capital Safety, a leading global provider of fall protection equipment, for a total enterprise value of $2.5 billion

ST. PAUL, Minn.--(BUSINESS WIRE)--3M (NYSE:MMM) today reported second-quarter earnings of $2.02 per share, an increase of 5.8 percent versus the second quarter of 2014. Sales declined 5.5 percent year-on-year to $7.7 billion. Organic local-currency sales grew 1.8 percent and foreign currency translation reduced sales by 7.3 percent year-on-year.

“We also continued to invest in our future, including strategic acquisitions. In June, we announced the acquisition of Capital Safety, which will bolster our personal safety platform and build on our fundamental strengths in technology, manufacturing, global capabilities and brand.”

Operating income was $1.8 billion and operating income margins for the quarter were 23.9 percent, up 1.1 percentage points year-on-year. Second-quarter net income was $1.3 billion and the company converted 74 percent of net income to free cash flow.

3M paid $646 million in cash dividends to shareholders and repurchased $1.7 billion of its own shares during the quarter.

Organic local-currency sales growth was 4.9 percent in Safety and Graphics, 3.4 percent in Health Care, 3.4 percent in Consumer and 1.4 percent in Industrial; Electronics and Energy declined 3.0 percent. On a geographic basis, organic local-currency sales grew 4.1 percent in the U.S., 0.8 percent in Latin America/Canada, 0.5 percent in Asia Pacific, and 0.4 percent in EMEA (Europe, Middle East and Africa).

“In the face of a mixed economic environment, the 3M team delivered positive organic growth in all geographic areas while expanding worldwide margins by over a full point,” said Inge G. Thulin, 3M’s chairman, president and chief executive officer. “We also continued to invest in our future, including strategic acquisitions. In June, we announced the acquisition of Capital Safety, which will bolster our personal safety platform and build on our fundamental strengths in technology, manufacturing, global capabilities and brand.”

3M also updated its guidance for the full-year 2015.

The company expects earnings will be in the range of $7.80 to $8.00 per share, versus a prior range of $7.80 to $8.10 per share. Organic local-currency sales growth is expected to be in the range of 2.5 to 4 percent, versus previous guidance of 3 to 6 percent.

3M continues to expect that foreign currency translation will reduce 2015 sales by 6 to 7 percent. The company also anticipates that full-year free cash flow conversion will be in the range of 90 to 100 percent.

“We are amending our growth outlook slightly to account for lower-than-expected global economic growth,” said Thulin. “As always, we are focused on executing our plan and improving those factors within our control. I am confident in our team's ability to generate profitable growth and premium returns into the future.”

Second-Quarter Business Group Discussion

Industrial

  • Sales of $2.6 billion, down 6.4 percent in U.S. dollars. Organic local-currency sales increased 1.4 percent and foreign currency translation reduced sales by 7.8 percent.
  • On an organic local-currency basis:
    • Sales growth was led by 3M purification, aerospace and commercial transportation, and automotive OEM.
  • Sales grew in the U.S. and Latin America/Canada; Asia Pacific was flat; EMEA sales declined slightly.
  • Operating income was $609 million, a decline of 1.2 percent year-on-year; operating margin of 23.1 percent.

Safety and Graphics

  • Sales of $1.4 billion, down 4.1 percent in U.S. dollars. Organic local-currency sales increased 4.9 percent and foreign currency translation reduced sales by 9.0 percent.
  • On an organic local-currency basis:
    • Sales grew in all businesses led by roofing granules, commercial solutions and personal safety.
    • Sales increased in Asia Pacific, the U.S. and EMEA; Latin America/Canada sales declined.
  • Operating income was $364 million, an increase of 3.1 percent year-on-year; operating margin of 25.4 percent.

Health Care

  • Sales of $1.4 billion, down 3.7 percent in U.S. dollars. Organic local-currency sales increased 3.4 percent, acquisitions increased sales by 0.7 percent and foreign currency translation reduced sales by 7.8 percent.
  • On an organic local-currency basis:
    • Sales growth was positive in food safety, health information systems, oral care, critical and chronic care, and infection prevention; drug delivery systems declined year-on-year.
    • Sales grew in Asia Pacific, Latin America/Canada and the U.S.; EMEA was flat.
  • Operating income was $440 million, an increase of 1.3 percent year-on-year; operating margin of 32.3 percent.

Electronics and Energy

  • Sales of $1.3 billion, down 7.9 percent in U.S. dollars. Organic local-currency sales declined 3.0 percent, divestitures reduced sales by 0.7 percent and foreign currency translation reduced sales by 4.2 percent.
  • On an organic local-currency basis:
    • Electronics-related sales declined 2 percent, as growth in electronics materials solutions was offset by a decline in display materials and systems; energy-related sales declined 3 percent, as electrical markets, telecom and renewable energy declined.
    • Sales grew in the U.S. and declined in EMEA, Asia Pacific and Latin America/Canada.
  • Operating income was $277 million, a decline of 5.2 percent year-on-year; operating margin of 21.2 percent.

Consumer

  • Sales of $1.1 billion, down 2.5 percent in U.S. dollars. Organic local-currency sales increased 3.4 percent and foreign currency translation reduced sales by 5.9 percent.
  • On an organic local-currency basis:
    • Sales increased across the portfolio, led by DIY, stationery and office supplies, and home care.
    • Sales grew in the U.S. and Asia Pacific; Latin America/Canada was flat; EMEA sales declined.
  • Operating income was $259 million, up 7.4 percent year-on-year; operating margin of 23.3 percent.

3M will conduct an investor teleconference at 9:00 a.m. EDT (8:00 a.m. CDT) today. Investors can access this conference via the following:

  • Live webcast at http://investors.3M.com.
  • Live telephone:
    Call 800-762-2596 within the U.S. or +1 212-231-2916 outside the U.S. Please join the call at least 10 minutes before the start time.
  • Webcast replay:
    Go to 3M’s Investor Relations website at http://investors.3M.com and click on “Quarterly Earnings.”
  • Telephone replay:
    Call 800-633-8284 within the U.S. or +1 402-977-9140 outside the U.S. (for both U.S. and outside the U.S. access code is 21735068). The telephone replay will be available until 10:30 a.m. CDT on July 28, 2015.

Forward-Looking Statements
This news release contains forward-looking information about 3M's financial results and estimates and business prospects that involve substantial risks and uncertainties. You can identify these statements by the use of words such as "anticipate," "estimate," "expect," "aim," "project," "intend," "plan," "believe," "will," "should," "could," "target," "forecast" and other words and terms of similar meaning in connection with any discussion of future operating or financial performance or business plans or prospects. Among the factors that could cause actual results to differ materially are the following: (1) worldwide economic and capital markets conditions and other factors beyond the Company's control, including natural and other disasters affecting the operations of the Company or its customers and suppliers; (2) the Company's credit ratings and its cost of capital; (3) competitive conditions and customer preferences; (4) foreign currency exchange rates and fluctuations in those rates; (5) the timing and market acceptance of new product offerings; (6) the availability and cost of purchased components, compounds, raw materials and energy (including oil and natural gas and their derivatives) due to shortages, increased demand or supply interruptions (including those caused by natural and other disasters and other events); (7) the impact of acquisitions, strategic alliances, divestitures, and other unusual events resulting from portfolio management actions and other evolving business strategies, and possible organizational restructuring; (8) generating fewer productivity improvements than estimated; (9) unanticipated problems or delays with the phased implementation of a global enterprise resource planning (ERP) system, or security breaches and other disruptions to the Company's information technology infrastructure; and (10) legal proceedings, including significant developments that could occur in the legal and regulatory proceedings described in the Company's Annual Report on Form 10-K for the year ended December 31, 2014, and its subsequent quarterly reports on Form 10-Q (the “Reports”). Changes in such assumptions or factors could produce significantly different results. A further description of these factors is located in the Reports under "Cautionary Note Concerning Factors That May Affect Future Results" and "Risk Factors" in Part I, Items 1 and 1A (Annual Report) and in Part I, Item 2 and Part II, Item 1A (Quarterly Report). The information contained in this news release is as of the date indicated. The Company assumes no obligation to update any forward-looking statements contained in this news release as a result of new information or future events or developments.

For full article, please click here.

Help employers find you! Check out all the jobs and post your resume.

Back to news