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3M Reports 4% Growth in Net Income with Record Sales in the First Quarter, 2012

Published on 2012-04-25. Author : SpecialChem

ST. PAUL, Minn. -- 3M reported record first-quarter sales of $7.5 billion, up 2.4 percent year-on-year. Earnings were $1.59 per share, an increase of 6.7 percent versus the first quarter of 2011, and operating margins for the quarter were 21.8 percent.

First-quarter organic local-currency sales grew 1.8 percent, acquisitions added 1.5 percent to sales and foreign exchange impacts reduced sales by 0.9 percent.

On a segment basis, sales increased 8.6 percent in Industrial and Transportation, 5.5 percent in Safety, Security and Protection Services, 4.3 percent in Consumer and Office and 2.0 percent in Health Care. Sales declined 3.4 percent in Electro and Communications and 11.8 percent in Display and Graphics, both impacted by the consumer electronics industry. On a geographic basis, sales grew 8.4 percent in Latin America/Canada, 6.3 percent in the United States and 0.1 percent in Europe. Sales declined 1.9 percent in Asia Pacific.

First-quarter net income rose 4.0 percent year-on-year to over $1.1 billion and earnings were $1.59 per share, an increase of 6.7 percent versus last year's first quarter. First-quarter 2012 results included a $0.04 per share charge related to a voluntary retirement program and other restructuring actions. Total-company operating income margins were 21.8 percent for the quarter, with five business segments above 20 percent, and free cash flow was $567 million.

"We are off to a very good start in 2012 with record first-quarter sales and strong earnings," said Inge G. Thulin, 3M President and Chief Executive Officer. "3M employees everywhere did an outstanding job of managing in a challenging environment for growth."

Thulin continued, "Looking ahead, we will keep driving operational excellence to fund ongoing investments in innovation, commercialization and manufacturing. I am very confident in our ability to improve every aspect of our company and to keep delivering high-quality results into the future."

3M also updated its 2012 performance expectations. The company now expects full-year earnings to be in the range of $6.35 to $6.50 per share versus a previous expected range of $6.25 to $6.50 per share. 3M continues to expect organic sales volume growth of 2 to 5 percent, and operating income margins in the range of 21.0 to 22.5 percent for the year.

First-Quarter Business Segment Discussion

Industrial and Transportation

  • Sales of $2.7 billion, up 8.6 percent, including 3.1 percent from acquisitions. Foreign currency translation reduced sales by 1.2 percent.
  • Broad-based sales growth led by double-digit increases in aerospace, abrasives and automotive OEM.
  • Sales rose in all geographic regions, including a double-digit increase in the U.S.
  • Operating income rose 16.2 percent to $600 million; operating income margin of 22.5 percent.

Health Care

  • Sales of $1.3 billion, up 2.0 percent; foreign exchange impacts reduced sales by 1.1 percent.
  • Sales increased in most businesses, led by a double-digit increase in health information systems; sales declined year-on-year in the drug delivery business.
  • Positive sales growth in Asia Pacific, Latin America/Canada and the U.S.; European sales declined year-on-year.
  • Operating income increased 9.0 percent to $402 million; operating income margin of 31.4 percent.

Consumer and Office

  • Sales of $1.0 billion, up 4.3 percent, including 3.0 percent from the recent acquisition of GPI. Foreign currency translation reduced sales by 0.8 percent.
  • Double-digit sales increase in DIY, driven by a combination of acquired and organic growth.
  • European sales grew double-digits (driven by GPI); U.S. declined slightly year-on-year.
  • Operating income rose 8.8 percent to $234 million; operating income margin of 22.4 percent.

Safety, Security and Protection Services

  • Sales of $1.0 billion, up 5.5 percent; foreign currency translation reduced sales by 1.3 percent.
  • Strongest sales growth in the roofing granules and personal safety businesses; sales declined year-on-year in security systems.
  • Sales rose double-digits in Latin America/Canada and the U.S.; European sales declined year-on-year.
  • Operating income rose 16.3 percent to $231 million; operating margin of 23.6 percent.

Display and Graphics

  • Sales of $832 million, down 11.8 percent; foreign exchange impacts reduced sales by 0.4 percent.
  • Optical systems' sales declined 28 percent, impacted by lower film volumes for LCD TVs.
  • Sales increased in both architectural markets and commercial graphics, and were down slightly in traffic safety systems.
  • Sales declined in Europe due to soft economy, and in Asia Pacific, largely electronics related.
  • Operating income declined 29.2 percent to $163 million; operating margin of 19.6 percent.

Electro and Communications

  • Sales of $808 million, down 3.4 percent; foreign currency translation reduced sales by 0.3 percent.
  • Consumer electronics-related sales declined year-on-year due to lower customer production levels.
  • Sales in Asia Pacific and Europe declined year-on-year, partially offset by increases in the U.S. and Latin America/Canada.
  • Operating income of $168 million, down 5.7 percent; operating margin of 20.8 percent.

About 3M

3M captures the spark of new ideas and transforms them into thousands of ingenious products. Their culture of creative collaboration inspires a never-ending stream of powerful technologies that make life better. 3M is the innovation company that never stops inventing. With $30 billion in sales, 3M employs 84,000 people worldwide and has operations in more than 65 countries.

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," "project," "intend," "plan," "believe," "will," "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) 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, 2011. Changes in such assumptions or factors could produce significantly different results. A further description of these factors is located in the Annual Report under "Cautionary Note Concerning Factors That May Affect Future Results" and "Risk Factors" in Part I, Items 1 and 1A, respectively. 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.

Source: 3M


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