OK
The Universal Selection Source:
Coatings Ingredients
Industry News

3M Reports First-Quarter Results

Published on 2009-04-28. Author : SpecialChem

ST. PAUL, Minn. -- 3M announced first-quarter sales of $5.1 billion, a decrease of 21.3 percent from the first quarter of 2008. Net income was $518 million, or $0.74 per share, versus $1.0 billion, or $1.38 per share in the corresponding period last year (a). Excluding special items in 2009 (b), per share earnings were $0.81, down 41 percent year-on-year.

"As expected, the global economic slowdown dramatically affected our businesses in the first quarter," said George W. Buckley, 3M chairman, president and CEO."Substantial end-market declines and continued inventory takedowns in major industries, including automotive, consumer electronics and general industrial manufacturing, resulted in significantly lower sales and profits. Accordingly, we aggressively reduced our cost structure, lowered manufacturing output and intensified our attention to operational improvement. The combination of these actions drove strong operating income margins of more than 17 percent."

Buckley continued,"In these extraordinary times, 3M employees around the world are energized by the challenges, remain keenly focused on our customers and are steadfastly committed to building for the future. In 2009, we will enhance our balance sheet by improving our free cash flow while still maintaining a significant investment in R&D. Our strategy will strengthen the company and position us for even greater success when global economies recover."

The company adjusted its 2009 sales and earnings expectations to reflect ongoing global economic uncertainty. 3M now expects 2009 organic sales volume to decline between 11 percent and 15 percent, versus a previous planning assumption of negative 5 percent to negative 9 percent. The company also expects 2009 full-year earnings to be in the range of $3.90 to $4.30 per share, down from a previous range of $4.30 to $4.70. All estimates quoted exclude special items.

Key Financial Highlights

First-quarter worldwide sales totaled $5.1 billion, a decrease of 21.3 percent versus last year. Local-currency sales including acquisitions decreased 13.9 percent, and foreign exchange impacts reduced sales by an additional 7.1 points in the quarter. Local-currency sales including acquisitions increased 1.9 percent in Health Care, but declined in the remaining segments with Consumer and Office down 0.1 percent, Safety, Security and Protection Services down 3.6 percent, Industrial and Transportation down 20.7 percent, Display and Graphics down 26.6 percent and Electro and Communications down 29.8 percent. Excluding special items, first-quarter net income was $563 million, or $0.81 per share, versus $1.0 billion, or $1.38 per share, in the first quarter of 2008. Net income and earnings per share declined 43 percent and 41 percent respectively, excluding special items (b).

Industrial and Transportation

  • Sales decreased 27.5 percent to $1.6 billion.
  • Local-currency sales declined 20.7 percent including a 2.8 percent increase from acquisitions.
  • Foreign currency translation reduced sales by 6.8 percent.
  • 50 percent decline in North American auto builds directly impacted 3M's auto OEM business; many other industrial market segments were down by more than 20 percent.
  • Local-currency sales down mid-single digits in Latin America, all other major geographies declined by double-digits.
  • Operating income of $197 million, with margins of 12.4 percent.

Health Care

  • Sales of $1.0 billion, down 7.7 percent, including a negative 9.6 percent impact from foreign currency translation.
  • Local-currency sales growth of 1.9 percent, largely from acquisitions.
  • Positive local-currency growth in oral care and medical supplies businesses.
  • Local-currency sales declined in drug delivery.
  • Geographically, Latin America posted double-digit local-currency sales growth.
  • Operating income declined slightly to $311 million, with margins of 31.2 percent.

Consumer and Office

  • Sales of $795 million, down 7.1 percent, mainly due to foreign currency translation.
  • Local-currency sales were flat, including a 2.9 percent benefit from acquisitions.
  • Positive local-currency sales growth in do-it-yourself and stationery products businesses.
  • Regionally, Latin America, Canada and U.S. delivered positive local-currency sales growth.
  • Profits down slightly to $167 million, with operating margins of 21.1 percent.

Safety, Security and Protection Services

  • Sales of $694 million, down 15.4 percent.
  • Sales growth in local currency down 3.6 percent, including positive growth of 10.6 percent from acquisitions, primarily Aearo Technologies, Inc.
  • The 2008 divestiture of HighJump Software, Inc. hurt sales growth by 2.2 percent.
  • Foreign currency translation decreased sales by 9.6 percent.
  • Global industrial manufacturing slowdown hurt organic sales in personal safety products.
  • Sales declined in all major geographies.
  • Profits down 34 percent to $129 million, with operating margins of 18.6 percent.

Display and Graphics

  • Sales declined 30.2 percent to $611 million, with local-currency sales down 26.6 percent.
  • Foreign currency translation reduced sales by 3.6 percent.
  • Local-currency sales were flat in traffic safety systems.
  • Optical systems' sales declined 44 percent year-on-year, which negatively impacted Display and Graphics' total sales growth by nearly 12 percent.
  • Double-digit decline in commercial graphics sales as customers reduced advertising spend.
  • Operating profits were $66 million, with a 10.9 percent margin.

Electro and Communications

  • Sales declined 34.8 percent to $480 million, including a 5.0 point penalty from foreign currency translation.
  • Local-currency sales down 29.8 percent due to significant double-digit market declines in many served markets--electronics, semiconductor, telecommunications and appliance.
  • Operating profits down 84 percent to $24 million.

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; (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 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; and (9) 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, 2008 (the"Report"). Changes in such assumptions or factors could produce significantly different results. A further description of these factors is located in the Report under"Risk Factors" in Part I, Item 1A. 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.

About 3M

A recognized leader in research and development, 3M produces thousands of innovative products for dozens of diverse markets. 3M's core strength is applying its more than 40 distinct technology platforms - often in combination - to a wide array of customer needs. With $25 billion in sales, 3M employs 76,000 people worldwide and has operations in more than 60 countries.

Source: 3M


Back to Top