Actionable news
0
All posts from Actionable news
Actionable news in MMM: 3M COMPANY,

3M Delivers Second-Quarter Sales of $7.8 Billion and Earnings of $2.58 per Share; Company Updates Its 2017 Outlook

ST. PAUL, Minn.--(BUSINESS WIRE)--3M (NYSE: MMM) today reported second-quarter earnings of $2.58 per share, an increase of 24.0 percent versus the second quarter of 2016. Sales were $7.8 billion, up 1.9 percent year-on-year in dollar terms. Organic local-currency sales increased 3.5 percent while divestitures reduced sales by 1.0 percent. Foreign currency translation decreased sales by 0.6 percent year-on-year.

Operating income was $2.2 billion and operating income margin for the quarter was 28.0 percent, up 3.6 percentage points year-on-year. This result includes a net benefit of $273 million, which is comprised of divestiture gains of $451 million (net of lost operating income), partially offset by $178 million of incremental investments in accelerated growth programs, productivity and portfolio actions. Second-quarter net income was $1.6 billion, up 22.6 percent. The company’s operating cash flow was $1.6 billion, contributing to conversion of 85 percent of net income to free cash flow, as referenced in the “Supplemental Financial Information Non-GAAP Measures” section.

3M paid $701 million in cash dividends to shareholders and repurchased $494 million of its own shares during the quarter.

Total sales grew 7.5 percent in Electronics and Energy, 2.5 percent in Industrial, 1.8 percent in Health Care, and 0.5 percent in Consumer; total sales declined 0.9 percent in Safety and Graphics. Organic local-currency sales increased 8.4 percent in Electronics and Energy, 3.8 percent in Industrial, 3.2 percent in Safety and Graphics, 2.5 percent in Health Care, and 0.7 percent in Consumer.

On a geographic basis, total sales grew 8.3 percent in Asia Pacific, 2.5 percent in Latin America/Canada, and 0.5 percent in the U.S.; total sales declined 3.6 percent in EMEA (Europe, Middle East and Africa). Organic local-currency sales increased 10.0 percent in Asia Pacific, 3.7 percent in Latin America/Canada, and 1.9 percent in the U.S.; organic local-currency sales declined 1.6 percent in EMEA.

“Our team posted another quarter of strong and broad-based organic growth, which included positive growth across all five of our business groups,” said Inge G. Thulin, 3M chairman, president and chief executive officer. “We also continued to deliver premium margins and returns, while accelerating investments to support growth and strengthen the portfolio – which is part of our playbook to build an even stronger and more competitive 3M.”

Coming off a strong first half of the year, 3M updated its guidance for 2017. The company now forecasts organic local-currency sales growth to be 3 to 5 percent, up from previous guidance of 2 to 5 percent. 3M expects earnings in the range of $8.80 to $9.05 per share – up 8 to 11 percent year-on-year – versus a prior expectation of $8.70 to $9.05.

Second-Quarter Business Group Discussion

Industrial

  • Sales of $2.7 billion, up 2.5 percent in U.S. dollars. Organic local-currency sales increased 3.8 percent, foreign currency translation reduced sales by 0.7 percent and divestitures reduced sales by an additional 0.6 percent.
  • On an organic local-currency basis:
    • Sales growth led by advanced materials, automotive and aerospace solutions, and industrial adhesives and tapes; separation and purification sciences declined.
    • Sales grew in all geographic areas led by Asia Pacific and the U.S.
  • Operating income was $523 million, a decrease of 15.6 percent year-on-year; operating margin of 19.2 percent.

Safety and Graphics

  • Sales of $1.5 billion, down 0.9 percent in U.S. dollars. Organic local-currency sales increased 3.2 percent, while foreign currency translation reduced sales by 0.7 percent and divestitures decreased sales by 3.4 percent.
  • On an organic local-currency basis:
    • Sales increased in personal safety, were flat in commercial solutions, and declined in transportation safety and roofing granules.
    • Sales grew in all geographic areas led by Asia Pacific and Latin America/Canada.
  • Operating income was $852 million, up 102.0 percent year-on-year, reflecting divestiture gains of $451 million (net of lost operating income); operating margin of 55.1 percent.

Health Care

  • Sales of $1.4 billion, up 1.8 percent in U.S. dollars. Organic local-currency sales increased 2.5 percent and foreign currency translation reduced sales by 0.7 percent.
  • On an organic local-currency basis:
    • Sales grew in drug delivery systems, food safety, and medical consumables; oral care was flat.
    • Sales increased in Latin America/Canada, Asia Pacific, and the U.S.; declined in EMEA.
  • Operating income was $412 million, a decrease of 10.6 percent year-on-year; operating margin of 28.6 percent.

Electronics and Energy

  • Sales of $1.2 billion, up 7.5 percent in U.S. dollars. Organic local-currency sales increased 8.4 percent, foreign currency translation reduced sales by 0.5 percent and divestitures decreased sales by 0.4 percent.
  • On an organic local-currency basis:
    • Electronics-related sales were up 15 percent with growth in both electronics materials solutions, and display materials and systems; energy-related sales declined 3 percent, with electrical markets flat, while telecom declined.
    • Sales grew in Asia Pacific and Latin America/Canada; U.S. was flat; EMEA declined.
  • Operating income was $301 million, an increase of 38.8 percent year-on-year; operating margin of 24.8 percent.

Consumer

  • Sales of $1.1 billion, up 0.5 percent in U.S. dollars. Organic local-currency sales increased 0.7 percent and foreign currency translation decreased sales by 0.2 percent.
  • On an organic local-currency basis:
    • Sales grew in home improvement, home care and consumer health care; stationery and office declined.
    • Sales grew in Asia Pacific and Latin America/Canada; declined in the U.S. and EMEA.
  • Operating income was $195 million, down 30.4 percent year-on-year; operating margin of 17.2 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:

  • 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., the access code is 21841623). The telephone replay will be available until 11:30 a.m. EDT (10:30 a.m. CDT) on July 30, 2017.

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, political, and capital markets conditions and other factors beyond the Company's control, including natural and other disasters or climate change 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...


More