St. Paul, MN - 3M reported third-quarter earnings of $1.78 per share, an increase of 7.9 percent versus the third quarter of 2012. Sales grew 5.6 percent year-on-year to $7.9 billion. Organic local-currency sales grew 5.8 percent, acquisitions added 1.5 percent to sales and currency impacts reduced sales by 1.7 percent year-on-year.
Operating income was $1.7 billion and operating income margins for the quarter were 22.0 percent. Third-quarter net income was $1.2 billion and free cash flow was $0.7 billion.
The company paid $431 million in cash dividends to shareholders and repurchased $1.54 billion of its own shares during the quarter.
Organic local-currency sales growth was 8.1 percent in Safety and Graphics, 6.8 percent in Health Care, 6.2 percent in Industrial, 4.2 percent in Consumer and 3.8 in Electronics and Energy. On a geographic basis, organic local-currency sales grew 10.5 percent in Latin America/Canada, 6.8 percent in Asia Pacific, 4.5 percent in the U.S. and 4.3 percent in EMEA (Europe, Middle East and Africa).
“The 3M team delivered another strong performance in the third quarter,” said Inge G. Thulin, 3M’s chairman, president and chief executive officer. “All business groups generated positive organic sales growth and operating margins above 20 percent. At the same time, we further strengthened the company through increased investments in innovation, commercialization and manufacturing. Finally, we returned $2 billion of cash to our shareholders during the quarter via dividends and gross share repurchases, or $4.8 billion through nine months of the year.”
3M updated its full-year performance expectations. The company anticipates 2013 earnings to be in the range of $6.65 to $6.75 per share versus a previous expectation of $6.60 to $6.85 per share. 3M expects full year organic local-currency sales growth of 3 to 4 percent versus a previous expectation of 2 to 5 percent. In addition, the company expects that free cash flow conversion will be approximately 90 percent.
Third-Quarter Business Group Discussion
Industrial
- Sales of $2.7 billion, up 8.6 percent in U.S. dollars. Organic local-currency sales increased 6.2 percent, acquisitions (Ceradyne) added 4.1 percent to sales and foreign currency translation reduced sales by 1.7 percent.
- On an organic local-currency basis:
- Sales grew in all businesses, led by aerospace, automotive, advanced materials, liquid filtration, automotive aftermarket and industrial adhesives and tapes.
- Sales rose in all major geographies, with double-digit growth in Latin America/Canada.
- Operating income was $568 million, equal to third quarter of 2012; operating margin of 21.3 percent.
Electronics and Energy
- Sales of $1.4 billion, an increase of 2.5 percent in U.S. dollars. Organic local-currency sales increased 3.8 percent and foreign currency translation reduced sales by 1.3 percent.
- On an organic local-currency basis:
- Positive sales growth in both electronics- and energy-related businesses.
- Sales grew in Asia Pacific, Latin America/Canada and EMEA, and declined in the U.S.
- Operating income was $300 million, up 3.2 percent year-on-year; operating margin of 20.7 percent.
Safety and Graphics
- Sales of 1.4 billion, up 6.7 percent in U.S. dollars. Organic local-currency sales increased 8.1 percent; acquisitions (Federal Signal Technologies) added 0.9 percent to sales and foreign currency translation reduced sales by 2.3 percent.
- On an organic local-currency basis:
- Sales grew at a double-digit rate in roofing granules and personal safety; sales declined in architectural markets.
- Sales rose in all major geographies, with double-digit growth in Asia Pacific and Latin America/Canada.
- Operating income was $315 million, an increase of 7.3 percent year-on-year; operating margin of 21.8 percent.
Health Care
- Sales of $1.3 billion, up 5.5 percent in U.S. dollars. Organic local-currency sales increased 6.8 percent and foreign currency translation reduced sales by 1.3 percent.
- On an organic local-currency basis:
- Sales grew across the portfolio led by double-digit growth in food safety and health information systems.
- Sales rose in all major geographies, with double-digit growth in Latin America/Canada.
- Operating income was $426 million, an increase of 6.7 percent; operating margin of 32.1 percent.
Consumer
- Sales of $1.2 billion, up 2.1 percent in U.S. dollars. Organic local-currency sales increased 4.2 percent, divestitures reduced sales by 0.2 percent and foreign currency translation reduced sales by 1.9 percent.
- On an organic local-currency basis:
- Sales growth was strongest in consumer health care, home care, stationery and office supplies and DIY.
- Sales grew in all geographic areas led by Latin America/Canada and Asia Pacific.
- Operating income was $247 million, up 0.6 percent year-on-year; operating margin of 21.5 percent .
