ST. PAUL, MN — 3M recently reported third-quarter 2018 results.
“In the third quarter, 3M delivered a double-digit increase in cash flow and earnings-per-share, along with strong margins despite slower growth,” said Mike Roman, 3M chief executive officer. “We also continued to deploy capital to invest in our future and return cash to our shareholders.
“Through nine months of the year, our global team posted organic growth of more than 3 percent, and we are positioned to deliver a solid 2018,” Roman continued. “Going forward, we remain focused on innovating for our customers and driving growth, while continuing to transform our enterprise.”
Third-quarter sales were $8.2 billion with organic local-currency sales up 1.3 percent while acquisitions, net of divestitures, increased sales by 0.2 percent. Foreign currency translation decreased sales by 1.7 percent year-on-year.
Total sales grew 7.0 percent in Safety and Graphics; Industrial was flat; sales declined 2.8 percent in Health Care, 3.4 percent in Consumer and 4.8 percent in Electronics and Energy. Organic local-currency sales increased 2.3 percent in Electronics and Energy, 2.2 percent in Industrial, and 2.2 percent in Safety and Graphics; organic local-currency sales declined 1.1 percent in Health Care and 2.0 percent in Consumer.
On a geographic basis, total sales grew 1.6 percent in Asia Pacific and 1.3 percent in the U.S.; total sales declined 3.9 percent in EMEA (Europe, Middle East and Africa) and 5.5 percent in Latin America/Canada. Organic local-currency sales increased 3.2 percent in Asia Pacific, 2.1 percent in Latin America/Canada, and 0.5 percent in the U.S.; organic local-currency sales declined 0.9 percent in EMEA.
Third-quarter GAAP earnings were $2.58 per share, an increase of 10.7 percent year-over-year. Operating income was $2.0 billion with operating margins of 24.7 percent.
The company’s operating cash flow was $2.1 billion, contributing to conversion of 114 percent of net income to free cash flow, as referenced in the “Supplemental Financial Information Non-GAAP Measures” section.
3M paid $794 million in cash dividends to shareholders and repurchased $1.1 billion of its own shares during the quarter.
The company updated its 2018 GAAP earnings expectations to be in the range of $8.78 to $8.93 per share versus $9.08 to $9.38 previously. Excluding the full-year impacts from the communication markets business divestiture gain and related actions, a first-quarter legal settlement, and the Tax Cuts and Jobs Act-related expense, 3M now expects its adjusted 2018 earnings to be in the range of $9.90 to $10.00 per share versus prior expectation of $10.20 to $10.45. The update to the ranges reflects an estimated full-year earnings headwind of $0.05 per share from foreign currency versus a prior expectation of a benefit of $0.10 per share.
3M also updated its full-year organic local-currency sales growth guidance to approximately 3 percent from 3 to 4 percent and free cash flow conversion to 90 to 95 percent from 90 to 100 percent, as referenced in the “Supplemental Financial Information Non-GAAP Measures” section.
