) announced third-quarter 2012 results before the market opened
today, reporting earnings per share of $1.65; below the Zacks
Consensus Estimate of $1.66 per share. Earnings per share surged
8.6% year over year.
Total revenue in the quarter declined by 0.4% year over year
to $7.5 billion. Acquisitions contributed 0.5% to total growth,
and foreign exchange reduced sales by 3.1%. Sales growth of 10.5%
in Latin America/Canada was the strongest in the quarter. US
sales increased by 2.3%, was up 0.8% in EMEA and declined by 0.1%
Display and Graphics
sales were flat year over year at $936 million
benefiting from architectural markets and optical films sales.
Electro and Communication
revenue was $820 million, down 2.1%, primarily due to declined
sales of consumer electronics and telecom products, partially
offset by sales increase in electrical market. The
Industrial and Transportation
segment sales declined by 0.5% to $2.6 million, due to a foreign
currency translation effect of 3.8%. The segment benefited from
strong sales in automotive OEM, aerospace and automotive
aftermarket while renewable energy witnessed a weak sale.
Safety, Security and Protection Services
revenue decreased by 2.9% to $926 mllion, led by a sales decrease
in roofing granules and personal safety business, partially
offset by an increase in infrastructure protection and personal
Consumer and Office
revenue was $1.1 billion, up 1.6% attributable to growth in DIY
and consumer health care businesses, partially offset by declined
sales of stationery and office supplies.
sales increased by 1.4% to $1.3 billion, helped by increased
sales in electrical markets, partially offset by a decline in
both the telecom and consumer electronics-related businesses.
Operating income, for the quarter was $1.68 billion compared
with $1.58 billion in the prior-year quarter. Selling and general
expense was $1.49 billion compared with $1.53 billion in the
prior-year quarter and research and development expense was $397
million compared with $389 million in the prior-year comparable
Cash and Cash equivalents were $3.03 billion at the end of the
year with long-term debt of $4.9 billion and shareholders equity
of $18.1 billion.
The company revised its 2012 guidance based on the prevailing
economic conditions. 3M expects full-year 2012 earnings to be in
the range of $6.27-$6.35, down from the prior range of
$6.35-$6.50. Organic sales growth is expected to be in the range
of 2% - 2.5%. Operating income margins are expected to be between
21.5% - 22%.
The company believes it will continue to post good results
despite the prevailing weak economies, which are challenging
business growth. Investments in research and development
("R&D"), as well as sales and manufacturing are targeted by
the company to achieve accelerated growth.
3M is globally recognized for its innovations, which are
supported by some of its well-known brands, such as Nexcare,
Post-it, Scotch, Scotch-Brite, and Scotchgard. We believe that
continued capital expenditure with new product launches should
bolster its prospects across most end markets.
However, the company's growth objectives are largely dependent
on timing and market acceptance of its new product offerings,
including its ability to continually renew its pipeline of new
offerings and bring those to the market at acceptable price
points. Further, the results have been impacted by worldwide
economic and capital market conditions.
3M Company, together with its subsidiaries, operates as a
diversified technology company with manufacturing operations
spread over 60 countries worldwide. It has more than 35 business
units organized into six segments: Consumer and Office, Display
and Graphics, Electro and Communications, Healthcare, Industrial
and Transportation, and Safety, Security and Protection Services
Business. The major competitors of 3M are
Avery Dennison Corporation
EI DuPont de Nemours & Co.
Johnson & Johnson
We continue to maintain a Neutral rating on 3M Company for the
long term and a Zacks #2 Rank (Buy recommendation) over the next
AVERY DENNISON (AVY): Free Stock Analysis
DU PONT (EI) DE (DD): Free Stock Analysis
JOHNSON & JOHNS (JNJ): Free Stock Analysis
3M CO (MMM): Free Stock Analysis Report
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