3M Company
(
MMM
) announced first-quarter 2012 results before the market opened
today, reporting earnings per share of $1.59, above the Zacks
Consensus Estimate of $1.48 per share. Earnings per share surged
6.7% year over year.
The company achieved record sales during the first quarter.
Total Revenue
Total revenue in the quarter inched up 2.4% year over year to $7.5
billion. Acquisitions contributed 1.5% to total growth, and foreign
exchange reduced sales by 0.9%. Sales growth of 8.4% in Latin
America/Canada was strongest in the quarter. US sales increased by
6.3%, was up 0.1% in Europe and declined by 1.9% in Asia-Pacific.
Segment Results
Sales increased in all segments of the company, except Display and
Graphics and Electro and Communication segments. Display and
Graphics sales declined by 11.8% to $832 million, primarily due to
declined sales of optical systems. Electro and Communication
revenue was $808 million, down 3.4%, primarily due to declined
sales of consumer electronics.
The Industrial and Transportation segment witnessed the highest
growth of 8.6%, amounting to $2.7 billion, led by double-digit
sales growth of abrasives, aerospace and automotive OEM.
Safety, Security and Protection Services revenue increased by 5.5%
to $1.0 bllion, led by sales increase in roofing granules and
personal safety business, partially offset by a decline in security
systems sales. Consumer and Office revenue was $1.0 billion, up
4.3% attributable to double-digit growth in DIY business.
Healthcare sales increased by 2.0% to $1.3 billion, helped by
increased health information systems sales, partially offset by
sales decline in drug delivery business.
Income and Expenses
Operating income, for the quarter, was $1.63 billion compared with
$1.58 billion in the prior-year quarter. Selling and general
expense was $1.55 billion compared with $1.53 billion in the
prior-year quarter and research and development expense was $411
million compared with $398 million in the prior-year comparable
quarter.
Balance Sheet
Cash and Cash equivalents were $2.33 billion at the end of the year
with long-term debt of $4.5 billion and shareholders equity of
$16.62 billion.
Outlook
3M upgraded its full-year 2012 earnings guidance to $6.35 - $6.50
from its prior expectation of $6.25 - $6.50. Organic sales growth
is expected to be in the range of 2% - 5%. Operating income margins
are expected to be between 21% - 22.5%.
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
(
AVY
),
EI DuPont de Nemours & Co.
(
DD
) and
Johnson & Johnson
(
JNJ
).
We continue to maintain a Neutral rating on 3M Company for the long
term and a Zacks #3 Rank (Hold recommendation) over the next
one-to-three months.
AVERY DENNISON (
AVY
): Free Stock Analysis Report
DU PONT (
EI
) DE (
DD
): Free Stock Analysis Report
JOHNSON & JOHNS (
JNJ
): Free Stock Analysis Report
3M CO (
MMM
): Free Stock Analysis Report
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