3M Company ( MMM )
has reported its earnings per share of $1.66 in the second quarter
of 2012, compared to $1.60 in the second quarter of 2011 and $1.59
in the earlier quarter. The earnings in the reported quarter
were above the Zacks Consensus Estimate of $1.65 per share.
The company's improved productivity and effective cost-control
strategy caused the earnings to augment further.
Total revenue in the quarter declined 1.9% year over year to
$7.5 billion, owing to the negative foreign exchange, which reduced
sales by 4.3% and weak macro-economic condition.
Sales growth of 4.0% in U.S. was strongest in the quarter. The
sales in Latin America/Canada slightly upped 0.5%. However, sales
in the EMEA and Asia-Pacific regions reduced by 10.9% and 2.1%,
The Industrial and Transportation segment's sales decreased 0.6%
year over year, amounting to $2.6 billion. Acquisitions positively
impacted the segment's sales by 0.2%, but foreign exchange
adversely affected sales by 5.0%.
Healthcare sales of $1.3 billion surged 1.1% from the prior-year
quarter. Consumer and Office revenue climbed up by 2.3% year over
year to $1.1 billion. While acquisitions positively impacted the
segment's sales by 2.7%, foreign exchange affected the sales
adversely by 3.5%.
Safety, Security and Protection Services revenue decreased 1.9%
from the prior-year quarter to $991 million. Display and Graphics
sales declined 9.3% from the year-earlier quarter to $882 million.
Electro and Communication revenue was $824 million, down 4.7% from
the year-ago quarter.
Income and Expenses
Operating income, for the quarter, was $1.73 billion compared
with $1.66 billion in the prior-year quarter. Selling and general
expense was $1.53 billion compared with $1.58 billion in the
year-earlier quarter and research and development expense was $408
million compared with $404 million in the prior-year quarter.
Cash and cash equivalents were $3.3 billion at the end of the
quarter versus $2.3 billion at the end of the previous quarter.
Long-term debt was $5.7 billion at the end of the quarter versus
$4.5 billion at the end of the previous quarter. Shareholders
equity was $16.9 billion versus $16.6 billion at the end of the
3M maintained its full-year 2012 earnings guidance of $6.35 -
$6.50 per share. Organic local-currency sales growth is expected to
be in the range of 2% - 5%. However, the foreign currency
translation is likely to negatively affect sales by 3%. Operating
income margins are anticipated to be between 21.5% - 22.5%.
The company is confident that it will continue to post good
results despite the prevailing weak economies. Investments in
manufacturing, innovation and commercialization 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.
AVERY DENNISON (AVY): Free Stock Analysis
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3M CO (MMM): Free Stock Analysis Report
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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
We continue to maintain a Neutral rating on 3M Company for the
long term and a Zacks #3 Rank (Hold recommendation) over the next