3M Beats on Q4 Earnings - Analyst Blog

By
A A A

3M Company ( MMM ) reported fourth quarter 2013 net income of $1,103 million or $1.62 per share compared with $991 million or $1.41 a share in the year-earlier quarter. The reported earnings beat the Zacks Consensus Estimate by a penny. The increase in earnings was driven by higher sales.

For fiscal 2013, the company reported net income of $4,659 million or $6.72 per share compared with $4,444 million or $6.32 a share in the year-earlier quarter. The reported earnings beat the Zacks Consensus Estimate of $6.71 per share.

Net sales during the quarter were $7,569 million, up 2.4 % year over year but below the Zacks Consensus Estimate of $7,683 million. The increase in sales was driven by 3.4% organic local currency sales growth and acquisition benefits of 0.7%. However, the positives were partly offset by currency impact of 1.7%. The company reported solid organic local-currency sales growth across all geographic regions.

For fiscal 2013, sales increased 3.2% to $30,871 million with organic local-currency growth of 3.4%. The reported sales missed the Zacks Consensus Estimate of $31,052 million. Acquisitions added 1.4% to sales and foreign currency reduced sales by 1.6%.

Operating income for fourth quarter 2013 was $1.6 billion, while operating margin was 20.9%.

Segment Results

Industrial segment sales increased 6.1% year over year in U.S. dollars to $2.6 billion in the reported quarter driven by an increase in sales in all major geographies. Organic local-currency sales increased 5.8% year over year due to strong sales in advanced materials, 3M Purification, aerospace and automotive aftermarket.

Health Care segment sales climbed 2.4% in U.S. dollars to $1.4 billion in the reported quarter, aided by positive growth in all major geographic regions. Organic local-currency sales increased 3.6% year over year with growth in health information systems and food safety, critical and chronic care and infection prevention.

Consumer segment revenues were $1.1 billion in the reported quarter, down 0.9% year over year in U.S. dollars as divestitures and foreign currency translations reduced sales. Organic local-currency sales growth of 1.3% was attributable to consumer health care and home care business.

Safety and Graphics segment sales rose 2.5% year over year in U.S. dollars to $1.3 billion with strong performances in Asia Pacific and Latin America/Canada. Organic local-currency sales growth of 4.8% benefited from roofing granules and personal safety, commercial graphics and architectural markets.

Electronics and Energy segment revenues were $1.3 billion in the reported quarter, down 1.0% in U.S. dollars as sales decreased in Latin America/Canada. Organic local-currency sales edged up 0.4% driven by sales growth in renewable energy and electrical markets.

Balance Sheet and Cash Flow

Cash and cash equivalents as of Dec 31, 2013 were $2.6 billion compared with $2.8 billion as of Dec 30, 2012. Long-term debt stood at $4,326 million compared with $4,916 million as of Dec, 30 2012. Free cash flow as of Dec 31, 2013 stood at $4,152 million versus $3,816 million in the prior-year period.

During the reported quarter, 3M converted 131% of net income to free cash flow. For fiscal 2013, 3M paid $1.7 billion in cash dividends to shareholders and repurchased $5.2 billion of its shares.

Outlook

3M expects EPS in the range of $7.30 to $7.55 with an organic local-currency sales growth of 3%-6% in 2014. 3M also expects free cash flow conversion to be in the range of 90 to 100%.

Going forward, the company's position will be strengthened through increased investments in innovation and more aggressive capital deployment.

The market reacted positively as share price increased in pre-market trading with a healthy beat in earnings.    

3M currently has a Zacks Rank #3 (Hold). Other stocks that look promising and are worth a look include Carlisle Companies Inc. ( CSL ), Hutchison Whampoa Ltd . ( HUWHY ) and Crane Co . ( CR ).



CRANE CO (CR): Free Stock Analysis Report

CARLISLE COS IN (CSL): Free Stock Analysis Report

HUTCHINSON WHAM (HUWHY): Get Free Report

3M CO (MMM): Free Stock Analysis Report

To read this article on Zacks.com click here.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: CR , CSL , HUWHY , MMM

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

12,801,513
  • $55.03 ▲ 1.49%
12,269,171
  • $97.70 ▲ 0.03%
10,645,570
  • $74.187 ▼ 1.33%
9,584,444
  • $25.52 ▼ 1.05%
9,071,561
  • $27.64 ▲ 15.02%
8,664,452
  • $6.875 ▼ 2.48%
8,358,912
    $3.44 unch
7,892,291
  • $3.705 ▼ 1.46%
As of 7/28/2014, 10:18 AM