) reported second-quarter 2014 net income of $1,267 million or
$1.91 per share compared with $1,197 million or $1.71 a share in
the year-earlier quarter. The reported earnings per share were in
line with the Zacks Consensus Estimate. The increase in earnings
was driven by higher sales.
Net sales during the quarter were $8,134 million, up 4.9 % year
over year, above the Zacks Consensus Estimate of $8055 million. The
increase in sales was driven by 4.8% organic local currency sales
growth and 0.1% impact of acquisitions. Operating income for
second-quarter 2014 was $1.9 billion, while operating margin was
segment sales increased 4.9% year over year in local currency to
$2.8 billion in the reported quarter driven by an increase in sales
in all major geographies except Latin America/Canada, which was
down marginally. Organic local-currency sales increased 4.7% year
over year due to strong sales in 3M purification, aerospace and
commercial transportation, abrasives and industrial adhesives and
segment sales climbed 5.9% in local currency to $1.4 billion in the
reported quarter, aided by growth in all major geographic regions.
Organic local-currency sales increased 5.1% year over year with
growth in health information systems critical and chronic care and
segment revenues were $1.1 billion in the reported quarter up 3.7%
year over year in local currency. Organic local-currency sales
growth of 4.2% was attributable to consumer health care and home
Safety and Graphics
segment sales rose 4.1% year over year in local currency to $1.5
billion with strong performances in all major geographic regions.
Organic local-currency sales growth of 4.7% benefited from personal
safety and commercial solutions business.
Electronics and Energy
segment revenues were $1.4 billion in the reported quarter, up 6.2%
in local currency as sales increased in Latin America/Canada and
Asia Pacific while sales remained flat in the U.S. Organic
local-currency sales edged up 6.4% driven by strong growth in
Electronics business and Energy business.
Balance Sheet and Cash Flow
Cash and cash equivalents as of Jun 30, 2014 were $2,125 million
compared with $2,942 million as of Jun 30, 2013. Long-term debt
stood at $5,323 million as of Jun 30, 2014 compared with $4,884
million as of Jun, 30 2013. Free cash flow as of Jun 30, 2014 stood
at $1,299 million versus $1,285 million in the prior-year
During the reported quarter, 3M converted 103% of net income to
free cash flow. 3M returned $2 billion to shareholders via
dividends and shares repurchases.
Subsequent to the end of the quarter, 3M announced the acquisition
of the remaining 25% stake of its Sumitomo 3M subsidiary in Japan
for $885 million.
3M maintained its EPS guidance in the range of $7.30 to $7.55 with
an organic local-currency sales growth of 3%-6% in 2014. Also
foreign currency impacts are expected to reduce sales by 1% for the
year. Going forward, the company's position will be strengthened
through increased investments in innovation and more aggressive
The market reacted positively as share price increased marginally
3M currently has a Zacks Rank #3 (Hold). Other stocks that look
promising and are worth a look now include
Noble Group Limited
), having a Zacks Rank #1 (Strong Buy),
Macquarie Infrastructure Company LLC
), both having a Zacks Rank #2 (Buy).
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