) fourth quarter earnings grew 4.4% year-over-year to $1.41 per
share on strong growth in emerging markets and the U.S. offsetting
a decline in Europe. Revenues also increased 4.2% y-o-y to $7.4
billion in the fourth quarter.
For full year 2012, earnings increased 6% y-o-y to $6.32 per
share and revenues increased 1% y-o-y to $29.9 billion. For
2013, the company projects higher sales and earnings driven by
continued growth in Asia-Pacific and Latin America, partially
offset by a decline in Europe. 3M projects 2013 earnings to be in
the range of $6.70-$6.95 per share with organic local currency
sales growth of 2% to 5%.
See our complete analysis of 3M here
Latin America and Asia-Pacific
In the fourth quarter, 3M's organic local currency sales
increased 9.7% y-o-y in Latin America, the highest among all major
geographies. This was followed by 5.8% growth in the Asia-Pacific
region. Additionally, sales from these two regions increased
in all six segments, namely Industrial, Health Care, Consumer and
Office, Safety and Security, Display, and Electronics &
The fast growing economies of Latin America and Asia-Pacific are
driving growth at 3M whose products serve several sectors of an
economy. In particular, healthcare sales in these regions posted
double-digit growth on rising healthcare spending in both
Asia-Pacific and Latin America. 3M serves healthcare markets
with medical and surgical supplies, skin infection prevention
products, dental products and health information systems.
Asia-Pacific and Latin America constitute approximately 30% and
12%, respectively, of 3M's global sales.
In the U.S., 3M's sales increased in all segments except Safety
and Security Services. Sales growth in the country was the highest
in the Consumer and Office segment that sells office
stationery products like Post-It notes, Scotch Magic Tape and
Scotch Glue Sticks, home care products like Scotch-Brite sponges,
and personal safety products like ACE bandages.
In all, in the fourth quarter, organic sales growth in the U.S.
was 5.2% y-o-y. Acquisitions, primarily that of Ceradyne, added
another 1.9 points to drive 7.1% y-o-y sales growth in the country.
The U.S. constitutes nearly a third of 3M's total sales.
Europe, Middle-East and Africa
On the flip side, growth in emerging markets and the U.S. was
partially offset by the decline in Europe, Middle-East and Africa
(EMEA). Sales in the EMEA region declined in Safety and Security,
Display, and Electro segments, were flat in the Industrial segment
and rose marginally in Healthcare and Consumer & Office
segments. In all, organic sales in EMEA declined 1% y-o-y in local
currency terms. Currency translation lowered this growth 1.8 points
while acquisitions added 0.6 points of growth. As a result, 3M's
sales in EMEA declined 2.2% y-o-y in Q4.
EMEA constitutes approximately 22% of 3M's global sales.
We currently have
a stock price estimate of $93.36 for 3M
, approximately 10% below its current market price. We are in the
process of incorporating fourth quarter earnings and will update
our analysis shortly.
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