3M Delivers Fourth-Quarter Sales of $7.4 Billion and Earnings of $1.41 per Share; Company Posts Reco

3M Delivers Fourth-Quarter Sales of $7.4 Billion and Earnings of $1.41 per Share; Company Posts Record Full-Year Sales of $29.9 Billion and Earnings of $6.32 per Share

ST. PAUL, Minn.--(BUSINESS WIRE)-- 3M (NYS: MMM) today reported fourth-quarter earnings of $1.41 per share, an increase of 4.4 percent versus the fourth quarter of 2011. Operating income was $1.4 billion and operating income margins for the quarter were 19.5 percent. Fourth-quarter net income was $1.0 billion and free cash flow was $1.2 billion.

Sales rose 4.2 percent year-on-year to $7.4 billion, an all-time fourth-quarter record. Organic local-currency sales grew 4.3 percent, acquisitions added 0.9 percent to sales and currency impacts reduced sales by 1.0 percent year-on-year.


Organic local-currency sales growth was 8.7 percent in Consumer and Office, 8.3 percent in Display and Graphics, 5.9 percent in Health Care, 3.9 percent in Industrial and Transportation and 1.8 percent in Electro and Communications; Safety, Security and Protection Services declined 1.7 percent year-on-year. On a geographic basis, organic local-currency sales grew 9.7 percent in Latin America/Canada, 5.8 percent in Asia Pacific, 5.2 percent in the U.S. and declined 1.0 percent in EMEA (Europe, Middle East and Africa).

For the full year 2012, 3M posted record sales of $29.9 billion, up 1.0 percent year-on-year. Organic local-currency sales grew 2.6 percent and acquisitions added 0.8 percent to sales. Foreign currency translation reduced sales by 2.4 percent year-on-year.

Four of the company's six business segments posted full-year organic local-currency growth, led by Health Care at 4.7 percent and Industrial and Transportation at 4.5 percent. Latin America/Canada was the fastest-growing geographic region in 2012 at 10.9 percent followed by the U.S. at 4.2 percent.

Full-year 2012 earnings were $6.32 per share, an increase of 6.0 percent. Operating margins were 21.7 percent and return on invested capital was 20 percent.

"Fourth-quarter was a good finish to a successful year for 3M," said Inge G. Thulin, 3M chairman, president and chief executive officer. "Our people executed well in the face of challenging macroeconomic conditions and we have built good momentum to innovate and move forward in 2013."

3M affirmed its 2013 full-year performance expectations. The company anticipates 2013 earnings to be in the range of $6.70 to $6.95 per share with organic local-currency sales growth of 2 to 5 percent. 3M also expects free cash flow conversion to be in the range of 90 to 100 percent.

Fourth-Quarter Business Segment Discussion

Industrial and Transportation

  • Sales of $2.5 billion, up 3.8 percent in U.S. dollars. Organic local-currency sales increased 3.9 percent, acquisitions (Ceradyne) added 1.2 percent to sales and foreign currency translation reduced sales by 1.3 percent.

  • On an organic local-currency basis:

    • Sales growth was strongest in liquid filtration, aerospace, industrial adhesives and tapes, abrasives and automotive OEM; both the advanced materials and the renewable energy businesses declined year-on-year.

    • Sales increased in Latin America/Canada, the U.S. and Asia Pacific and were flat in EMEA.

  • Operating income was $469 million, down 0.4 percent year-on-year; operating margin of 18.8 percent.

Health Care

  • Sales of $1.3 billion, up 5.6 percent in U.S. dollars. Organic local-currency sales increased 5.9 percent, acquisitions (CodeRyte) added 0.5 percent and foreign currency translation reduced sales by 0.8 percent.

  • On an organic local-currency basis:

    • Sales increased in all businesses, with the strongest growth in food safety, health information systems, skin/wound care and oral care.

    • Positive sales growth in all major geographies, with double-digit growth in Latin America/Canada and Asia Pacific.

  • Operating income increased 10.8 percent to $430 million; operating margin of 32.3 percent.

Consumer and Office

  • Sales of $1.1 billion, up 7.7 percent in U.S. dollars. Organic local-currency sales increased 8.7 percent and foreign currency translation reduced sales by 1.0 percent.

  • On an organic local-currency basis:

    • Growth was led by consumer health care, DIY and stationery and office supplies.

    • Sales rose in all major geographies with double-digit growth in the U.S. and Latin America/Canada.

  • Operating income increased 28.8 percent to $230 million; operating margin of 21.0 percent.

Display and Graphics

  • Sales of $910 million, up 10.6 percent in U.S. dollars. Organic local-currency sales increased 8.3 percent, acquisitions (Federal Signal Technologies) added 3.2 percent and foreign currency translation reduced sales by 0.9 percent.

  • On an organic local-currency basis:

    • Sales increased at a double-digit rate in optical systems; sales also increased in architectural markets, traffic safety systems and commercial graphics.

    • Sales increased in Asia Pacific, Latin America/Canada and the U.S. and declined year-on-year in EMEA.

  • Operating income decreased 3.6 percent to $152 million; operating margin of 16.7 percent.

Safety, Security and Protection Services

  • Sales of $904 million, down 2.5 percent in U.S. dollars. Organic local-currency sales decreased 1.7 percent, divestitures reduced sales by 0.1 percent and foreign currency translation reduced sales by 0.7 percent.

  • On an organic local-currency basis:

    • Sales growth was strongest in infrastructure protection, personal safety and roofing granules; sales declined year-on-year in security systems.

    • Sales increased in Latin America/Canada and Asia Pacific; sales declined in the U.S. and EMEA.

  • Operating income decreased 5.2 percent to $162 million; operating margin of 18.0 percent.

Electro and Communications

  • Sales of $776 million, up 1.0 percent in U.S. dollars. Organic local-currency sales increased 1.8 percent and foreign currency translation reduced sales by 0.8 percent.

  • On an organic local-currency basis:

    • Sales increased in both electrical and telecom markets, partially offset by a decline in consumer electronics-related businesses.

    • Sales increased in Latin America/Canada, the U.S. and Asia Pacific and declined year-on-year in EMEA.

  • Operating income of $142 million, down 6.5 percent; operating margin of 18.4 percent.

3M will conduct an investor teleconference at 9:00 a.m. EST (8:00 a.m. CST) today. Investors can access this conference via the following:

  • Live webcast at http://investor.3M.com.

  • Live telephone:
    Call 800-762-2596 within the U.S. or +1 212-231-2916 outside the U.S. Please join the call at least 10 minutes before the start time.

  • Webcast replay:
    Go to 3M's Investor Relations website at http://investor.3M.com and click on "Quarterly Earnings."

  • Telephone replay:
    Call 800-633-8284 (for both U.S. and outside the U.S.; access code is 21609530).
    The telephone replay will be available until 10:00 a.m. CST on January 29, 2013.

Forward-Looking Statements
This news release contains forward-looking information about 3M's financial results and estimates and business prospects that involve substantial risks and uncertainties. You can identify these statements by the use of words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "will," "target," "forecast" and other words and terms of similar meaning in connection with any discussion of future operating or financial performance or business plans or prospects. Among the factors that could cause actual results to differ materially are the following: (1) worldwide economic and capital markets conditions and other factors beyond the Company's control, including natural and other disasters affecting the operations of the Company or its customers and suppliers; (2) the Company's credit ratings and its cost of capital; (3) competitive conditions and customer preferences; (4) foreign currency exchange rates and fluctuations in those rates; (5) the timing and market acceptance of new product offerings; (6) the availability and cost of purchased components, compounds, raw materials and energy (including oil and natural gas and their derivatives) due to shortages, increased demand or supply interruptions (including those caused by natural and other disasters and other events); (7) the impact of acquisitions, strategic alliances, divestitures, and other unusual events resulting from portfolio management actions and other evolving business strategies, and possible organizational restructuring; (8) generating fewer productivity improvements than estimated; (9) security breaches and other disruptions to the Company's information technology infrastructure; and (10) legal proceedings, including significant developments that could occur in the legal and regulatory proceedings described in the Company's Annual Report on Form 10-K for the year ended December 31, 2011, and its subsequent quarterly reports on Form 10-Q (the "Reports"). Changes in such assumptions or factors could produce significantly different results. A further description of these factors is located in the Reports under "Cautionary Note Concerning Factors That May Affect Future Results" and "Risk Factors" in Part I, Items 1 and 1A (Annual Report) and in Part I, Item 2 and Part II, Item 1A (Quarterly Report). The information contained in this news release is as of the date indicated. The Company assumes no obligation to update any forward-looking statements contained in this news release as a result of new information or future events or developments.

3M Company and Subsidiaries

CONSOLIDATED STATEMENT OF INCOME

(Millions, except per-share amounts)

(Unaudited)

Three-months ended

Twelve-months ended

December 31,

December 31,

2012

2011

2012

2011

Net sales

$

7,387

$

7,089

$

29,904

$

29,611

Operating expenses

Cost of sales

3,991

3,824

15,685

15,693

Selling, general and administrative expenses

1,535

1,522

6,102

6,170

Research, development and related expenses

418

379

1,634

1,570

Total operating expenses

5,944

5,725

23,421

23,433

Operating income

1,443

1,364

6,483

6,178

Interest expense and income

Interest expense

44

45

171

186

Interest income

(10

)

(10

)

(39

)

(39

)

Total interest expense - net

34

35

132

147

Income before income taxes

1,409

1,329

6,351

6,031

Provision for income taxes

405

355

1,840

1,674

Net income including noncontrolling interest

$

1,004

$

974

$

4,511

$

4,357

Less: Net income attributable to

noncontrolling interest

13

20

67

74

Net income attributable to 3M

$

991

$

954

$

4,444

$

4,283

Weighted average 3M common shares

outstanding - basic

691.5

701.2

693.9

708.5

Earnings per share attributable to

3M common shareholders - basic

$

1.43

$

1.36

$

6.40

$

6.05

Weighted average 3M common shares

outstanding - diluted

701.2

707.5

703.3

719.0

Earnings per share attributable to

3M common shareholders - diluted

$

1.41

$

1.35

$

6.32

$

5.96

Cash dividends paid per 3M common share

$

0.59

$

0.55

$

2.36

$

2.20

3M Company and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEET

(Dollars in millions)

(Unaudited)

Dec. 31,

Dec. 31,

2012

2011

ASSETS

Current assets

Cash and cash equivalents

$

2,883

$

2,219

Marketable securities - current

1,648

1,461

Accounts receivable - net

4,061

3,867

Inventories

3,837

3,416

Other current assets

1,201

1,277

Total current assets

13,630

12,240

Marketable securities - non-current

1,162

896

Investments

163

155

Property, plant and equipment - net

8,378

7,666

Goodwill and intangible assets - net

9,310

8,963

Prepaid pension benefits

16

40

Other assets

1,217

1,656

Total assets

$

33,876

$

31,616

LIABILITIES AND EQUITY

Current liabilities

Short-term borrowings and

current portion of long-term debt

$

1,085

$

682

Accounts payable

1,762

1,643

Accrued payroll

701

676

Accrued income taxes

371

355

Other current liabilities

2,281

2,085

Total current liabilities

6,200

5,441

Long-term debt

4,916

4,484

Pension and postretirement benefits

3,086

3,972

Other liabilities

1,634

1,857

Total liabilities

$

15,836

$

15,754

Total equity

$

18,040

$

15,862

Shares outstanding

December 31, 2012: 687,091,650 shares

December 31, 2011: 694,970,041 shares

Total liabilities and equity

$

33,876

$

31,616

3M Company and Subsidiaries

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in millions)

(Unaudited)

Twelve-months ended

December 31,

2012

2011

NET CASH PROVIDED BY

OPERATING ACTIVITIES

$

5,300

$

5,284

Cash flows from investing activities:

Purchases of property, plant

and equipment

(1,484

)

(1,379

)

Acquisitions, net of cash acquired

(1,046

)

(649

)

Purchases and proceeds from sale or maturities of

marketable securities and investments - net

(211

)

(745

)

Other investing activities

55

55

NET CASH USED IN INVESTING ACTIVITIES

(2,686

)

(2,718

)