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3M delivers record third-quarter results


24 October 2013

3M today reported third-quarter earnings of $1.78 per share, an increase of 7.9 per cent versus the third quarter of 2012.  Sales grew 5.6 per cent year-on-year to $7.9 billion.  Organic local-currency sales grew 5.8 per cent, acquisitions added 1.5 per cent to sales and currency impacts reduced sales by 1.7 per cent year-on-year.

Operating income was $1.7 billion and operating income margins for the quarter were 22.0 per cent.  Third-quarter net income was $1.2 billion and free cash flow was $0.7 billion.

The company paid $431 million in cash dividends to shareholders and repurchased $1.54 billion of its own shares during the quarter.

Organic local-currency sales growth was 8.1 per cent in Safety and Graphics, 6.8 per cent in Health Care, 6.2 per cent in Industrial, 4.2 per cent in Consumer and 3.8 in Electronics and Energy.  On a geographic basis, organic local-currency sales grew 10.5 per cent in Latin America/Canada, 6.8 per cent in Asia Pacific, 4.5 per cent in the U.S. and 4.3 per cent in EMEA (Europe, Middle East and Africa).

“The 3M team delivered another strong performance in the third quarter,” said Inge G. Thulin, 3M’s chairman, president and chief executive officer.  “All business groups generated positive organic sales growth and operating margins above 20 per cent.  At the same time, we further strengthened the company through increased investments in innovation, commercialization and manufacturing.  Finally, we returned $2 billion of cash to our shareholders during the quarter via dividends and gross share repurchases, or $4.8 billion through nine months of the year.”

3M updated its full-year performance expectations.  The company anticipates 2013 earnings to be in the range of $6.65 to $6.75 per share versus a previous expectation of $6.60 to $6.85 per share. 3M expects full year organic local-currency sales growth of 3 to 4 per cent versus a previous expectation of 2 to 5 per cent.  In addition, the company expects that free cash flow conversion will be approximately 90 per cent.

THIRD-QUARTER BUSINESS GROUP DISCUSSION

►  Industrial

  • Sales of $2.7 billion, up 8.6 per cent in U.S. dollars. Organic local-currency sales increased 6.2 per cent, acquisitions (Ceradyne) added 4.1 per cent to sales and foreign currency translation reduced sales by 1.7 per cent.
  • On an organic local-currency basis:
    •Sales grew in all businesses, led by aerospace, automotive, advanced materials, liquid filtration, automotive aftermarket and industrial adhesives and tapes.
    •Sales rose in all major geographies, with double-digit growth in Latin America/Canada.
  • Operating income was $568 million, equal to third quarter of 2012; operating margin of 21.3 per cent.


►  Electronics and Energy

  • Sales of $1.4 billion, an increase of 2.5 per cent in U.S. dollars. Organic local-currency sales increased 3.8 per cent and foreign currency translation reduced sales by 1.3 per cent.
  • On an organic local-currency basis:
    •Positive sales growth in both electronics- and energy-related businesses.
    •Sales grew in Asia Pacific, Latin America/Canada and EMEA, and declined in the U.S.
  • Operating income was $300 million, up 3.2 per cent year-on-year; operating margin of 20.7 per cent.
     

►  Safety and Graphics

  • Sales of 1.4 billion, up 6.7 per cent in U.S. dollars. Organic local-currency sales increased 8.1 per cent; acquisitions (Federal Signal Technologies) added 0.9 per cent to sales and foreign currency translation reduced sales by 2.3 per cent.
  • On an organic local-currency basis:
    •Sales grew at a double-digit rate in roofing granules and personal safety; sales declined in architectural markets.
    •Sales rose in all major geographies, with double-digit growth in Asia Pacific and Latin America/Canada.
  • Operating income was $315 million, an increase of 7.3 per cent year-on-year; operating margin of 21.8 per cent.

►  Health Care

  • Sales of $1.3 billion, up 5.5 per cent in U.S. dollars. Organic local-currency sales increased 6.8 per cent and foreign currency translation reduced sales by 1.3 per cent.
  • On an organic local-currency basis:
    •Sales grew across the portfolio led by double-digit growth in food safety and health information systems.
    •Sales rose in all major geographies, with double-digit growth in Latin America/Canada.
  • Operating income was $426 million, an increase of 6.7 per cent; operating margin of 32.1 per cent.

►  Consumer

  • Sales of $1.2 billion, up 2.1 per cent in U.S. dollars. Organic local-currency sales increased 4.2 per cent, divestitures reduced sales by 0.2 per cent and foreign currency translation reduced sales by 1.9 per cent.
  • On an organic local-currency basis:
    •Sales growth was strongest in consumer health care, home care, stationery and office supplies and DIY.
    •Sales grew in all geographic areas led by Latin America/Canada and Asia Pacific.
  • Operating income was $247 million, up 0.6 per cent year-on-year; operating margin of 21.5 per cent.
     

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