HomeMy WebLinkAbout2015 01-29 3M posts positive fourth quarter, beats Wall Street estimates STAR TRIBUNE �StarTribune
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Article by: Dee DePass " r � � �
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3M Co. delivered a record fourth quarter and expects continued 5,+f� �,�� ��° �P���� � �
growth next year, despite the traumatized oil sector anC volatile ��' • �� � ���y �"'���
foreign currencies. � � �'
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The Maplewood company's results, released Tuesday, beat � ` - � ✓
analysts'expectations and defied negative stock market trends for >� �� �+r,oc, � F�.,ra wi:r t ��.�n�,�no�,�+ ,s�,��.
the day.That combination prompted congratulations from several r�ju,��„teti�ins,�n,
Wall Street analysts who follow the stock.
"Nice quarter,"said Goldman Sachs industnal research analyst Joe Ritchie.
"Great job,"said Scott Davis with Barclays Capital.
Edward Jones equity analyst Matt Amold said 3M bucked several tough trends smacking most major industrials reporting this
month. Few were able to reiterale prior eamings goals because of worties about their oil and gas exposure or because of
signifcant foreign currency woes.
3M isn't crippled by either problem and reiterated its 2015 guidance Tuesday. "Few industrials have been able to do that,"
Arnold said.
3M now expects 2015 eamings of$8 per share and sales growth of 3 to 6 percent.One reason the forecast was not lowered
is that 3M generates just 3 percent of all sales from the lurbulent oil sectoc In addition, 3M's revenue hit from volatile foreign
currencies was not even 2 percent, compared with other industrial companies whose sales have been hurt 4 to 8 percent.
3M saw impressive results from once lackluster regions in Europe,Japan and the United Slates.
"So 3M is doing well across all geographies and business segments,"Amold said."The strength of their business is that they
are very broad based.°
The maker of Scotch tape, Post-it notes and car adhesives reported that revenue grew 2 percent to$7.7 billion during the
quarter that ended Dec. 31. Eamings grew 7 percent to$1.18 billion or 51.81 a share, beating analysts' profit expectations by
a penny.Analysts had expected revenue of$7.77 billion.
Dunng a conference call with analysts Tuesday,3M executives noted that the fourth quarter benefitetl from lower raw
material costs, higher prices and slrong resWts from the United Slates,China, Japan and Mexico.
On the product front,demand grew for 3M respirators in China; safety and industrial products in Europe; and for factory and
auto adhesives in the United States. The U.S. consumer business also enjoyed sVOng holiday sales.
"3M delivered strong results in the fourth quarter, which culminated in a solid perfortnance for 2014,°CEO Inge Thulin told
analysts.
3M's safety and graphics division had the largest growth of any business when measured in loral currencies. Sales grew 92
percant to$1.4 billion during the quaRer. Health care product sales rose 6.4 percent on a local currency basis to$1.4 billion.
Thulin and CFO Nicholas Gangestad noted that the Ebola scare recen(ly boosted overall sales by 530 million.
3M's industnal unit,which is its largest, saw local currency sales nse 5.9 percent to$2.6 billion dunng the quarter amid nsing
demand from all geographies.
3M spent nearly 81.8 billion in research and development in 2014. It also spent about$30 million tuming around various
product portfotios dunng the quarter,7hulin said. �
For full 2014, 3M reported eamings oi$7.49 a share and sales that rose 3.1 percent to a record$31.8 billion. Analysts had
forecast that 2014 earnings would reach$7.48 a share and that revenue would hit$31.9 billion.
3M's stock dipped 0.36 percent, or 61 cents,to close et$163.63 a share Tuesday. The slight decline contrasted with a broad
market sell-off that sent rivo major indexes down a respective 1.6 and 1.3 percent.