HomeMy WebLinkAbout2016 04-26 3M's profit rises on stronger margins, tax benefit PIONEER PRESS4/27/2016 Pioneer Press - Ws profit rises on stronger margins, tax benefit
3M's profit rises on stronger margins, tax benefit
By: DOW JONES NEWS SERVICE
April 26, 2016
3M Co.'s first-quarter profit rose 6.3 percent with an accounting -related tax gain, but sales dropped from
continued lower demand for 3M's materials used in cellphones, computers and other consumer gadgets.
The Maplewood -based manufacturer of Post -it Notes, Ace bandages, Filtrete furnace filters and Scotch
tape topped sales and profit expectations for the quarter and backed its earlier profit outlook for the
year.
3M's electronics and energy business was the company's weakest unit during the quarter, continuing a
pattern seen in recent quarters. First-quarter sales from the electronics unit dropped 14 percent to $1.1
billion. Operating income from the business plunged 27 percent to $208 million. Performance of the
electronics unit has lagged behind amid lower demand for 3M's films and other components used in
electronic products. Sales of 3M products to the renewable energy market and the telecommunications
industry were lower during the quarter as well.
Chairman and Chief Executive Inge Thulin said the weakness in electronics wasn't unexpected, adding
the company remains committed to the business and revealed the company intends to record a $20
million charge in the second quarter to restructure the unit.
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Ws profit rises on stronger margins, tax benefit
Inge Thulin, CEO of 3M
"This is a very good business for us," Thulin told analysts during a conference call Tuesday "We have
worked on this business for four years to be more relevant for us."
Thulin reiterated 3M's expectation that the electronics business will improve as the year progresses.
Even with a better second half of 2016, the company predicted sales will be moderately lower this year
from 2015.
3M's other consumer -related businesses fared better during the first quarter. Sales from the company's
health care business rose 4 percent to $1.4 billion as the unit's income rose 12 percent to $455 million.
Sales from the consumer unit, which includes some of 3M's best-known brands, were flat at $1 billion,
while income edged up 1 percent to $238 million.
Fourth-quarter sales from 3M's industrial business — the company largest business unit — fell 3 percent
to $2.6 billion. But income rose 3.6 percent to $617 million on an improved profit margin.
3M's ability to raise its margins has helped the company increase income, despite sluggish sales growth
lately. The company's first-quarter operating margin grew to 24.1 percent from 22.8 percent a year
earlier. Meanwhile, changes in the way 3M accounts for stock -based compensation for employees
added 10 cents to per-share income for the first quarter.
Overall for the quarter ended March 31, 3M reported a profit of $1.28 billion, or $2.05 a share, up from
$1.2 billion, or $1.85 a share, a year earlier. Sales decreased 2.2 percent to $7.41 billion. Organic sales
— which exclude revenue from acquisitions and the effects of currency exchange rates — edged down
0.8 percent. Analysts expected per-share profit of $1.92 and sales of $7.33 billion. For 2016, 3M said it
continues to expect to earn $8.10 to $8.45 per share.
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