3M Announces Record Second-Quarter Earnings of $1.66 per Share; Strong Productivity Efforts Drive 22.9 Percent Operating Margins
Middle East, August 2012
3M in the Middle East registers over 15 percent growth in core markets across key Middle East markets
(NYSE: MMM) reported record second-quarter earnings of $1.66 per share, an increase of 3.8 percent versus the second quarter of 2011. Operating income was $1.7 billion and operating income margins for the quarter were 22.9 percent. All of the company's six business segments posted operating income margins greater than 20 percent.
Sales were $7.5 billion, down 1.9 percent year-over-year. Organic local-currency sales grew 1.9 percent and acquisitions added 0.5 percent to sales. The company noted that the combination of challenging economic conditions and the strong U.S. dollar hurt sales in the quarter. Currency impacts reduced sales by 4.3 percent year-on-year.
On a business segment basis, organic local-currency sales increased 5.4 percent in Health Care, 4.2 percent in Industrial and Transportation, 3.1 percent in Consumer and Office and 3.1 percent in Safety, Security and Protection Services. Organic local-currency sales declined 1.8 percent in Electro and Communications and 6.6 percent in Display and Graphics, both impacted by weakness in the consumer electronics industry. On a geographic basis, organic local-currency sales grew 11.4 percent in Latin America/Canada and 3.6 percent in the United States, while Asia Pacific and EMEA (Europe, Middle East and Africa) declined 0.6 percent and 1.9 percent, respectively.
Second-quarter net income was $1.2 billion and earnings were $1.66 per share. Total-company operating income margins were 22.9 percent for the quarter, and free cash flow exceeded $1.0 billion.
"Our team performed very well in the quarter, delivering excellent productivity and record second-quarter earnings,” said Inge G. Thulin, 3M chairman, president and chief executive officer. "We achieved these results through outstanding factory efficiency and cost discipline throughout the organization.”
Thulin continued, "Going forward, we will keep driving to achieve strong earnings and cash flow. At the same time we will expand 3M's customer relevance through strategic investments in manufacturing, innovation and commercialization”.
Commenting on Middle East's performance in the second quarter, Irfan Malik, Area Vice President 3M Middle East and Africa said, "3M's performance in the Middle East and Africa has sustained a strong growth trajectory as we are now witnessing over 15 percent growth in the key core markets and an average 12 percent growth has been secured in other markets. The industry average varies from 3 to 8% depending on the segment and our plans are to outpace the industry growth by two to three times”.
Looking ahead, 3M maintained its full-year 2012 earnings expectations of $6.35 to $6.50 per share. The company anticipates full-year organic local-currency sales growth of 2 to 5 percent and that foreign currency translation will reduce sales by approximately 3 percent for the year. 3M expects operating income margins in the range of 21.5 to 22.5 percent for the year.