3M, St. Paul, Minn., reported second-quarter earnings of $2.02 per share, an increase of 5.8 percent versus the second quarter of 2014. Sales declined 5.5 percent year-on-year to $7.7 billion. Organic local-currency sales grew 1.8 percent and foreign currency translation reduced sales by 7.3 percent year-on-year.
Operating income was $1.8 billion, and operating income margins for the quarter were 23.9 percent—up 1.1 percentage points year-on-year. Second-quarter net income was $1.3 billion, and the company converted 74 percent of net income to free cash flow.
3M paid $646 million in cash dividends to shareholders and repurchased $1.7 billion of its own shares during the quarter.
Organic local-currency sales growth was 4.9 percent in safety and graphics, 3.4 percent in health care, 3.4 percent in consumer, and 1.4 percent in industrial; electronics and energy declined 3 percent. On a geographic basis, organic local-currency sales grew 4.1 percent in the U.S., 0.8 percent in Latin America/Canada, 0.5 percent in Asia Pacific, and 0.4 percent in EMEA (Europe, Middle East and Africa).
“In the face of a mixed economic environment, the 3M team delivered positive organic growth in all geographic areas while expanding worldwide margins by over a full point,” said Inge G. Thulin, chairman, president and CEO of 3M. “We also continued to invest in our future, including strategic acquisitions. In June, we announced the acquisition of Capital Safety, which will bolster our personal safety platform and build on our fundamental strengths in technology, manufacturing, global capabilities and brand.”
3M also updated its guidance for the full year 2015.
The company expects earnings will be in the range of $7.80 to $8.00 per share, versus a prior range of $7.80 to $8.10 per share. Organic local-currency sales growth is expected to be in the range of 2.5 to 4 percent, versus previous guidance of 3 to 6 percent.
3M continues to expect that foreign currency translation will reduce 2015 sales by 6 to 7 percent. The company also anticipates that full-year free cash flow conversion will be in the range of 90 to 100 percent.
“We are amending our growth outlook slightly to account for lower-than-expected global economic growth,” said Thulin. “As always, we are focused on executing our plan and improving those factors within our control. I am confident in our team’s ability to generate profitable growth and premium returns into the future.”
For more information, visit www.3m.com.
