3M Posts Positive Fourth Quarter, Beats Estimates

MINNEAPOLIS (Minneapolis Star Tribune/TNS) -

3M Co. exceeded Wall Street’s profit expectations by a penny per share Tuesday, when it reported fourth-quarter results that grew across all business segments of the conglomerate.

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. Earnings grew 7 percent to $1.18 billion, or $1.81 a share.

On average, analysts had expected earnings of $1.80 a share but also expected slightly higher revenue of $7.77 billion for the quarter.

In regular trading Tuesday, 3M’s stock dropped 61 cents to $163.63, amid a broad stock-market selloff. In aftermarket trading, the shares gained 77 cents to $164.40.

Reaction from Wall Street analysts proved positive.

“Nice quarter,” said Goldman Sachs industrial research analyst Joe Ritchie.

“Great job,” said Scott Davis with Barclays Capital.

Edward Jones equity analyst Matt Arnold said 3M bucked tough trends smacking most major industrials reporting this month. Few were able to reiterate prior earnings goals because of worries about their oil and gas exposure or foreign-currency woes.

3M isn’t crippled by either problem and reiterated its guidance Tuesday.

“Few industrials have been able to do that,” Arnold said. 3M generates just 3 percent of sales from the troubled oil sector and its hit from volatile foreign currencies was nearly 2 percent.

“It is doing well across all geographies and across business segments,” Arnold said. “The strength of their business is that they are very broad based.”

During a conference call with analysts Tuesday, 3M executives noted that the fourth quarter benefited from lower raw-material costs, higher prices and strong results from the United States, China, Japan and Mexico. On the product front, demand grew for 3M respirators in China; health and industrial products in Europe; and for factory and auto adhesives in the United States. The U.S. consumer business also enjoyed strong year-end-shopping-season sales.

“3M delivered strong results in the fourth quarter which culminated in a solid performance for 2014,” CEO Inge Thulin told analysts.

3M’s Safety and Graphics division had the largest growth of any business when measured in local currencies. Sales grew 9.2 percent to $1.4 billion during the fourth quarter. 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 boosted overall sales by $30 million during the quarter.

3M’s industrial unit, which is its largest, saw local currency sales rise 5.9 percent to $2.6 billion during the quarter, amid strong demand from all geographies except Europe and Africa.

3M spent nearly $1.8 billion in research and development in 2014. It also spent about $30 million turning around various product portfolios during the quarter, Thulin said.

For the full 2014, 3M reported earnings of $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.

For 2015, 3M reiterated its full-year guidance and said it expects earnings of $8 per share and sales growth of 3 to 6 percent.