3M First-Quarter Sales Rise 15 Percent to a Record $7.3 Billion
26 April 2011
3M has reported record first-quarter sales of $7.3 billion, up 15.2 percent year-on-year, including an 8.9 percent increase in organic sales volumes. Earnings rose 15.5 percent to $1.49 per share and operating margins for the quarter were 21.6 percent. All six of the company’s business segments posted operating margins above 21 percent in the quarter.
Sales increased at a double-digit rate in all geographic regions, with Asia Pacific up 21.0 percent, Latin America/Canada up 19.5 percent, Europe up 13.1 percent and the United States up 10.2 percent. All six of 3M’s business segments expanded sales in the quarter, with particular strength in Electro and Communications at 20.5 percent, Industrial and Transportation at 20.3 percent and Safety, Security and Protection Services at 14.4 percent.
Sales in emerging markets grew by 24 percent in the first quarter and now comprise 34 percent of 3M’s worldwide sales. Sales grew by 30 percent in India, 27 percent in China/Hong Kong and 25 percent in Brazil.
George W. Buckley, 3M chairman, president and chief executive officer noted. “New product flow is accelerating, boosted by higher investment in laboratory, sales and marketing and manufacturing capacity. Sales are growing faster as a result and our businesses are growing most everywhere in the world.” The company noted that its new product vitality index, which measures the percent of sales attributed to new products, is projected to rise again in 2011, on top of a record 31 percent in 2010.
“In addition, we were able to more than overcome the impact of the terrible earthquake in Japan and its tragic aftermath in the tsunami and nuclear power plant issues,” Buckley continued. “I would like to thank all our employees for their outstanding execution in the first quarter, with special heartfelt thanks to our courageous Japanese team for selflessly responding to this challenge. Our hearts go out to all of them and to their nation.”
3M increased its 2011 performance expectations. The company now expects full-year earnings will be in the range of $6.05 to $6.25 per share versus a prior expectation of $5.95 to $6.20 per share. Included in this estimate is a $0.22 per share year-on-year increase in pension and postretirement benefit expense. Excluding the pension and postretirement expense increase, 2011 earnings would be in the range of $6.27 to $6.47 per share, an increase of 11 to 15 percent year-over-year. The company also updated its expectation for organic sales volume growth to a range of 6.0 to 7.5 percent versus a prior range of 5.5 to 7.5 percent. 3M expects that currency effects will add 2 to 3 percent to sales for the year and acquisitions will add another 4 to 6 percent.
First-quarter worldwide sales totaled $7.3 billion, up 15.2 percent compared to the first quarter of 2010. Organic volumes grew 8.9 percent, selling prices rose 0.1 percent, acquisitions added 3.2 percent and foreign exchange added 3.0 percent to sales in the quarter.
Local-currency sales including acquisitions grew in all six of the company’s business segments, with Electro and Communications up 17.1 percent, Industrial and Transportation up 16.9 percent, Safety, Security and Protection Services up 11.3 percent, Health Care up 9.7 percent, Consumer and Office up 7.0 percent and Display and Graphics up 6.4 percent. All geographic regions posted double-digit local-currency sales growth, with Asia Pacific up 15.6 percent, Latin America/Canada up 12.3 percent, Europe up 10.5 percent and the U.S. up 10.2 percent.