3M CEO Thulin Reveals Five-Year Growth Plan
3M Company is targeting “organic” revenue growth—which includes existing businesses—of between 4 and 6 percent annually between 2013 and 2017, Chairman, President, and CEO Inge Thulin told investors and analysts at a Thursday meeting in St. Paul.
Thulin’s five-year organic revenue growth goal would outpace the 3 percent average annual growth reported between 2003 and 2012 but represents a decrease from the 7 to 8 percent goal that his predecessor, George Buckley, set in 2009, according to Bloomberg Businessweek, The expansion will be driven by developing markets, as sales in those areas will account for 40 to 45 percent of 3M’s total sales by 2017, Thulin reportedly said at Thursday’s meeting. (Sales in those regions accounted for 35 percent of sales in 2012.)
Meanwhile, 3M aims to increase its earnings per share by 9 to 11 percent annually over the next five years, Thulin told meeting attendees. That’s compared to average annual earnings per share growth of 11 percent between 2003 and 2010, according to Businessweek.
The Maplewood-based manufacturing giant also plans to boost research spending to 6 percent of sales by 2017, said Thulin, who took the helm in February. (That’s up from 5.3 percent of sales in 2011, Businessweek reported.)
“Innovation is at the center of our plan, so it is essential that we strengthen our commitment to R&D,” Thulin said in a statement. “I am confident that 3M innovation, along with world-class talent, strong R&D and manufacturing capabilities, unparalleled global reach, and our unrelenting focus on operational excellence, will drive future success for our company and our shareholders.”
3M last month reported record third-quarter earnings of $1.16 billion, or $1.65 per share, for the third quarter that ended September 30, up 8.6 percent from the same period in 2011. Revenue, meanwhile, totaled $7.5 billion, down 0.4 percent. But the company lowered its full-year earnings outlook due to “current economic realities.” It expects 2012 earnings to be in the range of $6.27 to $6.35 per share, down from the previously expected $6.35 to $6.50 per share.
Thulin said Thursday that several 3M businesses that together comprise $2.5 billion in annual sales are under strategic review to be fixed, scaled up, sold, or closed, Businessweek reported.
Thulin noted at Thursday’s meeting that acquisitions would only be a “complement” to growing sales from existing businesses and wouldn’t be a key strategy, according to Businessweek. 3M reportedly plans to make about $1 billion to $2 billion of acquisitions a year that will add about 1 to 3 percentage points to annual sales growth. Last month, 3M agreed to pay $860 million for Ceradyne, Inc., a Costa Mesa, California-based company that makes high-tech ceramics. But that same month, amid regulatory concerns, the company terminated its planned $550 million acquisition of Avery Dennison Corporation’s office supply operations.
3M is among Minnesota’s five largest public companies based on revenue, which totaled $29.6 billion in 2011. Last month, the company restructured its business units. Shares of the its stock were trading down 0.6 percent at $88.88 early Thursday afternoon.