3M’s Profits Grow But Fail To Meet Expectations
3M, the Maplewood behemoth behind Post-it notes, Scotch tape and reflective traffic signs, posted its second-quarter earnings with a 2.6 percent profit growth and increased margins. Company sales reached $7.7 billion—a 5.5 percent decline from last year—which amounted to $1.3 billion in net income, or earnings of $2.02 per share.
Almost every department at 3M saw growth in local-currency sales. 3M’s safety and graphics division improved the most at 4.9 percent; health care and consumer departments both had a 3.4 percent jump and industrial products increased 1.4 percent. Electronics and energy felt the only decline, dipping 3 percent from the year prior. In total, organic U.S. sales grew 4.1 percent as no other international market reached beyond one point of growth.
The Wall Street Journal reports that 3M was hurt by lagging sales of materials used in consumer electronics and areas of its renewable energy business, such as film for solar panels. Demand was highest for water-purification filters, masking tape used for painting, and airplane materials.
The biggest thorn in 3M’s side has been the foreign currency translation that has reduced sales in some departments by as much as 9 percent. 3M CEO Inge Thulin said the company plans to revise its growth outlook “to account for lower-than-expected global economic growth.”
The company narrowed its earnings expectations down to $7.80 to $8 per share Previous expectations ranged from $7.80 to $8.10 per share earlier in the year.
Thulin hyped growth expectations by emphasizing their June acquisition of Capital Safety, a safety equipment manufacturer purchased for $2.5 billion. He said that amassing Capital Safety’s product portfolio would help to “build on [the company’s] fundamental strengths in technology, manufacturing, global capabilities and brand.”