3M’s second quarter beats expectation
3M Company, the Maplewood-based giant best known for making Scotch tape and Post-It Notes, beat expectations for its second quarter with strong growth across all five businesses, most notably Safety/Graphics and Industrial, officials announced Tuesday.
For the quarter ended June 30, revenues rose 7.4 percent to $8.4 billion. Net earnings jumped 17 percent to $1.86 billion or $3.07 a share. Excluding divestitures and other one time items, adjusted earnings were $2.59.
Results, which posted before the market opened, beat expectations.
The consensus from Wall Street analysts forecast earnings of $2.58 a share and revenues of $8.37 billion.
“3M had a strong quarter, including organic growth of 6 percent that was broad-based across all business groups and geographic areas,” said 3M’s newly promoted CEO Michael Roman in a statement. “Our team delivered record sales and a double-digit increase in earnings per share, while keeping our commitment to investing in our business and returning cash to shareholders. Going forward we will continue to prioritize 3M’s portfolio, strengthen our innovation capabilities and accelerate our transformation, while developing our people.”
During the quarter, 3M enjoyed growth across its portfolio. The biggest surge was in Safety and Graphics, where sales bolted 15.8 percent to $1.8 billion.
3M’s largest division - Industrial - followed, as sales rose 6.8 percent to $3.1 billion. Industrial’s solid performance served as further proof that 3M has largely overcome the global 2016 and early 2017 sluggishness caused by downturns in China, Japan and the oil/gas, mining, and electrical sectors.
During April, May and June, 3M Industrial’s business was led by strong results from its separation and purification, advanced materials, abrasives, and industrial adhesives and tapes businesses, officials said.
3M Safety and Graphics was aided by acquisitions and by sales of personal safety, commercial solutions, and transportation safety products.
3M’s other businesses also did well during the second quarter. Health Care sales rose 4.9 percent, Consumer rose 4.6 percent and Electronics and Energy rose 3.6 percent.
On a geographic basis, Europe, Asia and the United States reported the strongest growth during the quarter, followed by Latin America and Canada.
Beyond sales, it’s been a busy quarter for the global giant
In May, 3M successfully defended itself against the first of many defective product lawsuits regarding its Bair Hugger surgical blanket.
In June, 3M sold its fiber optics telecommunications markets division to Corning Inc. for $870 million. Effective July 1, Roman, a 3M lifer and 3M’s chief operating officer became CEO, succeeding Inge Thulin, who will remain on as executive chairman of the board.
3M updated its guidance for full year 2018. 3M now expects earnings to be $9.08 to $9.38 per share versus $8.68 to $9.03 previously forecast.
However, excluding the impact from the telecommunication markets business divestiture gain, a first-quarter legal settlement, and expenses related to the new Tax Cuts and Jobs Act, 3M now expects adjusted 2018 earnings to be $10.20 to $10.45 per share.
That compares to the prior forecast of $10.20 to $10.55 per share. “The update to the range reflects the impact of the divested income associated with the communication markets business which was not included in prior guidance,” officials said.
3M’s stock is trading near $198 a share, down from its January record high of $259.77 per share.
Dee DePass • 612-673-7725