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Share Name | Share Symbol | Market | Type |
---|---|---|---|
3M Company | NYSE:MMM | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
3.06 | 3.02% | 104.30 | 104.99 | 101.33 | 101.33 | 2,504,972 | 15:43:38 |
Fourth-Quarter Highlights:
3M (NYSE:MMM) today reported fourth-quarter earnings of $1.81 per share, an increase of 11.7 percent versus the fourth quarter of 2013. Sales grew 2.0 percent year-on-year to $7.7 billion. Organic local-currency sales grew 6.3 percent with acquisitions adding 0.1 percent to sales. Foreign currency translation reduced sales by 4.4 percent year-on-year.
Operating income was $1.7 billion and operating income margins for the quarter were 21.5 percent. Fourth-quarter net income was $1.2 billion and the company converted 144 percent of net income to free cash flow.
3M paid $544 million in cash dividends to shareholders and repurchased $1.3 billion of its own shares during the quarter.
Organic local-currency sales growth was 9.2 percent in Safety and Graphics, 6.4 percent in Health Care, 6.2 percent in Electronics and Energy, 5.9 percent in Industrial, and 5.8 percent in Consumer. On a geographic basis, organic local-currency sales grew 9.0 percent in Latin America/Canada, 6.9 percent in Asia Pacific, 6.6 percent in the U.S., and 3.3 percent in EMEA (Europe, Middle East and Africa).
Full-year 2014 earnings were $7.49 per share, an increase of 11.5 percent. Sales increased 3.1 percent to a record $31.8 billion with organic local-currency growth of 4.9 percent. Foreign currency translation reduced sales by 1.9 percent. Full-year operating income margins were 22.4 percent, up 0.8 percentage points versus 2013. 3M converted 104 percent of net income to free cash flow for the year and generated 22 percent return on invested capital.
For the full year, 3M paid $2.2 billion in cash dividends to shareholders and repurchased $5.7 billion of its own shares.
“3M delivered strong results in the fourth quarter, which culminated a solid 2014 performance,” said Inge G. Thulin, 3M’s chairman, president and chief executive officer. “Organic growth was positive across all business groups and geographic areas, and operating margins rose by nearly a full point. We once again generated substantial free cash flow, which allowed for continued investment in our businesses and significant return of cash to our shareholders.”
3M affirmed its 2015 full-year performance expectations. The company expects 2015 earnings to be in the range of $8.00 to $8.30 per share with organic local-currency sales growth of 3 to 6 percent. 3M also expects free cash flow conversion to be in the range of 90 to 100 percent.
Fourth-Quarter Business Group Discussion
Industrial
Health Care
Electronics and Energy
Safety and Graphics
Consumer
3M will conduct an investor teleconference at 9:00 a.m. EST (8:00 a.m. CST) today. Investors can access this conference via the following:
Forward-Looking StatementsThis news release contains forward-looking information about 3M's financial results and estimates and business prospects that involve substantial risks and uncertainties. You can identify these statements by the use of words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "will," "target," "forecast" and other words and terms of similar meaning in connection with any discussion of future operating or financial performance or business plans or prospects. Among the factors that could cause actual results to differ materially are the following: (1) worldwide economic and capital markets conditions and other factors beyond the Company's control, including natural and other disasters affecting the operations of the Company or its customers and suppliers; (2) the Company's credit ratings and its cost of capital; (3) competitive conditions and customer preferences; (4) foreign currency exchange rates and fluctuations in those rates; (5) the timing and market acceptance of new product offerings; (6) the availability and cost of purchased components, compounds, raw materials and energy (including oil and natural gas and their derivatives) due to shortages, increased demand or supply interruptions (including those caused by natural and other disasters and other events); (7) the impact of acquisitions, strategic alliances, divestitures, and other unusual events resulting from portfolio management actions and other evolving business strategies, and possible organizational restructuring; (8) generating fewer productivity improvements than estimated; (9) unanticipated problems or delays with the phased implementation of a global enterprise resource planning (ERP) system, or security breaches and other disruptions to the Company's information technology infrastructure; and (10) legal proceedings, including significant developments that could occur in the legal and regulatory proceedings described in the Company's Annual Report on Form 10-K for the year ended December 31, 2013, and its subsequent quarterly reports on Form 10-Q (the “Reports”). Changes in such assumptions or factors could produce significantly different results. A further description of these factors is located in the Reports under "Cautionary Note Concerning Factors That May Affect Future Results" and "Risk Factors" in Part I, Items 1 and 1A (Annual Report) and in Part I, Item 2 and Part II, Item 1A (Quarterly Report). The information contained in this news release is as of the date indicated. The Company assumes no obligation to update any forward-looking statements contained in this news release as a result of new information or future events or developments.
3M Company and Subsidiaries CONSOLIDATED STATEMENT OF INCOME (Millions, except per-share amounts) (Unaudited)Three-months ended
Twelve-months ended
December 31, December 31, 2014 2013 2014 2013 Net sales $ 7,719 $ 7,569 $ 31,821 $ 30,871 Operating expenses Cost of sales 4,027 3,976 16,447 16,106 Selling, general and administrative expenses 1,594 1,576 6,469 6,384 Research, development and related expenses 436 438 1,770 1,715 Total operating expenses 6,057 5,990 24,686 24,205 Operating income 1,662 1,579 7,135 6,666 Interest expense and income Interest expense 32 32 142 145 Interest income (8 ) (11 ) (33 ) (41 ) Total interest expense – net 24 21 109 104 Income before income taxes 1,638 1,558 7,026 6,562 Provision for income taxes 459 442 2,028 1,841 Net income including noncontrolling interest $ 1,179 $ 1,116 $ 4,998 $ 4,721Less: Net income attributable to noncontrolling interest
― 13 42 62 Net income attributable to 3M $ 1,179 $ 1,103 $ 4,956 $ 4,659Weighted average 3M common shares outstanding – basic
637.9 668.5 649.2 681.9Earnings per share attributable to 3M common shareholders – basic
$ 1.85 $ 1.65 $ 7.63 $ 6.83Weighted average 3M common shares outstanding – diluted
650.9 681.3 662.0 693.6Earnings per share attributable to 3M common shareholders – diluted
$ 1.81 $ 1.62 $ 7.49 $ 6.72 Cash dividends paid per 3M common share $ 0.855 $ 0.635 $ 3.42 $ 2.54 3M Company and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEET (Dollars in millions) (Unaudited)Dec. 31,
Dec. 31,
2014 2013 ASSETS Current assets Cash and cash equivalents $ 1,897 $ 2,581 Marketable securities – current 626 756 Accounts receivable – net 4,238 4,253 Inventories 3,706 3,864 Other current assets 1,298 1,279 Total current assets 11,765 12,733 Marketable securities – non-current 828 1,453 Investments 102 122 Property, plant and equipment – net 8,489 8,652 Goodwill and intangible assets – net 8,485 9,033 Prepaid pension benefits (a) 46 577 Other assets (a) 1,554 980 Total assets $ 31,269 $ 33,550 LIABILITIES AND EQUITY Current liabilitiesShort-term borrowings and current portion of long-term debt
$ 106 $ 1,683 Accounts payable 1,807 1,799 Accrued payroll 732 708 Accrued income taxes 435 417 Other current liabilities 2,918 2,891 Total current liabilities 5,998 7,498 Long-term debt 6,731 4,326 Pension and postretirement benefits (a) 3,843 1,794 Other liabilities 1,555 1,984 Total liabilities $ 18,127 $ 15,602 Total equity (a) $ 13,142 $ 17,948 Shares outstanding December 31, 2014: 635,134,594 shares December 31, 2013: 663,296,239 shares Total liabilities and equity $ 31,269 $ 33,550 (a) The changes in 3M’s defined benefit pension and postretirement plans’ funded status, which is required to be measured as of each year-end, significantly impacted several balance sheet amounts. In the fourth quarter of 2014, these required annual measurements decreased prepaid pension benefits by $0.7 billion, increased deferred taxes within other assets by $0.8 billion, increased pension and postretirement benefits' long-term liabilities by $1.9 billion, and decreased stockholders’ equity by $1.8 billion. Other pension and postretirement changes during the year, such as contributions and amortization, also impacted these balance sheet amounts. 3M Company and Subsidiaries CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in millions) (Unaudited)Twelve-months ended
December 31, 2014 2013NET CASH PROVIDED BY OPERATING ACTIVITIES
$ 6,626 $ 5,817 Cash flows from investing activities:Purchases of property, plant and equipment
(1,493 ) (1,665 ) Acquisitions, net of cash acquired (94 ) ―Purchases and proceeds from sale or maturities of marketable securities and investments – net
754 627 Other investing activities 237 182 NET CASH USED IN INVESTING ACTIVITIES (596 ) (856 ) Cash flows from financing activities: Change in debt 1,010 (37 ) Purchases of treasury stock (5,652 ) (5,212 )Proceeds from issuances of treasury stock pursuant to stock option and benefit plans
968 1,609 Dividends paid to shareholders (2,216 ) (1,730 ) Purchase of noncontrolling interest (b) (861 ) ― Other financing activities 148 124 NET CASH USED IN FINANCING ACTIVITIES (6,603 ) (5,246 )Effect of exchange rate changes on cash and cash equivalents
(111 ) (17 )Net increase (decrease) in cash and cash equivalents
(684 ) (302 )Cash and cash equivalents at beginning of year
2,581 2,883Cash and cash equivalents at end of period
$ 1,897 $ 2,581 (b) This primarily related to the purchase of the remaining noncontrolling interest of Sumitomo 3M Limited from Sumitomo Electric Industries, Ltd. for 90 billion Japanese Yen. The transaction closed on September 1, 2014. 3M Company and Subsidiaries SUPPLEMENTAL FINANCIAL INFORMATION NON-GAAP MEASURES (Dollars in millions) (Unaudited) Three-months ended Twelve-months ended December 31, December 31, Free Cash Flow 2014 2013 2014 2013 Net cash provided by operating activities $ 2,183 $ 1,993 $ 6,626 $ 5,817 Purchases of property, plant and equipment (490 ) (543 ) (1,493 ) (1,665 ) Free Cash Flow (c) $ 1,693 $ 1,450 $ 5,133 $ 4,152(c) Free cash flow and free cash flow conversion are not defined under U.S. generally accepted accounting principles (GAAP). Therefore, they should not be considered a substitute for income or cash flow data prepared in accordance with U.S. GAAP and may not be comparable to similarly titled measures used by other companies. The Company defines free cash flow as net cash provided by operating activities less purchases of property, plant and equipment. It should not be inferred that the entire free cash flow amount is available for discretionary expenditures. The Company defines free cash flow conversion as free cash flow divided by net income attributable to 3M. The Company believes free cash flow and free cash flow conversion are useful measures of performance and uses these measures as an indication of the strength of the company and its ability to generate cash.
December 31,
Net Debt 2014 2013 Total Debt $ 6,837 $ 6,009Less: Cash and Cash Equivalents and Marketable Securities
3,351 4,790 Net Debt (d) $ 3,486 $ 1,219 (d) The Company defines net debt as total debt less the total of cash, cash equivalents and current and long-term marketable securities. 3M considers net debt and its components to be an important indicator of liquidity and a guiding measure of capital structure strategy. Net debt is not defined under U.S. GAAP and may not be computed the same as similarly titled measures used by other companies.December 31,
Working Capital Index 2014 2013 Net Working Capital Turns (e) 5.0 4.8 (e) The Company uses various working capital measures that place emphasis and focus on certain working capital assets and liabilities. 3M’s net working capital index is defined as quarterly net sales multiplied by four, divided by ending net accounts receivable plus inventory less accounts payable. This measure is not recognized under U.S. GAAP and may not be comparable to similarly titled measures used by other companies.Twelve-months ended
December 31, Return on Invested Capital 2014 2013 Return on Invested Capital (f) 22.0 % 20.0 % (f) The Company uses non-GAAP measures to focus on shareholder value creation. 3M uses Return on Invested Capital (ROIC), defined as annualized after-tax operating income (including interest income) divided by average operating capital. Operating capital is defined as net assets (total assets less total liabilities) excluding debt. This measure is not recognized under U.S. GAAP and may not be comparable to similarly titled measures used by other companies. 3M Company and Subsidiaries SALES CHANGE ANALYSIS (Unaudited) Three-months ended December 31, 2014Europe,
Middle
Latin Sales Change Analysis United Asia-East and
America/
World-
By Geographic Area StatesPacific
Africa
Canada Wide Volume – organic 6.3 % 7.2 % 1.9 % 6.0 % 5.6 % Price 0.3 (0.3 ) 1.4 3.0 0.7 Organic local-currency sales 6.6 6.9 3.3 9.0 6.3 Acquisitions 0.3 – – – 0.1 Translation – (3.8 ) (9.7 ) (9.0 ) (4.4 ) Total sales change 6.9 % 3.1 % (6.4) %
– % 2.0 % Three-months ended December 31, 2014Organic
Worldwide local- Total Sales Change Analysis currency Acqui- Divest- Trans- sales By Business Segment sales sitions itures lation change Industrial 5.9 % – % – % (4.5) %
1.4 % Safety and Graphics 9.2 % – % – % (5.8) %
3.4 % Electronics and Energy 6.2 % – % – % (2.9) %
3.3 % Health Care 6.4 % 0.6 % – % (4.6) %
2.4 % Consumer 5.8 % – % – % (3.6) %
2.2 % Twelve-months ended December 31, 2014Europe,
Middle
Latin Sales Change Analysis United Asia-East and
America/ World- By Geographic Area States PacificAfrica
Canada Wide Volume – organic 4.4 % 6.2 % 2.1 % 0.2 % 3.9 % Price 0.5 0.1 1.1 4.3 1.0 Organic local-currency sales 4.9 6.3 3.2 4.5 4.9 Acquisitions 0.2 – – – 0.1 Divestitures (0.1 ) – – – – Translation – (2.2 ) (1.6 ) (7.5 ) (1.9 ) Total sales change 5.0 % 4.1 % 1.6 % (3.0) %
3.1 % Twelve-months ended December 31, 2014 Organic Worldwide local- Total Sales Change Analysis currency Acqui- Divest- Trans- sales By Business Segment sales sitions itures lation change Industrial 4.9 % – % – % (1.8) %
3.1 % Safety and Graphics 5.4 % – % – % (2.7) %
2.7 % Electronics and Energy 5.2 % – % – % (1.3) %
3.9 % Health Care 5.8 % 0.4 % – % (1.7) %
4.5 % Consumer 3.9 % – % (0.1) %
(1.8) %
2.0 %BUSINESS SEGMENTS(Dollars in millions)(Unaudited)
Effective in the first quarter of 2014, 3M transferred a product line between divisions within different business segments and made other changes within business segments in its continuing effort to improve the alignment of its businesses around markets and customers.
The product move between business segments was as follows:
In addition, other changes within business segments were as follows:
Effective in the second quarter of 2014, within the Electronics and Energy business segment, 3M combined three existing divisions into two new divisions. A large portion of both the Electronics Markets Materials Division and the Electronic Solutions Division were combined to form the Electronics Materials Solutions Division, which focuses on semiconductor and electronics materials and assembly solutions. The Optical Systems Division, the remaining portion of the Electronic Solutions Division and a portion of the Electronics Markets Materials Division were combined to form the Display Materials and Systems Division, which focuses on delivering light, color and user interface solutions.
Effective in the fourth quarter of 2014, within the Industrial business segment, the Personal Care Division, which focuses on tapes and attachment systems for infant and adult hygiene, was combined with the Industrial Adhesives and Tapes Division.
The financial information presented herein reflects, for all periods presented, the impact of these realignments. Refer to 3M's Current Report on Form 8-K furnished on March 5, 2014, and 3M's Current Report on Form 8-K filed on May 15, 2014, for additional information concerning the business segment realignments effective in the first quarter of 2014.
BUSINESS SEGMENT INFORMATIONThree-months ended
Twelve-months ended
NET SALES December 31, December 31, (Millions) 2014 2013 2014 2013 Industrial $ 2,627 $ 2,589 $ 10,990 $ 10,657 Safety and Graphics 1,367 1,322 5,732 5,584 Electronics and Energy 1,371 1,327 5,604 5,393 Health Care 1,392 1,359 5,572 5,334 Consumer 1,128 1,103 4,523 4,435 Corporate and Unallocated (1 ) 2 4 8 Elimination of Dual Credit (165 ) (133 ) (604 ) (540 ) Total Company $ 7,719 $ 7,569 $ 31,821 $ 30,871 BUSINESS SEGMENT INFORMATIONThree-months ended
Twelve-months ended
OPERATING INCOME December 31, December 31, (Millions) 2014 2013 2014 2013 Industrial $ 538 $ 554 $ 2,389 $ 2,307 Safety and Graphics 285 254 1,296 1,227 Electronics and Energy 257 221 1,115 954 Health Care 431 425 1,724 1,672 Consumer 254 226 995 945 Corporate and Unallocated (67 ) (72 ) (251 ) (321 ) Elimination of Dual Credit (36 ) (29 ) (133 ) (118 ) Total Company $ 1,662 $ 1,579 $ 7,135 $ 6,666About 3M3M captures the spark of new ideas and transforms them into thousands of ingenious products. Our culture of creative collaboration inspires a never-ending stream of powerful technologies that make life better. 3M is the innovation company that never stops inventing. With $32 billion in sales, 3M employs 90,000 people worldwide and has operations in more than 70 countries.
3MInvestor Contacts:Matt Ginter, 651-733-8206orBruce Jermeland, 651-733-1807orMedia Contact:Fanna Haile-Selassie, 651-736-0876
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