3M's Sales Growth Falls Short -- Update

By James R. Hagerty 

3M Co.'s sales growth in the second quarter fell short of Wall Street expectations amid sluggishness in Asia and Europe and weak demand for materials used in solar-energy panels and flat screens for electronic devices.

Profit grew 2.6% and margins widened, but the St. Paul, Minn.-based maker of adhesives, abrasives and films slightly reduced its forecast for full-year earnings per share. The company's new forecast range is $7.80 to $8, down from the range of $7.80 to $8.10 announced three months ago. In 2014, earnings per share were $7.49.

The company, whose best-known products include Scotch tape and Post-it Notes, said operating profit margins in the second quarter were 23.9%, up 1.1 percentage points from the already strong year- earlier level. Much of that improvement came from lower raw-material costs.

3M reported strong demand for water-purification filters and materials used in making airplanes, cars and roofing shingles.

Profit was $1.3 billion, or $2.02 per share, up from $1.27 billion, or $1.91 per share, a year earlier. Wall Street had expected earnings of about $2 a share, according to FactSet. Sales fell 5.5% to $7.69 billion, well below analyst forecasts of around $7.8 billion. Organic sales, excluding currency effects and recent acquisitions, grew just 1.8%, far below the company's long-run target of 4% to 6%. General Electric Co., another giant industrial conglomerate, had 5% organic growth in the latest quarter.

3M's organic sales grew 4.1% in the U.S. and 17% in Mexico but were down 1% in Western Europe and 2% in China.

3M's thousands of products include Scotch-Brite sponges, masking tape, medical and dental supplies, Nexcare skin cream and automated systems used to track books in libraries.

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