3M Second-Quarter Sales Grow 14.1%

3M (NYSE: MMM), St. Paul, MN, reported second-quarter 2011 sales of $7.7 billion, up 14.1 percent year-on-year. Profit rose 3.9 percent to $1.2 billion.

Sales increased in all geographic regions, with Europe up 24.1 percent, Latin America/Canada up 20.2 percent, Asia Pacific up 11 percent and the U.S. up 8.7 percent. Five of the company’s six business segments expanded sales in the quarter, with particular strength in Industrial and Transportation at 24.6 percent and Safety, Security and Protection Services at 19.7 percent.

The company estimates that combined direct and indirect business disruption resulting from the March earthquake in Japan reduced second-quarter sales growth by 2.4 percentage points. Without these estimated impacts, second-quarter sales growth was 16.5 percent, operating margins were 22.1 percent and earnings per share growth was 8.4 percent.

On a worldwide basis, second-quarter organic sales volumes rose 3.2 percent (5.6 percent excluding Japan earthquake impacts) and selling prices increased 0.8 percent. Acquisitions added 4 percent and foreign exchange impacts added 6.1 percent to second-quarter sales growth.

Industrial and Transportation sales were $2.6 billion, up 17.5 percent in local currency, including 7.1 percent from acquisitions.

Double-digit local-currency sales growth was seen in renewable energy, abrasives systems, aerospace, industrial adhesives and tapes, energy and advanced materials and automotive aftermarket.

Sales in automotive OEM business declined in local-currency terms, impacted by Japan earthquake-related disruptions.

Sales rose by 40 percent in Europe, driven by a combination of organic growth, currency translation and the acquisition of Winterthur; sales rose by 28 percent in Asia Pacific, 22 percent in Latin America/Canada and 13 percent in the U.S.

Operating income of $544 million; operating margin of 20.6 percent.

Health care sales were $1.3 billion, up 7.8 percent in local currency, including 5 percent from acquisitions.

Double-digit local-currency sales growth in infection prevention, boosted by the October 2010 acquisition of Arizant; Arizant continues to outperform sales and profit expectations and its growth pipeline remains strong.

Positive local-currency sales growth in skin and wound care, health information systems, food safety and oral care; local-currency sales declined in drug delivery systems business.

Sales rose at a double-digit rate in every geographic region, with Asia Pacific up 24 percent, Latin America/Canada up 20 percent, Europe up 14 percent and the U.S. up 10 percent.

Operating income was $364 million, with operating margin of 28.7 percent.

Consumer and office sales were $1 billion, up 4 percent in local currency.

Strongest growth was in home care, consumer health care and stationery products businesses.

Sales grew by 21 percent in Latin America/Canada and Asia Pacific and 20 percent in Europe.

U.S. sales rose 1 percent, impacted by weak consumer confidence and continued high unemployment levels.

3M is investing in developing economies to build brand awareness and sales momentum; second-quarter sales rose 51 percent in China and 29 percent in India.

Operating income for this segment was $202 million with margins of 19.5 percent.

Safety, Security and Protection Services sales rose 12.4 percent in local currency to $1 billion, including 7 percent from acquisitions; H1N1-related comps reduced sales growth by 2.7 percent.

Double-digit local-currency growth was seen in occupational health and environmental safety, security systems and track and trace businesses.

All geographic regions posted sales growth, led by Asia Pacific at 24 percent and Latin America/Canada at 23 percent.

Operating income rose 22.7 percent to $242 million; operating margin of 24.0 percent.

Display and Graphics sales were $973 million, down 10.6 percent in local currency.

Sales declined 22 percent in optical systems, driven by LCD TV; excess channel inventory and market maturation are driving OEMs to reduce product performance and costs to improve profitability.

Single-digit local-currency sales growth was seen in both commercial graphics and architectural markets.

Traffic safety's sales declined slightly in local currency; highway construction government funding remains soft in the U.S. and Western Europe.

Operating income was $222 million; operating margin was 22.8 percent.

Electro and Communications sales were $864 million, up 8.2 percent in local currency.

Double-digit local-currency growth in electronics markets materials business, driven by 3M solutions for the fast-growing semiconductor manufacturing, tablet PC and smart phone markets.

Single-digit local-currency growth was seen in electrical products and telecom-related businesses.

Sales grew 21 percent in Europe, 17 percent in Latin America/Canada and 16 percent in Asia Pacific.

Operating income increased 13.8 percent to $200 million; operating margin of 23.1 percent.