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3M, St. Paul, MN, reported first-quarter sales of $5.1 billion, a decrease of 21.3% from the first quarter of 2008. Profit was $518 million, about half of what it was a year ago.
As expected, the global economic slowdown dramatically affected our businesses in the first quarter, said George W. Buckley, president and CEO. "Substantial end-market declines and continued inventory takedowns in major industries, including automotive, consumer electronics and general industrial manufacturing, resulted in significantly lower sales and profits.
"Accordingly, we aggressively reduced our cost structure, lowered manufacturing output and intensified our attention to operational improvement. The combination of these actions drove strong operating income margins of more than 17%."
Local-currency sales including acquisitions decreased 13.9%, and foreign exchange impacts reduced sales by an additional 7.1 points in the quarter.
Industrial and Transportation
Sales decreased 27.5% to $1.6 billion. Local-currency sales declined 20.7% including a 2.8% increase from acquisitions. Foreign currency translation reduced sales by 6.8%.
50% decline in North American auto builds directly impacted 3M's auto OEM business; many other industrial market segments were down by more than 20%. Local-currency sales down mid-single digits in Latin America; all other major geographies declined by double-digits.
Sales of $1 billion were down 7.7%, including a negative 9.6% impact from foreign currency translation. Local-currency sales growth of 1.9%, largely from acquisitions.Positive local-currency growth in oral care and medical supplies businesses.
Local-currency sales declined in drug delivery. Geographically, Latin America posted double-digit local-currency sales growth. Operating income declined slightly to $311 million, with margins of 31.2%.
Consumer and Office
Sales of $795 million, down 7.1%, mainly due to foreign currency translation. Local-currency sales were flat, including a 2.9% benefit from acquisitions. Positive local-currency sales growth in do-it-yourself and stationery products businesses.
Regionally, Latin America, Canada and U.S. delivered positive local-currency sales growth. Profits down slightly to $167 million, with operating margins of 21.1%.
Safety, Security and Protection Services
Sales of $694 million, down 15.4%. Sales growth in local currency down 3.6%, including positive growth of 10.6% from acquisitions, primarily Aearo Technologies, Inc. The 2008 divestiture of HighJump Software, Inc. hurt sales growth by 2.2%. Foreign currency translation decreased sales by 9.6%.
Global industrial manufacturing slowdown hurt organic sales in personal safety products. Sales declined in all major geographies. Profits down 34% to $129 million, with operating margins of 18.6%.
Display and Graphics
Sales declined 30.2% to $611 million, with local-currency sales down 26.6%. Foreign currency translation reduced sales by 3.6%. Local-currency sales were flat in traffic safety systems.
Optical systems' sales declined 44% year-on-year, which negatively impacted Display and Graphics' total sales growth by nearly 12%. Double-digit decline in commercial graphics sales as customers reduced advertising spend. Operating profits were $66 million, with a 10.9% margin.
Electro and Communications
Sales declined 34.8% to $480 million, including a 5.0 point penalty from foreign currency translation. Local-currency sales down 29.8% due to significant double-digit market declines in many served markets--electronics, semiconductor, telecommunications and appliance.