By James R. Hagerty
3M Co. reinforced its reputation as a steady performer in
turbulent times by posting a 6.9% increase in profit for the fourth
quarter and promising further growth in 2015.
The decline of the euro, yen and other currencies is hurting
results at the St. Paul, Minn.-based industrial conglomerate in
dollar terms. But the company is gaining from lower raw material
costs, especially on plastics and other oil-derived materials used
in making 3M's adhesives and films.
Unlike Caterpillar Inc. and many other big U.S. industrial
companies, 3M doesn't have a major exposure to spending by oil
companies on exploration and production, expected to plunge in line
with oil prices. Nick Gangestad, chief financial officer, told
analysts Tuesday that the oil and gas industry accounts for about
3% of 3M sales, and not all of that is related to exploration and
production.
The company, whose best-known products include Scotch tape and
Post-it notes, reaffirmed its forecast that earnings for 2015 as a
whole will be $8 to $8.30 per share, up from $7.49 in 2014 and
$6.72 in 2013.
3M can mitigate the effect of the stronger dollar because it has
large production capacities in Europe and Asia, allowing it to
serve local markets without exporting in many cases. Mr. Gangestad
said 3M will look for opportunities to buy materials from suppliers
in countries whose currencies have weakened. 3M may also export
more products from its factories in Europe that make medical and
industrial supplies.
Inge Thulin, chief executive officer, said 3M got a boost from
an improving trend in Latin America. "Brazil was slightly positive
[in the latest quarter], and Mexico did very, very well," he said.
Sales of abrasives, adhesives and other materials to the U.S. auto
and aerospace industry also were strong, the company said.
Organic sales growth, excluding the effects of exchange rates
and recent acquisitions, was 6.3% in the quarter, slightly above
the company's long-run target of 4% to 6% growth.
Fourth-quarter profit was $1.18 billion, or $1.81 per share, up
from $1.10 billion, or $1.62 a share, a year earlier. Wall Street
had expected earnings per share of about $1.80 for the latest
quarter. Sales grew 2% to a record $7.72 billion.
3M makes adhesives, abrasives, coatings and films used in
thousands of industrial and consumer applications, including
manufacturing and repair of cars and aircraft. 3M's products
include Ace bandages, Nexcare skin cream, reflective materials for
highway signs, granules used in roofing shingles, Filtrete furnace
filters and films for large advertising displays.
Write to James R. Hagerty at bob.hagerty@wsj.com
Access Investor Kit for Caterpillar, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US1491231015
Access Investor Kit for 3M Co.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US88579Y1010