News/Case Summaries

3M: signals of continued economic uncertainty


April 26, 2011

3M Co. says the global economy continues to send mixed signals, as sectors like automotive and technology show strength but the housing market remains weak.

"We keep on hoping for a quarter without this level of uncertainty, but that doesn't seem to be likely for a while," the manufacturing conglomerate's CEO George Buckley said in a conference call.

Still, 3M remains "much more optimistic than pessimistic," Buckley said. His company, which makes everything from Post-its and Scotch Tape to stethoscopes and films for LCD TVs, on Tuesday reported a 16 percent increase in first-quarter profit and raised its earnings expectations for the year. That sent shares up about 2 percent.

The Maplewood, Minn. company now expects to earn between at $6.27 to $6.47 per share this year, excluding an increase in pension and post-retirement benefits. 3M attributed the improved outlook to newer products like materials used in screens for tablet computers like Apple's iPad. The company expects problems in Japan will cut earnings by about 10 to 13 cents per share this year.

Analysts' average estimate is $6.24 per share, according to FactSet.

3M said its display and graphics segment is experiencing "very robust" demand and should post a double-digit sales gains. In addition to films for tablet computers, the unit produces touch screen systems and computer privacy filters.

Sales in 3M's biggest unit, Industrial and Transportation, which produces over 1,000 products for cars like abrasives and paint finishings, rose 20.3 percent.

Even as it rides technological advances and the improved auto market, 3M remains concerned about the impact of a weaker dollar, rising oil prices and still-high unemployment in the U.S. and Europe. And while construction demand improves, Buckley said the housing market continues to be a drag on the pace of economic recovery.

"Just when you think it's at the bottom it seems to get worse," he said. "I think housing prices will still have somewhere to fall this year. But at some point that will attract more buyers."

3M makes a number of products for homes including algae-resistant roofing, window films, air filters and painter's tape.

New-home sales rose 11 percent last month from February. That follows three straight monthly declines. Still, the pace remains far below the level that economists view as healthy.

3M earned $1.08 billion in the first quarter, or $1.49 per share, compared with $930 million, or $1.29 per share, a year earlier.

Revenue rose 15 percent to $7.31 billion. The results topped analysts' expectations of $1.42 per share on revenue of $6.84 billion.

Shares rose 1.9 percent to $95.94.

Sales increased by double-digit percentages in all regions the company serves. Asia-Pacific remained strong with 21 percent growth. But business is picking up in other areas _ sales in the United States rose 10.2 percent.

Emerging markets sales grew by 24 percent and now make up more than a third of 3M's worldwide total. Sales grew by 30 percent in India, 27 percent in China/Hong Kong and 25 percent in Brazil.

All six of 3M's business segments had higher sales in the quarter, with the biggest jump in Electro and Communications at 20.5 percent. That segment makes everything from police tape to static control products.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.