3M Posts In-Line Q1 Earnings, Grows Y/Y - Analyst Blog

3M Company MMM reported first quarter 2014 net income of $1,207 million or $1.79 per share compared with $1,129 million or $1.61 a share in the year-earlier quarter. The reported earnings were in line with the Zacks Consensus Estimate. The increase in earnings was driven by higher sales.
    
Net sales during the quarter were $7.8 billion, up 2.6 % year over year, but below the Zacks Consensus Estimate of $7.9 billion. The increase in sales was driven by 4.6% organic local currency sales growth. However, the positives were partly offset by currency impact of 2.0%. The company reported solid organic local-currency sales growth across all geographic regions.

Operating income for first quarter 2014 was $1.7 billion, while operating margin was 21.9%.

Segment Results

Industrial segment sales increased 3.1% year over year in U.S. dollars to $2.8 billion in the reported quarter driven by an increase in sales in all major geographies. Organic local-currency sales increased 4.9% year over year due to strong sales in 3M Purification, automotive OEM, advanced materials, abrasive systems, and aerospace and commercial transportation.

Health Care segment sales climbed 4.8% in U.S. dollars to $1.4 billion in the reported quarter, aided by positive growth in all major geographic regions. Organic local-currency sales increased 6.2% year over year with growth in drug delivery, health information systems, food safety, critical and chronic care, and infection prevention.

Consumer segment revenues were $1.1 billion in the reported quarter, down 0.2% year over year in U.S. dollars as divestitures and foreign currency translations reduced sales. Organic local-currency sales growth of 2.6% was attributable to consumer health care and home care business.
 
Safety and Graphics segment sales rose 1.7% year over year in U.S. dollars to $1.4 billion with strong performances in Asia Pacific and Latin America/Canada. Organic local-currency sales growth of 4.6% benefited from roofing granules and commercial solutions.

Electronics and Energy segment revenues were $1.3 billion in the reported quarter, up 2.7% in U.S. dollars as sales increased in Latin America/Canada and Asia Pacific. Organic local-currency sales edged up 4.1% driven by strong growth in optical systems.

Balance Sheet and Cash Flow

Cash and cash equivalents as of Mar 31, 2014 were $1,954 million compared with $2,928 million as of Mar 31, 2013. Long-term debt stood at $4,401 million compared with $4,864 million as of Mar, 31 2013. Free cash flow as of Mar 31, 2014 stood at $799 million versus $670 million in the prior-year period.

During the reported quarter, 3M converted 66% of net income to free cash flow. 3M returned $2.3 billion to shareholders via dividends and share repurchases and increased first-quarter per-share dividend by 34.6% to 85.5 cents.

Outlook    

3M maintained its EPS in the range of $7.30 to $7.55 with an organic local-currency sales growth of 3%–6% in 2014. Also foreign currency impacts are expected to reduce sales by 1% for the year. Going forward, the company's position will be strengthened through increased investments in innovation and more aggressive capital deployment.

Share prices dipped in pre-market trading as investors probably expected a more positive outlook from the company.

3M currently has a Zacks Rank #3 (Hold). Other stocks that look promising and are worth a look now include Noble Group Ltd. (NOBGY), Federal Signal Corp. FSS  and Icahn Enterprises, L.P. IEP, each having a Zacks Rank #1 (Strong Buy).


 
FED SIGNAL CP FSS: Free Stock Analysis Report
 
ICAHN ENTERPRIS IEP: Get Free Report
 
3M CO MMM: Free Stock Analysis Report
 
NOBLE GROUP LTD (NOBGY): Get Free Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research
Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!