MINNEAPOLIS – 3M Co. posted a better-than-expected first-quarter profit as strong sales to auto and airplane makers and growth in Latin America and Canada helped offset weakness in Europe and Asia.
The Maplewood, Minn. company does business worldwide and across most major industries. It sells office supplies such as Post-it notes, granules for shingles, tapes, and coatings for LCD television screens. So investors tend to view its financial performance as a window into the world’s economy.
3M’s results on Tuesday showed U.S. sales growth of 6.3 per cent and a jump of 8.4 per cent in Latin America and Canada.
Sales were weaker elsewhere. 3M posted a 1.9 per cent sales decline in Asia as growth in China slowed. Sales to Western Europe declined. Economies there “have stabilized at least for the moment, so things are not getting worse sequentially, but they’re also not getting better,” said David W. Meline, the company’s chief financial officer.
Net income rose 4 per cent to $1.13 billion, or $1.59 per share. It would have been higher by another 4 cents per share if not for charges for a voluntary early retirement program. The profit was well ahead of the $1.48 per share expected by analysts surveyed by FactSet. Revenue rose 2.4 per cent to $7.49 billion, matching analyst expectations.
3M raised the low end of its profit guidance for this year to $6.35 to $6.50 per share. Previously it had predicted $6.25 to $6.50 per share.
Shares rose $1.36, or 1.6 per cent, to close at $88.49 Tuesday.
3M’s top sector was industrial and transportation, where profits rose 16.2 per cent to $600 million on strong sales to aerospace, automotive, and abrasives makers. The sales gains were worldwide, including double-digit growth in the U.S.
Continuing weakness in television sales hurt. 3M rode the homebuilding wave and the fast adoption of flat-screen televisions. The coatings it made for those screens were once a profit driver. But in the most recent quarter, profits in its display and graphics unit fell 29 per cent to $163 million, with sales down 11.8 per cent to $832 million. In 2011, the unit’s profits fell 17 per cent on a 5 per cent drop in sales.
3M expects the electronics market to get better starting in the second half of the year.
The company’s health care unit was a good example of how the global economy shows up on its bottom line. Profits grew 9 per cent to $402 million on strong demand for software that tracks patient records as well as wound care and infection prevention. But sales in Europe fell 6 per cent because of economic softness and cuts in government spending.
3M is looking to accelerate its growth in the mining, oil, and gas industries by adapting its current tapes and filters to those fast-growing industries.
New CEO Inge G. Thulin said 3M has “confidence in our ability to deliver, even against weak segments and regions and against an uncertain global economy.”
Thulin became president and CEO in February, and is expected to be named chairman at the company’s annual meeting on May 8.