3M Co.'s first-quarter results beat investors' expectations with strong gains across the globe, leading its executives on Tuesday to raise their outlook for the rest of 2017.
The company's profit jumped nearly 4 percent to $1.3 billion, or $2.16 a share, well above the $2.06 a share that was the consensus forecast of investment analysts.
Sales also grew nearly 4 percent to $7.7 billion. The company said it saw gains in every region of the world, reflecting the broader alignment of growth in the major regional economies that has taken shape in recent months.
"This was a very strong quarter for 3M, in terms of healthy, broad-based growth, increased earnings per share and good execution across each of our business groups and functions," CEO Inge Thulin said in a conference call with analysts. "Equally important, we made additional investments to support growth and productivity for the remainder of 2017 and well into the future."
Those investments included the $2 billion acquisition of Scott Safety and $470 million — or 6.1 percent of sales — in research and development programs, Thulin said. 3M shares have been trading at record levels since mid-February and closed Tuesday at $195.13. By business segment, four of the company's five units experienced sales growth in the January-to-March quarter. By comparison, only two of the segments saw sales growth in the last three months of 2016. Executives said they now expect sales to grow in a range of 2 to 5 percent for full-year 2017, up from the range of 1 to 3 percent they previously forecast. Full-year earnings should grow 7 to 11 percent to $8.70 to $9.05 per share, up from the previously forecast range of $8.45 to $8.80. The company's industrial products business segment — which is 3M's largest by sales and as profit contributor, and provides adhesives and materials to aerospace, automotive and other manufacturers — reported a 4 percent gain in sales and slight gain in operating profit. "As you can see, industrial is off to a strong start to 2017," said Nick Gangestad, the company's chief financial officer. "For the full year we now expect organic growth in the range of 2 to 5 percent vs. our prior estimate of 1 to 3 percent." Its next-largest business segment, safety and graphics, reported a 3.4 percent gain in sales and an 11 percent jump in operating profit. The company last month announced the $2 billion acquisition of Scott Safety, a North Carolina-based maker of self-contained breathing apparatus systems, that will add to the size of its safety business when complete later this year. 3M's health care segment had a 2.3 percent jump in sales and a 5 percent drop in operating profit in the first quarter. The company's electronics and energy unit enjoyed an 11 percent jump in sales and a 15 percent gain in operating profit. "Growth was led by electronics and energy," Thulin said. "We have done a lot of work in this business to improve our relevance to customers and the marketplace, and those efforts are paying off." The company's consumer division, which handles the products most people see in stores, experienced a 0.7 percent drop in sales and a nearly 7 percent drop in operating profit. 3M said the consumer unit saw gains in home improvement and health care products but a decline in stationery and office products. Dee DePass • 612-673-7725Evan Ramstad • 612-673-4241
