3M Posts First-Quarter Sales of $7.4 Billion, GAAP EPS of $2.05

3M reported first-quarter earnings of $2.05 per share, an increase of 10.8% versus the first quarter of 2015. Sales declined 2.2% year-on-year to $7.4 billion. Organic local-currency sales declined 0.8% while acquisitions, net of divestitures, added 1.6% to sales. Foreign currency translation reduced sales by 3.0% year-on-year.
 
Operating income was $1.8 billion and operating income margins for the quarter were 24.1%, up 1.3 percentage points year-on-year. First-quarter net income was $1.3 billion and the company converted 74% of net income to free cash flow.
 
Organic local-currency sales growth was 6.2% in Health Care, 2.8% in Consumer and 2.4% in Safety and Graphics, with declines of 1.9% in Industrial and 11.7% in Electronics and Energy
 
“Our team continued to execute the 3M playbook and delivered another solid operational performance in the first quarter,” said Inge G. Thulin, 3M’s chairman, president and CEO. “We expanded 3M’s profitability, improved our cash flow generation, and increased margins over a full percentage point. At the same time, we continued to invest in the business – including opening a new, world-class laboratory in the United States – while returning cash to our shareholders.”
 
Industrial Group sales were $2.6 billion, down 3.0% in US dollars. Sales growth in automotive OEM, automotive aftermarket and 3M Purification was offset by declines across the rest of the portfolio. Operating income was $617 million, up 3.6% year-on-year, with an operating margin of 23.9%.
 
Safety and Graphics Group sales were $1.4 billion, up 2.9% in US dollars. Sales grew in roofing granules, commercial solutions and personal safety; sales declined in traffic safety and security. Operating income was $345 million, an increase of 3.1% year-on-year, with an operating margin of 24.5%.
 
Health Care Group sales were $1.4 billion, up 4.0% in US dollar, with strong sales growth across all businesses. Operating income was $455 million, an increase of 11.5% year-on-year, with an operating margin of 32.9%.
 
Electronics and Energy Group sales were $1.1 billion, down 13.6% in US dollars. Electronics-related sales decreased 18% with declines in both electronics materials solutions and display materials and systems; energy-related sales declined 1% as growth in electrical markets was offset by declines in renewable energy and telecom. Operating income was $208 million, down 26.8% year-on-year, with an operating margin of 18.2%.
 
Consumer Group sales were $1.0 billion, up 0.1% in US dollars. Sales grew in three of four businesses, led by home improvement and consumer health care. Operating income was $238 million, down 1.1% year-on-year, with an operating margin of 22.7%.