3M Announces 1Q 2015 Results

3M reported first-quarter earnings of $1.85 per share, an increase of 3.4% versus the first quarter of 2014. Sales declined 3.2% year-on-year to $7.6 billion. Organic local-currency sales grew 3.3%, and foreign currency translation reduced sales by 6.5% year-on-year.
 
Operating income was $1.7 billion and operating income margins for the quarter were 22.8%, up 0.9% points year-on-year. First-quarter net income was $1.2 billion, and the company converted 66% of net income to free cash flow.
 
Organic local-currency sales growth was 5.8% in Electronics and Energy, 4.1% in Safety and Graphics, 3.0% in Health Care, 2.7% in Industrial and 2.1% in Consumer. On a geographic basis, organic local-currency sales grew 5.6% in Asia Pacific, 3.6% in Latin America/Canada, 3.1% in the U.S. and 0.3% in EMEA (Europe, Middle East and Africa).
 
“We are executing well against a more challenging economic backdrop in early 2015,” said Inge G. Thulin, 3M’s chairman, president and CEO. “The stronger U.S. dollar negatively impacted sales and earnings in the first quarter, and global economic growth was mixed. Despite these near-term challenges, we grew organically in all business groups and all geographic areas, and expanded operating margins by nearly a full%age point.
 
“We also continue to invest for long-term success through research and development, commercialization and acquisitions,” Thulin continued. “In February, we announced plans to acquire Polypore’s Separations Media business for $1.0 billion, which will enhance our existing filtration platform and help generate new growth opportunities across the company.”
Industrial Group sales were $2.7 billion in the first quarter of 2015, down 4.3% in U.S. dollars. Sales growth was led by aerospace and commercial transportation, automotive OEM and 3M Purification. Operating income was $598 million, down 3.3% year-on-year; operating margin of 22.5%.
 
Safety and Graphics Group sales were $1.4 billion, down 3.6% in U.S. dollars. Sales grew in personal safety, commercial solutions, and traffic safety and security; roofing granules declined year-on-year. Operating income was $335 million, an increase of 5.3% year-on-year; operating margin of 24.4%.
 
Health Care Group sales were $1.3 billion, down 3.3% in U.S. dollars. Sales growth was positive in food safety, critical and chronic care, health information systems, infection prevention and oral care; drug delivery systems declined year-on-year. Operating income was $408 million, a decline of 4.3% year-on-year; operating margin of 30.7%.
 
Electronics and Energy Group sales were $1.3 billion, up 0.8% in U.S. dollars. Electronics-related sales increased 12% with strong growth in both electronics materials solutions, and display materials and systems; energy-related sales declined 3%, with electrical markets flat while telecom and renewable energy both declined. Operating income was $283 million, up 24.3% year-on-year; operating margin of 21.4%.
 
Consumer Group sales were $1.0 billion, down 2.9% in U.S. dollars. Sales grew in all businesses, led by DIY and home care. Operating income was $240 million, up 5.2% year-on-year; operating margin of 22.9%.