3M Reports Q2 Financials
Also Announced Acquisition Of Capital Safety
Minnesota-based 3M, the parent company of Top 40 supplier 3M Promotional Markets (asi/91240), has announced total second-quarter sales of $7.7 billion, a year-over-year decrease of 5.5%. Organic local revenues – which don’t account for exchange rates – grew 1.8%, meaning foreign currency translation cut 3M’s sales by more than 7% versus Q2 of 2014. Nonetheless, earnings jumped to $2.02 per share, an increase of 5.8%.
“In the face of a mixed economic environment, the 3M team delivered positive organic growth in all geographic areas while expanding worldwide margins by over a full point,” said Inge G. Thulin, 3M’s chairman. “We also continued to invest in our future, including strategic acquisitions.’
During Q2, 3M announced the acquisition of Capital Safety, a firm that produces equipment like harnesses and self-retracting lifelines. The $2.5 billion deal is expected to close in the third quarter, bolstering 3M’s expanding safety division. In fact, Q2 organic local-currency sales in 3M’s safety and graphics segment increased 4.9%.
In other divisions, second-quarter sales were mixed. Local revenues in 3M’s healthcare and consumer segments each jumped 3.4%, while industrial sales were up 1.4%. Sales in the firm’s electronics and energy division, though, were down 3%. On a geographic basis, organic local sales grew 4.1% in the U.S., 0.8% in Latin America/Canada, 0.5% in the Asia Pacific region, and 0.4% in Europe, the Middle East and Africa.
In its full-year outlook, 3M said it expects earnings will be in the range of $7.80 to $8.00 per share, versus a prior range of $7.80 to $8.10. The firm projects local-currency sales growth of 2.5% to 4%, which comes in below earlier guidance. 3M expects foreign currency translation will reduce 2015 sales by as much as 7%. “We are amending our growth outlook slightly to account for lower-than-expected global economic growth,” said Thulin. “As always, we are focused on executing our plan and improving those factors within our control.”
As is customary in its earnings statements, 3M did not break out promotional products sales. Counselor ranks 3M Promotional Markets as the 15th largest supplier in the industry, estimating the firm generated 2014 North American ad specialty revenues of $103 million.