CHICAGO – 3M Co. (MMM), the maker of Scotch tape and Post-It notes (search), Monday posted a higher quarterly profit on growth in its optical films and health-care businesses, and reaffirmed its full-year outlook.
3M, seen as a benchmark for the U.S. economy because of its broad array of businesses, earned $809 million, or $1.03 a share in the first quarter, compared with $722 million, or 90 cents a share, in the year earlier quarter.
Analysts were expecting the company to post a profit of $1.01 a share, according to Reuters Estimates, so the results soothed investors worried about weak corporate earnings as 3M's shares rose in premarket trading.
"3M's earnings should relieve investors because it has a broadly diversified exposure to the American economy and that is a bellwether for the market generally. If those results are good then one shouldn't feel too apprehensive about the overall balance of results," Mike Lenhoff, chief strategist at Brewin Dolphin Securities Ltd in London, said.
Investors have worried that high energy costs, especially for oil, and rising interest rates will hurt 3M and other manufacturers.
Last week, the Federal Reserve (search) said U.S. industrial production rose 0.3 percent in March, as expected, but February's output was revised down and the Federal Reserve Bank of New York's report that its gauge of regional manufacturing fell in April to its lowest level in two years sharpened the impression that industry output was softening.
On Friday, conglomerate General Electric Co. (GE) posted a 25 percent rise in quarterly profit as strong demand for diagnostic equipment and price increases propelled revenue well above analysts' expectations.
3M's worldwide sales rose 4.6 percent from last year to $5.17 billion, below the $5.26 billion analysts had expected. The effect of the weak U.S. dollar accounted for half that gain while selling prices contributed 0.5 percent. Global volume rose 1.8 percent.
The St. Paul, Minn.-based company also reaffirmed its 2005 earnings guidance, saying it expects profit within a range of $4.15 to $4.25 a share. It sees a second-quarter profit of $1.08 to $1.10 a share.
Analysts were expecting a profit of $4.23 a share for the year and $1.09 a share for the second quarter, according to Reuters Estimates.
Improved operational efficiency, sales growth and pricing were key to overcoming slow growth in Western Europe and Japan, and continued raw material price pressure, 3M Chairman and Chief Executive W. James McNerney said in a statement.
3M expects higher growth in its existing businesses for the rest of the year through new product sales, demand for such products as LCD films and its strong presence in fast-growth markets like China and Eastern Europe, he added.
The company's stock rose to $81.25 in premarket trading on Inet from its Friday closing price of $80.86 on the New York Stock Exchange.