CHICAGO – Diversified manufacturer 3M Co. (MMM) on Tuesday posted a 5.7 percent increase in quarterly profit on strong demand in its industrial and electronics businesses.
Net income in the fourth quarter rose to $761 million, or 99 cents a share, compared with $720 million, or 91 cents a share, in the year-earlier quarter.
Excluding the effect of an accounting change, it earned $1.04 a share, matching what analysts had expected, according to Reuters Estimates.
Sales for the company — considered a bellwether of the U.S. economy because of the breadth of its businesses — rose 4.6 percent from last year, to $5.33 billion, just shy of the $5.43 billion analysts had expected. Excluding acquisitions and currency effects, growth at existing businesses rose 5.1 percent.
While rising energy costs have affected companies' results, investors now are worried about mounting price pressures. Output from U.S. factories, mines and utilities rose in December, and capacity use climbed, according to a Federal Reserve report last week.
This year 3M, whose products range from Thinsulate insulation and Post-It notes to Scotch tape and surgical masks, expects to earn $4.45 to $4.60 a share, including an estimated 16 cent impact from expensing stock options — a result of the new rule from the Financial Accounting Standards Board that requires U.S. companies to deduct the cost of options from their earnings in fiscal 2006, which began in January for most of them.
3M expects local-currency growth in ongoing businesses to be between 4 percent and 7 percent, with an additional growth from its addition of filtration products maker Cuno of about 1.4 percent.
For the first quarter, the St. Paul, Minnesota-based company sees earnings of $1.10 to $1.14 a share, with an impact of 2 cents from stock option expensing. It expects first-quarter, local-currency sales growth of 4 percent to 7 percent with an additional estimated 2.3 percent from Cuno.
Analysts were expecting 3M to earn $4.71 for the year and $1.15 for the first quarter before one-time items.
Fourth-quarter sales in local currencies in more than 200 countries increased 7.3 percent, including 2.1 percent from Cuno. 3M said in October it expected local currency growth of 4 percent to 7 percent, excluding Cuno.
Total sales volume in the quarter rose 7.2 percent, including 10.7 percent internationally and 1.8 percent in the United States. Pricing rose 0.1 percent globally, led by a 3.2 percent U.S. increase.
Local-currency sales increased 18.2 percent in 3M's industrial (including 12 percent due to Cuno), 10.9 percent in electro and communications, 10.2 percent in display and graphics, 9.7 percent in safety, security and protection services, 3.3 percent in transportation, 0.5 percent in consumer and office, and were flat in health care.
3M shares since the start of last year have fallen almost 8 percent, underperforming the Standard & Poor's 500 index, which has risen more than 4 percent.