Tuesday, January 25, 2011

3M Co. (NYSE: MMM): Q4 Earnings Preview 2010

3M Co. (NYSE: MMM) is scheduled to release fourth-quarter earnings before the market open on Tuesday, January 25, 2011. Analysts, on average, expect the company to report earnings of $1.27 per share on revenue of $6.62 billion. In the year-ago period, the company reported earnings of $1.30 per share on revenue of $6.12 billion.

3M Company, together with its subsidiaries, operates as a diversified technology company worldwide. 3M operates in six business segments: Industrial and Transportation; Health Care; Consumer and Office; Safety, Security and Protection Services; Display and Graphics; and Electro and Communications.

In the preceding third quarter, the Saint Paul, Minnesota-based company's net income was $1.12 billion, or $1.53 a share, compared to $957 million, or $1.35 a share, in the prior-year quarter. Revenue grew to $6.9 billion from $6.2 billion. Analysts, on average, expected earnings of $1.51 a share on revenues of $6.82 billion. 

At its last earnings call in October, the company said it expects that full-year earnings per share, excluding the Medicare Part D-related charge recorded in the first quarter of this year, will be in the range of $5.70 to $5.74. The high end of this range is down 6 cents per share versus the company's prior expectations, due solely to anticipated earnings dilution related to the company's October 2010 purchases of Attenti Holdings S.A. and Arizant Inc. and a controlling interest in Cogent Inc. GAAP earnings are expected to be in the range of $5.59 to $5.63 per share for 2010 in total. 

3M anticipates fiscal 2011 earnings per share of between $5.90 and $6.10, including a $0.27 per share year-on-year increase in pension expense. Excluding the rise in pension expense, earnings are expected to be in the range of $6.17 - $6.37 per share for fiscal 2011, a 10% to 14% growth from the estimated GAAP earnings levels in 2010. The company projects fiscal 2011 sales to be $29 billion to $30.5 billion, with organic sales volumes growing 5.5% to 7.5%. Currency effects are estimated to add 1% to 2% to sales while acquisitions are estimated to contribute 4% to 6%. The company remains committed to growing its core businesses and expanding market share through increased investments in R&D, sales and marketing and new manufacturing capacity, particularly in fast growth developing economies. 

3M continues to deliver sustainable increases in sales, earnings and free cash flow. For four consecutive quarters, the company has generated net growth of about 8% to 9% above the market. The company remains committed to investing in its core businesses to accelerate sales growth. It is also seeking to increase sales of its consumer and office products by more than 40% to $5 billion by enhancing its product portfolio and marketing efforts. The business segment generated $3.5 billion in revenue last year. 

The company is also expanding rapidly in overseas markets. International sales of 3M's consumer and office products, which account for about 40% of the $3.5 billion in annual revenue, have been growing at an average rate of 12% a year since 2000. Developing markets currently represent one-third of 3M sales and will likely reach forty-five percent by 2015.

3M Co. is also pursuing an aggressive acquisition strategy to broaden its product portfolio. Last month, the company agreed to buy Swiss-listed Winterthur Technologies AG for 62 Swiss francs or US$63.56 per share. Recently, 3M Co. acquired the business of Nida-Core Corp., a manufacturer of structural honeycomb core and fiber-reinforced foam core materials based. 

In terms of stock performance, 3M shares have gained nearly 9 percent over the past year.

Full Disclosure: None.
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