3M Profit Dips In 4Q, Lifts Forecast For 2011
NEW YORK (AP) -- 3M is hedging its bets on the U.S. economy until more people get back to work.
The Maplewood, Minn., company, which makes everything from Post-Its and Scotch Tape to respirators and computer arms, doesn't expect to see a big improvement in the U.S. market until the unemployment rate, currently at 9.4 percent, significantly improves.
"There's still a lot of smoke without fire," CEO George Buckley said Tuesday about economic conditions in the U.S. during a conference call following the release of 3M's fourth-quarter results.
Net income fell slightly in the last three months of 2010. Shares fell nearly 3 percent in morning trading after the announcement.
Still, the company raised its profit forecast for the year as it expects investments in new products and acquisitions to pay off.
3M's U.S. sales rose 8 percent in the fourth quarter. But that was half the rate at which worldwide sales picked up. Sales in Asia, which have been driving 3M's growth, jumped 35 percent from a year ago.
Buckley said mild improvements in unemployment and retail sales data are positive signs, but he advocates a cautious approach in the U.S.
"We need to be sure it's really a dawn and not a forest fire coming our way," he said.
Overall, sales rose 10 percent in the fourth-quarter to $6.71 billion. 3M saw strong growth in sales of products used in electronics, cars and planes. Business improved in all six of the company's segments.
3M's Electro and Communications unit, which makes everything from police tape to static control products, grew sales by 20 percent. Sales in its biggest segment, industrial and transportation, rose 10 percent. That division sells over 1,000 products for cars including abrasives and paint finishings, and adhesives for aircraft.
Other divisions reported more modest increases. 3M's goal is double-digit sales growth in all segments.
"It's still premature to hold up the mission accomplished banner just yet, but i think it's safe to say our growth plan is progressing very nicely," Buckley said.
The company earned $928 million, or $1.28 per share, in the fourth quarter compared with $935 million, or $1.35 per share, a year ago.
The results topped the expectations of analysts polled by FactSet Research, who on average forecast a profit $1.27 per share on revenue of $6.59 billion.
For 2011, the maker of Post-Its and Scotch Tape expects to earn $5.95 to $6.20 per share, up from a previous forecast of $5.90 to $6.10 per share. 3M expects double-digit sales growth this year.
During the conference call, Buckley also addressed media reports that he might be stepping down before his contract runs out in 2012. He said he plans to fulfill his full contract, but noted the board is searching for internal candidates to eventually take over.
"Unless I drop dead first I'm going to work here as long as the board wants me to work here," he said. "I'm not anxious to go fishing just yet."
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