3M Co. profits nudged higher as global demand for industrial adhesives and health care data systems swelled during the second quarter, company officials said Thursday.
The Maplewood-based conglomerate, best known for its Scotch tape, Post-it notes and other adhesives, grew in four of five businesses, with industrial and health care sales leading the way. Products sold well in Latin America and Canada, and the company showed growth in Western Europe for the first time in several quarters.
Given the challenging economy, "I am pleased with our performance," CEO Inge Thulin told analysts during a conference call Thursday. 3M reiterated its guidance for the full year, saying 2013 earnings should reach $6.60 to $6.85 a share, up from $6.34 in 2012.
The industrial division, 3M's largest, had the most growth of any division, jumping 6.6 percent to $2.7 billion amid soaring demand for airplane and automotive adhesives, seals and putties; water filtration systems for restaurants, and industrial glues for factories.
The industrial business was also aided by Ceradyne, the high-tech industrial ceramics firm 3M bought in November for $860 million. Ceradyne ceramics are used in car engines, military helmets, helicopter armor, and even missile nose cones. It recently won a $40 million Department of Defense contract to make 242,000 body armor plates for soldiers serving in Afghanistan. As a result, the Ceradyne business was profitable. "We are pleased so far with the integration effort and look forward to continued successes," said Chief Financial Officer David Meline.
Thulin noted that 3M scored big with Ceradyne, because its technology could be applied across the company. He told analysts to expect more large and tech-laden acquisitions like Ceradyne.
Health care also thrived
Another win for 3M during the quarter came from health care, which is 3M's third-largest division by revenue, but its highest profit margin business at 31 percent. Sales rose 4.6 percent to $1.3 billion. During the quarter, demand grew for 3M fast-growing medical coding systems as well as for its bandages and surgical drapes, bacteria testing dishes and dental implant materials.
FBR Capital Markets analyst Ajay Kejriwal told executives Thursday that "It is very nice to see your highest-margin business being one of your fastest-growing. It has been like that for the past couple quarters."
Electronics, energy declined
3M's electronics and energy business was the only unit to suffer a decline for the quarter. Sales dipped 3.2 percent as consumer electronics "remained soft" and renewable energy products experienced weakness, officials said. It was the second quarter that demand slid for flat-panel TVs, PC and laptops that use 3M's screen-brightening films and other components.
Companywide, 3M saw total revenue rise 2.9 percent to $7.8 billion during the quarter. Earnings rose 2.6 percent to $1.2 billion, or $1.71 per share, which was in line with analysts' consensus estimates. A tax rate decline, lower raw material costs and select price increases also helped results.
Officials also noted that Western Europe improved for the first time in about eight quarters. Thulin also said 3M grew slightly in Eastern Europe during the quarter and made factory investments in Russia, Turkey and Poland. Those investments should continue to pay off, he said.
3M's stock closed Thursday at $116.55, up 22 cents.