3M Co. is looking ahead to a year of growth in 2018.
The Maplewood-based manufacturing giant expects the much-improved results of this year to continue into 2018 with significant input from its two largest markets: the U.S. and China, company officials told Wall Street analysts during 3M's 2018 Outlook meeting on Tuesday.
CEO Inge Thulin said the $30 billion maker of items from Scotch tape and Post-it notes to industrial adhesives and roofing tile granules, will increase total sales by 5 to 7 percent and organic sales by 3 to 5 percent. It should also boost earnings 6 to 10 percent to reach $9.60 to $10 per share in 2018, he said.
3M's outlook was a significant improvement over 2016 and early 2017, when 3M and the rest of the industrial world struggled mightily with downturns in China, global oil and gas, mining and agriculture equipment sectors.
"The 3M team is delivering a robust performance in 2017, and is well-positioned to build on that momentum in 2018 — including strong, broad-based organic growth and expanded profitability," Thulin told analysts. "We are executing the 3M playbook, which is making us even more competitive and enabling us to generate premium value for our customers and shareholders."
Thulin said operating margins in 2018 should average "a very robust" 25 percent. "We expect very solid margins for all five of our business groups."
3M's stock — which had been trading near the company's 52-week high in recent weeks — fell 1 percent to close at $236.58 per share Tuesday. Analysts suggested that investors were looking for higher growth.
Company officials were not put off. They said the improving global industrial climate will help boost 3M's results.
After some subpar growth in 2016 and early 2017, sales of 3M's largest business — the $10.9 billion industrial group — is now poised to grow 3 to 5 percent. Sales in China alone are expected to jump from $3 billion in 2017 to about $3.5 billion in 2018 as 3M continues supplying goods for Chinese manufacturers and consumers.
3M officials told analysts that the company is growing by double digits in China as it introduces new breathing masks specifically designed for children and expands its filtration, auto electrification and worker-safety products across that country.
"Air quality is a mega trend in China," said Stephen Shafer, 3M's managing director for China
3M sales across all of Asia are expected to grow 4 to 7 percent next year. Sales are poised to grow 3 to 5 percent in the Latin America/Canada region and 1 to 4 percent in Europe/Middle East/Africa.
3M's much-larger sales presence in the United States, where 3M has more than $10 billion in revenue, is expected to grow 2 to 5 percent in 2018.
Thulin emphasized 3M's commitment to the United States.
The U.S., he said, "is our home arena. We will always win in the United States. Here is where we have our biggest research [facilities and investments]. And here we have commercialization machinery that is very, very good and we have the strongest brand equity. We will never lose in the United States."
Thulin reiterated 3M's commitment to investing 6 percent of sales into research and development. He also reiterated 3M's focus on helping manufacturing customers solve internal problems and develop proprietary products.
3M officials outlined several global-market trends that should drive growth in the coming years. They include growing demand for auto electrification, adhesive and sound proofing products, for health care and digital medical record solutions, and a heightened call for automation/robotics, worker safety, improved air quality and tools that address the world's aging population.
Health care, which is 3M's most profitable business group, generates $5.8 billion in global revenue and is expected to grow 4 to 6 percent in 2018. Safety and graphics, which is 3M's second-largest business, has $6.1 billion in sales, and is also expected to grow 4 to 6 percent next year.
3M's once troubled energy/electronics and consumer businesses have rebounded and are poised to increase sales a respective 1 to 4 percent and 2 to 4 percent in 2018.