3M Co. delivered a record fourth quarter and expects continued growth next year, despite the traumatized oil sector and volatile foreign currencies.
The Maplewood company’s results, released Tuesday, beat analysts’ expectations and defied negative stock market trends for the day. That combination prompted congratulations from several Wall Street analysts who follow the stock.
“Nice quarter,” said Goldman Sachs industrial research analyst Joe Ritchie.
“Great job,” said Scott Davis with Barclays Capital.
Edward Jones equity analyst Matt Arnold said 3M bucked several tough trends smacking most major industrials reporting this month. Few were able to reiterate prior earnings goals because of worries about their oil and gas exposure or because of significant foreign currency woes.
3M isn’t crippled by either problem and reiterated its 2015 guidance Tuesday. “Few industrials have been able to do that,” Arnold said.
3M now expects 2015 earnings of $8 per share and sales growth of 3 to 6 percent. One reason the forecast was not lowered is that 3M generates just 3 percent of all sales from the turbulent oil sector. In addition, 3M’s revenue hit from volatile foreign currencies was not even 2 percent, compared with other industrial companies whose sales have been hurt 4 to 8 percent.
3M saw impressive results from once lackluster regions in Europe, Japan and the United States.
“So 3M is doing well across all geographies and business segments,” Arnold said. “The strength of their business is that they are very broad based.”
The maker of Scotch tape, Post-it notes and car adhesives reported that revenue grew 2 percent to $7.7 billion during the quarter that ended Dec. 31. Earnings grew 7 percent to $1.18 billion or $1.81 a share, beating analysts’ profit expectations by a penny. Analysts had expected revenue of $7.77 billion.
During a conference call with analysts Tuesday, 3M executives noted that the fourth quarter benefited from lower raw material costs, higher prices and strong results from the United States, China, Japan and Mexico.
On the product front, demand grew for 3M respirators in China; safety and industrial products in Europe; and for factory and auto adhesives in the United States. The U.S. consumer business also enjoyed strong holiday sales.
“3M delivered strong results in the fourth quarter, which culminated in a solid performance for 2014,” CEO Inge Thulin told analysts.
3M’s safety and graphics division had the largest growth of any business when measured in local currencies. Sales grew 9.2 percent to $1.4 billion during the quarter. Health care product sales rose 6.4 percent on a local currency basis to $1.4 billion. Thulin and CFO Nicholas Gangestad noted that the Ebola scare recently boosted overall sales by $30 million.
3M’s industrial unit, which is its largest, saw local currency sales rise 5.9 percent to $2.6 billion during the quarter amid rising demand from all geographies.
3M spent nearly $1.8 billion in research and development in 2014. It also spent about $30 million turning around various product portfolios during the quarter, Thulin said.
For full 2014, 3M reported earnings of $7.49 a share and sales that rose 3.1 percent to a record $31.8 billion. Analysts had forecast that 2014 earnings would reach $7.48 a share and that revenue would hit $31.9 billion.
3M’s stock dipped 0.36 percent, or 61 cents, to close at $163.63 a share Tuesday. The slight decline contrasted with a broad market sell-off that sent two major indexes down a respective 1.6 and 1.3 percent.