3M reported third-quarter earnings of $2.33 per share, an increase of 8.4 percent versus the third quarter of 2016. Sales were $8.2 billion, up 6.0 percent year-on-year in dollar terms. Organic local-currency sales increased 6.6 percent while divestitures reduced sales by 1.2 percent. Foreign currency translation increased sales by 0.6 percent year-on-year.
Third quarter operating income was $2.0 billion and operating income margin was 25.0 percent, up 0.3 percentage points year-on-year. This result includes $48 million of incremental investments in accelerated growth programs, productivity and portfolio actions. Third-quarter net income was $1.4 billion, up 7.5 percent.
The company’s operating cash flow was $1.8 billion, contributing to conversion of 100 percent of net income to free cash flow, as referenced in the “Supplemental Financial Information Non-GAAP Measures” section.
3M paid $701 million in cash dividends to shareholders and repurchased $380 million of its own shares during the quarter.
Total sales grew 13.1 percent in Electronics and Energy, 7.7 percent in Health Care, 6.2 percent in Industrial, 2.2 percent in Consumer, and 1.9 percent in Safety and Graphics. Organic local-currency sales increased 13.2 percent in Electronics and Energy, 6.9 percent in Health Care, 6.1 percent in Industrial, 6.0 percent in Safety and Graphics, and 1.9 percent in Consumer.
On a geographic basis, total sales grew 10.8 percent in Asia Pacific, 7.4 percent in EMEA (Europe, Middle East and Africa), 5.6 percent in Latin America/Canada, and 2.0 percent in the U.S. Organic local-currency sales increased 12.8 percent in Asia Pacific, 5.3 percent in Latin America/Canada, 4.0 percent in EMEA, and 3.6 percent in the U.S.
“Coming off a strong first half, our team delivered an even more robust performance in the third quarter – marked by an eight percent increase in earnings per share, and seven percent organic growth that was positive across all business groups and geographic areas,” said Inge G. Thulin, 3M’s chairman, president and chief executive officer. “We also expanded margins to 25 percent, while investing for the future and returning significant cash to our shareholders.”
As a result of strong performance through the first nine months, 3M increased its guidance for 2017. The company now forecasts organic local-currency sales growth of 4 to 5 percent, up from previous guidance of 3 to 5 percent. 3M expects earnings in the range of $9.00 to $9.10 per share – up 10 to 12 percent year-on-year – versus a prior expectation of $8.80 to $9.05.