3M recently reported first-quarter financial results. Sales reached $5.1 billion, a decrease of 21.3% from the first quarter of 2008. Net income was $518 million versus $1 billion in the corresponding period last year.
Local-currency sales including acquisitions decreased 13.9% and foreign exchange impacts reduced sales by an additional 7.1 points in the quarter. Local-currency sales including acquisitions increased 1.9% in Health Care, but declined in the remaining segments with Consumer and Office down 0.1%, Safety, Security and Protection Services down 3.6%, Industrial and Transportation down 20.7%, Display and Graphics down 26.6% and Electro and Communications down 29.8%.
“As expected, the global economic slowdown dramatically affected our businesses in the first quarter,” said George Buckley, 3M chairman, president and CEO. “Substantial end market declines and continued inventory takedowns in major industries, including automotive, consumer electronics and general industrial manufacturing, resulted in significantly lower sales and profits. Accordingly, we aggressively reduced our cost structure, lowered manufacturing output and intensified our attention to operational improvement. The combination of these actions drove strong operating income margins of more than 17%.”
The company adjusted its 2009 sales and earnings expectations to reflect ongoing global economic uncertainty. 3M now expects 2009 organic sales volume to decline between 11% and 15% versus a previous planning assumption of -5% to -9%.
In the Industrial and Transportation sector, sales decreased 27.5% to $1.6 billion. A 50% decline in North American auto builds directly impacted 3M's auto OEM business and many other industrial market segments were down by more than 20%. Local-currency sales dropped by mid-single digits in Latin America while all other major geographies declined by double-digits.
In 3M’s Health Care business, sales of $1 billion were down 7.7%, including a negative 9.6% impact from foreign currency translation. Local-currency sales grew 1.9%, largely from acquisitions. While local-currency growth was seen in oral care and medical supplies, local-currency sales declined in drug delivery. Geographically, Latin America posted double-digit local-currency sales growth.