3M has closed its second quarter with declines in both sales and per-share earnings. Sales and per-share earnings dropped 15.1% and 15.8% year-on-year, respectively. On a sequential basis, sales and per-share earnings increased 12.4% and 51.4%, respectively, and operating income margins improved 5 percentage points.
Second quarter worldwide sales totaled $5.7 billion, a year-on-year decrease of 15.1%. Local-currency sales including acquisitions decreased 9.4%, currency translation effects reduced sales by 5.5% and divestitures reduced sales by 0.2%.
“We drove strong results in the second quarter, exceeding our own expectations for profits, sales and free cash flow,”said George Buckley, 3M chairman, president and CEO. “Operating discipline was key to the quarter, as discretionary spending was well-controlled and restructuring actions proceeded according to plan. 3M employees across the globe are undaunted in facing this recession, and I applaud their efforts.”
Mr. Buckley said that while sales were helped by improved demand for consumer electronics and respiratory products used to prevent the spread of the N1N1 virus, 3M’s sound operational strategy and early actions to address the recession were at the core of the strong second quarter performance.
The company raised its 2009 sales expectations. 3M now expects 2009 organic sales volume to decline between 10% and 13%, versus a previous planning assumption of negative 11% to negative 15%.
In 3M’s Health Care business, sales of $1.1 billion were up 2.2% year-on-year in local currency, including a 1.4% hike from acquisitions; currency impacts reduced sales by 7.1%. Positive local currency growth in medical supplies, food safety and health information systems; oral care sales were flat in local currency. Drug delivery sales declined year-on-year but improved 13% sequentially. All major geographic regions posted positive local currency sales growth. Operating income increased 10.8% to $344 million, with margins of 32.3%.
In the Industrial and Transportation section, sales dove 15.3% year-on-year in local currency, to $1.7 billion. Double-digit declines in many served industries, most notably automotive manufacturing, contributed to the sales decline. The company reported operating income of $329 million, with strong margins of 19.1%. Sales and operating income improved by 9.2% and 67.2%, respectively, when compared to first quarter of 2009.