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3M Reports Sales, Earnings

September 1, 2010

3M has closed its second quarter with

increases in both sales and per-share earnings. Sales and per-share earnings increased 17.7% and 37.5%, respectively, versus the second quarter of 2009.

Second-quarter worldwide sales totaled $6.7 billion, up 17.7% compared to the 2009 period. Local-currency sales including acquisitions increased 17.9%. Divestitures and foreign exchange impacts each reduced sales by 0.1%. Excluding special items recorded in the second quarter of 2009, earnings per share rose 28.3%.

Sales improved in all businesses and geographic regions, with particular strength in Electro and Communications at 32%, Display and Graphics at 30% and Industrial and Transportation at 23%. On a geographic basis, sales growth was strongest in emerging economies, where sales expanded 38% versus the 2009 period. Total-company sales rose 18% year-on-year and 6% sequentially and have now returned to second quarter 2008 levels.

3M generated record second-quarter operating income of nearly $1.6 billion and operating margins were 23.7%. All six of the company’s business segments posted operating margins of 22% or higher.

“Our growth strategy continues to gain momentum as we again delivered strong top-line growth and outstanding leverage to the bottom line,” said George Buckley, 3M chairman, president and CEO. “I thank the 3M team around the world for continuing to deliver during these uncertain times.”

Mr. Buckley added that the second-quarter results reaffirm the company’s long-term strategy of accelerating investment in higher growth opportunities.

“Our new product vitality index is the highest in recent memory and we are taking share in many of our businesses,” he said. “3M’s improved engine of organic growth, combined with our commitment to operational excellence positions us well to deliver sustainable increases in sales, earnings and free cash flow.”

In 3M’s Health Care business, sales rose 5.7% in local currency to $1.1 billion. Double-digit local-currency sales growth in drug delivery systems; solid local-currency growth in skin and wound care, health information systems and oral care businesses; sales in infection prevention business up slightly in local currency. All major geographic regions posted positive local-currency growth led by Latin America and Canada. Operating income increased 5% to $344 million with margins of 30.9%.

In the Industrial and Transportation section, sales rose 23.2% in local currency to $2.2 billion. Double-digit local-currency growth was reported across much of the portfolio, renewable energy up 71%, automotive OEM up 45%, abrasives up 28% and industrial adhesives and tapes up 22%. All businesses delivered year-on-year profit growth. Double-digit sales and profit growth were reported across all major geographic regions, led by Asia-Pacific; operating income was up 66% to $476 million with operating margin of 22%.