The company said sales increased in all geographic regions, with Europe up 24.1%, Latin America/Canada up 20.2%, Asia Pacific up 11.0% and the US up 8.7%. Five of the company's six business segments expanded sales in the quarter, with particular strength in Industrial and Transportation at 24.6% and Safety, Security and Protection Services at 19.7%.
The company estimates that combined direct and indirect business disruption resulting from the March earthquake in Japan reduced second quarter sales growth by 2.4%, operating margins by 50 basis points and earnings by 7 cents per share. Without these estimated impacts, second-quarter sales growth was 16.5%, operating margins were 22.1% and earnings per share growth was 8.4%. For the full year 2011, 3M estimates that the Japan earthquake impacts will reduce sales growth by approximately one percentage point, operating margins by 30 basis points and earnings by 11 cents to 12 cents per share.
On a worldwide basis, second-quarter organic sales volumes rose 3.2% (5.6% excluding Japan earthquake impacts) and selling prices increased 0.8%. Acquisitions added 4% and foreign exchange impacts added 6.1% to second-quarter sales growth.
"We posted record second-quarter sales and earnings per share and generated significant free cash flow in the quarter, and we did so in the face of some sizable headwinds," says George Buckley, 3M chairman, president and CEO. "Most significant was the impact of the Japan earthquake, which was in line with our projections. In addition, a larger-than-anticipated contraction in LCD TV end-market demand affected our sales, reflecting a tighter consumer electronics market as OEMs work to reduce channel inventories and lower their unit costs. Without these two impacts, organic sales growth would have been 8%, so underlying strength remains."
Buckley continues, "3M's innovation engine continues to accelerate, and we expect further growth in new products this year. While economic growth moderated a bit in the second quarter, we believe that the global economy will continue to expand and 3M is well-positioned to capitalize on that growth."