MMM 2009 Q2 Earnings

Prior to the opening bell on July 23, manufacturing conglomerate 3M Co. (MMM) confirmed that the company’s profits during the 2Q receded in large part due to the relentless global recession that has devastated the auto industry, 3M’s largest beneficiary of products.

During the quarter, 3M managed to post quarterly earnings of $783M, or $1.12 per share, compared to the previous year’s earnings of $945M, or $1.33 per share, a decrease in profits of more than 17%.

Excluding costs related to restructuring activities, 3M would have posted net income of $1.20 per share.

Meanwhile, sales for the St. Paul, Minnesota-based company came in at $5.72B, down more than 15% from last year’s revenues of $6.74B. Analysts, in the meantime, were looking for the maker of Scotch tape and Post-it notes to record net profits of $0.94 per share on total sales of $5.41B. Analysts’ estimates typically exclude one-time charges.

Despite the decline in gross revenues, the company noted that sales were aided by an increase in revenues from higher demand in consumer electronics and respiratory products used in the prevention of spreading the H1N1 virus, a.k.a. the swine flu.

Chairman and CEO George Buckley stated, "While the exact shape and timing of the economic recovery is unknown, we will move ahead efficiently and energetically so that 3M emerges from the downturn an even stronger company."

Internally, 3M’s Industrial and Transportation segment generated sales of $1.73B, noticeably lower than the $2.18B generated during last year’s 2Q. The decrease of nearly 21% within the division was directly related to double-digit declines inside the automotive industry.

As for the company’s Healthcare division, sales dipped from $1.12B to $1.07B, while revenues within the Consumer and Office unit fell from $939M to $866M, a drop of nearly 8%.

Generated revenues from the Safety, Security and Protection Services segment slipped from $979M to $794M, a decrease in sales of nearly 19%. Revenues primarily decreased across the board, with sales falling nearly 5% to $808M in Display and Graphics, and plunging almost 28% in the company’s Electro and Communications’ unit to $551M.

Through the first half of the year, 3M produced net profits of $1.3B, or $1.86 per share, in contrast to last year’s six-month results of $1.93B, or $2.70 per share, a drop in earnings of nearly 33%. Sales fell-off as well, dropping from $13.2B to $10.81B, a decline of more than 18%.

Buckley added, "We drove strong results in the second quarter, exceeding our own expectations for profits, sales and free cash flow. Operating discipline was key to the quarter, as discretionary spending was well controlled and restructuring actions proceeded according to plan.

Looking ahead to full-year results, 3M anticipates recording annual earnings between $4.10 and $4.30 per share, up from a previously stated range of $3.90 to $4.30 per share. Analysts, in the meantime, are looking for the company to post yearly earnings between $3.45 and $5.16 per share.

With an upward revision in the company’s earnings per share, 3M also adjusted their sales expectations for 2009. The company previously projected sales to decline between 11% and 15%, and now is looking for revenues to slip in a narrower range, between 10% and 13%. 3M’s new guidance equates to annual sales come in between $22.52B and $22.77B.

Considered a bellwether of the U.S. economy due to the extent of their operations and geographic reach, 3M’s stock has gained nearly 12% in market value thus far this year. continuing to add to their gains, shares of MMM were up more than 7% in the July 23 trading session, adding $4.76 to end the day at $69.43 per share.

During the past year, 3M shares have traded as high as $74.71 and as low as $40.87 per share.

By BetterTrades