| HOME | NEWS ALERTS | SMK RECOMMENDATIONS |


3M's Earnings Climb More Than 11 Percent
CHICAGO (Reuters) - Industrial conglomerate 3M Co. (NYSE:MMM - News) said on Monday its quarterly earnings rose over 11 percent, helped by strong sales in its new displays and graphics division and by cost controls.

The company, whose products range from Post-it Notes and Scotch tape to sandpaper and asthma inhalers, reported net income rose to $502 million, or $1.27 a share, compared with $452 million, or $1.14 a share, a year ago. Sales increased 11 percent to $4.32 billion, with unit volume up 5.4 percent.

Before items in both years, the St. Paul, Minnesota-based company had income of $560 million, or $1.42 a share, compared with $487 million, or $1.23 a share, a year ago.

Results were at the upper end of 3M's Jan. 21 estimate that it would earn $1.38 to $1.43 a share before items in the first quarter. Analysts on average have been expecting $1.40 a share, according to market tracker Thomson First Call (News - Websites).

3M shares, a component of the Dow Jones Industrial Average, were up 51 cents at $130.50 in early trading on the New York Stock Exchange (News - Websites).

The company's strongest gains came in displays and graphics, a new division 3M started breaking out with the current report. The company said sales volume there rose 24.4 percent, with 12 percent coming from its acquisition of Corning Inc.'s (NYSE:GLW - News) precision lens business in December. Operating income gained more than 54 percent.

"Brightness enhancement films continue to crank along," said Mark Gulley, an analyst with Banc of America Securities (News - Websites). He said 3M's capital efficiency remains high, with capital expenditures in the first quarter well below recent trends.

The company's new Safety, Security and Protection Services division boosted sales by 5.0 percent and increased operating income almost 22 percent. Health care product increased 4.7 percent, with profits up 8.4 percent.

The company also reaffirmed its estimates for the second quarter and full year. 3M said it expects second-quarter earnings of $1.47 to $1.53 a share, up from $1.36 a year ago. It also estimated 2003 earnings before items of $5.80 to $6.00 a share before items, with net income of $5.65 to $5.85 a share.

Analysts' second-quarter estimates range from $1.45 to $1.54 a share, with a First Call average of $1.50 a share. For the year, estimates range from $5.80 to $6.10, with an average of $5.93 a share, according to First Call.

Selling prices in the quarter were unchanged, 3M said, with the United States down 0.4 percent and international up 0.4 percent. Weakness in the U.S. dollar increased sales by 5.6 percent.

Total U.S. sales rose 1.0 percent to $1.8 billion, with acquisitions adding 1.8 percent. International sales jumped 8.7 percent, primarily due to the weakness of the U.S. dollar and acquisitions.

Asia Pacific was again the strongest area, with volume up 19 percent. Japan, 3M's largest market outside the United States, gained 8 percent while the rest of Asia rose 30 percent. Latin American volume increased 17.5 percent while Europe was down 1.1 percent.