3M Company (MMM) reported first quarter 2010 earnings from continuing operations of $1.40 per share, exceeding the Zacks Consensus Estimate of $1.21.
First-quarter worldwide sales totaled $6.3 billion, up 24.7 % compared to the first quarter of 2009. Local-currency sales including acquisitions increased 19.8% and foreign exchange impacts added 5% to sales growth in the quarter.
Total sales grew at a double-digit rate in each of the company’s six business segments, with Display and Graphics up 42.4%; Electro and Communications up 38.6%; Industrial and Transportation up 29.3%; Safety, Security and Protection Services up 20.4%; Consumer and Office up 14.7%; and Health Care up 12%. Similarly, all geographic regions posted double-digit sales growth, led by Asia-Pacific at 54.1% and the combined Latin America/Canada region at 25.9%.
Each of the company’s six business segments posted double-digit sales growth and 20% plus operating income margins. Sales growth was strongest in emerging economies, where sales expanded by 47% versus the first quarter of 2009. Free cash flow more than doubled to $925 million and free cash flow conversion was 99% of net income.
Cash and equivalents were $4.5 billion, with long-term debt at $5 billion and shareowners’ equity at $13.8 billion.
The 3M brand is recognized and trusted around the world. Household names like Nexcare™, Post-it®, Scotch®, Scotch-Brite® and Scotchgard™ are market leaders. This has led to household recognition of its brands across the globe.
We believe that continued capital expenditure with new product launches and increased focus on emerging markets like China, India, etc. should bolster its prospects across most end markets.
Finally, the company recently announced a unique optical film that enables 3-D viewing on handheld devices without the need for 3-D glasses. The MPro 150 projects high quality images up to 50 inches. This projector is 50% brighter than the MPro 100 launched a year ago, and 25% brighter than the 120 launched in September 2009.
We currently have a Neutral recommendation on MMM.
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