Our Take on 3M's Fourth Quarter
Morningstar's Adam Fleck notes that quarterly declines seen in 3M's display and graphics and electronics units have tended to lead weakness in the other segments in the past.
3M (MMM) reported continued slowing internal sales growth and profitability erosion, as further struggles in the display and graphics segment, seasonal weakness in consumer and office, and increased pension costs offset strong growth in the industrial business.
For the quarter, consolidated revenue climbed 5.7% year over year, but the 1.3 percentage points of internal volume growth within this figure was the lowest since a decline in the third quarter of 2009. Still, we're encouraged that the company was able to once again garner substantial price improvements (up 2% in the quarter and 1% for the full year), while still seeing decent growth in the United States (volume up 3.7%) and Latin America (up 8.6%). Although 3M's operating margin slipped slightly from a year ago (to 19.2% from 19.4%), management reaffirmed its 2012 outlook, which is in line with our current projections. We plan to maintain our $100 fair value estimate.
Adam Fleck does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.