3M posts Q3 income decline

St. Paul, Minn.-based 3M has reported third-quarter net income of $1.09 billion, down 1.8% from $1.11 billion in the third quarter of 2010. Sales in the third quarter ended Sept. 30 totaled $7.53 billion, up 9.6% from $6.87 billion in the year-ago period. 

Net income for the first nine months totaled $3.33 billion, up 5.4% from $3.16 billion in the prior-year period. Net sales were $22.52 billion, up 12.9% from $19.95 billion in the first nine months of 2010.

Third-quarter worldwide sales grew 9.6% -- 3.7% came from acquisitions, 3.1% from foreign exchange impacts, 1.9% from organic volume growth and 0.9% from higher year-on-year selling prices.

Five of 3M's six business segments expanded sales in the quarter, with Industrial and Transportation up 15.1%; Safety, Security and Protection Services up 14.1%; Health Care up 10.9%; Consumer and Office up 4.6%; and Electro and Communications up 1%. Local-currency sales in Display and Graphics declined 14.1%.

3M posted year-on-year sales increases in all geographic regions. Sales in local currencies grew 11.2% in Latin America/Canada, 9.2% in the United States, 5.9% in Europe and 2.1% in Asia Pacific. Excluding optical, Asia Pacific sales increased 11.3% in local currencies.

"The business environment remains challenging, as the economic softening that we experienced late in the second quarter continued into the third," said George Buckley, 3M chairman, president and CEO. "While growth rates were good across much of our portfolio, LCD TV remained weak and momentum slowed in other parts of electronics following several quarters of very good growth. In addition, ongoing policy uncertainty and austerity are affecting growth in Western Europe, which reduced sales in the quarter. As is typical, we are seeing the impact of these changes earlier than most as our customers decrease production in order to lower their inventories. Conversely, we should benefit more quickly when those markets recover." 

The company expects earnings to be in the range of $5.85 to $5.95 per share versus a prior expected range of $6.10 to $6.25. 

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