3M Company (NYSE:MMM) Q2 2015 Earnings Conference Call Transcript

Jul 23, 2015 • 09:00 am ET

Previous

3M Company (NYSE:MMM) Q2 2015 Earnings Conference Call Transcript

Share
Close

Loading Event

Loading Transcript

Presentation
Operator
operator

Welcome to the 3M Second Quarter Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. After which, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded Thursday, July 23, 2015. I would now like to turn the call over to Matt Ginter, Treasurer and Vice President of Investor Relations at 3M.

Executive
Matt Ginter

Thank you and good morning everyone. Welcome to our second quarter 2015 business review. On the call today are Inge Thulin, 3M's chairman, president and CEO, and Nick Gangestad, our CFO. Each will make some formal comments and then we'll take your questions. As a reminder, please mark your calendars for upcoming earnings call dates, October 22 and January 26. Also, take note of our next investor meeting scheduled for December 15. More details will be available as we get closer to that date. Today's earnings release and the slide presentation accompanying this call are posted on our Investor Relations website at 3M.com.

(Forward-Looking Cautionary Statements). Please turn to slide three and I will hand off to Inge.

Executive
Inge Thulin

Thank you, Matt and good morning, everyone and thank you for joining us today. Overall this was a good quarter for 3M, marked by broad-based organic growth and margin expansion. We continued to operate in an uncertain global economic environment, which softened growth.

At the same time, we grew organically in all geographic areas, expanded margins a full percentage point and increased net income. Most importantly, we maintained our commitment to managing 3M for the long-term with strong investments in our portfolio. Let's go through a few of the second-quarter numbers.

Earnings per share rose to $2.02, a 5.8% increase year-over-year. Our team posted local-currency sales growth of 2% on company- wide. On an ex-electronics basis, growth was 2.2%, the same as Q1. And I will talk more about our electronics business shortly. Organic growth was positive in all geographic areas, paced by the United States at 4%.Four of our five business groups grew organically, led by Safety and Graphics at 5%,followed by Consumer and Health Care businesses at 3%.

Growth in Industrial slowed a bit to 1% as we experienced channel inventory adjustments in general industrial markets. Electronics and Energy declined 3% organically in the quarter. This business group faced a tough year-on-year comparison, and we also saw somewhat softer However, even in softer market conditions, we increased margins in Electronics and Energy to more than 21% for the second straight quarter.

As you recall, last year we consolidated a number of businesses within Electronics and Energy to better align to customers and generate efficiencies, and that portfolio work is paying off. I am pleased with the progress of this business, and going forward the team is focused on driving spec-in wins, increasing productivity and advancing our technology capabilities. In the second quarter, we saw continued strength of the US dollar which reduced company-wide sales by 7.3%.

As a result, total sales declined 5.5% to $7.7 billion. We increased