ST. PAUL, MN — 3M reported record first-quarter 2007 earnings of $1.4 billion or $1.85 per share, up 52.2 percent and 58.1 percent, respectively, from the first quarter of 2006. First quarter 2007 net income includes a net gain of $422 million, or 57 cents per share, from the sale of the company’s branded pharmaceuticals business in Europe, net of various other special items.
"Our strategy for achieving higher growth while maintaining superior financial returns is working well, as evidenced by this quarter’s broad-based growth and profitability," said George Buckley, 3M chairman, president and CEO. "Quarterly sales grew by 6.1 percent, reaching an all-time high, and we delivered record net income – all while investing in additional capacity to build and sustain growth in the future. Importantly, we were able to overcome the impact of the pharmaceutical business divestiture, as sales improved by almost 10 percent ex-pharma and earnings grew at double-digit rates. Our exceptionally strong start in 2007 gives me great confidence in our people around the world to keep accelerating growth and leveraging it to the bottom line."
First-quarter worldwide sales in U.S. dollars totaled $5.9 billion, up 6.1 percent compared to the first quarter of 2006. Local-currency sales including acquisitions increased 7.4 percent, and foreign exchange impacts added 2.5 percent in the quarter. Divestitures, namely the recent sale of the company’s branded pharmaceuticals business, reduced reported sales growth by 3.8 percent. Local-currency sales including acquisitions increased 20.4 percent in Health Care, 15 percent in Safety, Security and Protection Services, 8.2 percent in Consumer and Office, 4 percent in Industrial and Transportation and 1.2 percent in Electro and Communications. Local-currency sales decreased by 0.8 percent in Display and Graphics, largely due to difficult year-on-year comparisons resulting from last year’s first-quarter inventory buildup within the LCD industry.
First-quarter net income was $1.4 billion, or $1.85 per share, versus $899 million, or $1.17 per share, in the first quarter of 2006. Net income and earnings per share increased 52.2 percent and 58.1 percent, respectively. The divested pharmaceuticals business contributed 5 cents per share in the comparable quarter last year. First quarter 2007 net income included a net profit of $422 million, or 57 cents per share, due to a gain on the sale of the branded pharmaceuticals business in Europe that closed in January, net of various other special items.
"The great strength of our brands, manufacturing capabilities and broad geographic distribution network, combined with the tremendous efforts across the company to invigorate 3M’s core businesses are producing tangible results," said Buckley. "Our ability to deliver products that embody innovative 3M technology to make our customers more successful will accelerate growth well into the future."
3M also reiterated its 2007 sales and earnings expectations. The company continues to expect 2007 earnings per share to be in the range of $5.20 to $5.45. This includes an estimated full year 2007 gain, net of costs from special items, of approximately 60 cents to 70 cents per share, primarily due to the sale of the company’s branded pharmaceuticals business in Europe. 3M also expects full-year, local-currency sales growth, adjusted for the divestiture of its branded pharmaceuticals business, to be between 6 and 10 percent, which includes approximately 1.8 percentage points from acquisitions closed as of today. Including the branded pharmaceuticals sales in 2006, total local-currency sales growth for 2007 is expected to be between 2 and 6 percent.
