In reporting its fourth-quarter and full-year 2020 results, St. Paul, Minnesota-based 3M, which operates in the promotional products market through its 3M Promotional Markets Dept. (PPAI 113638, S11), announced a robust fourth-quarter sales growth that helped push up its full-year performance.
“The 3M team delivered a strong fourth quarter with organic growth across all business groups, robust cash flow and a double-digit increase in earnings per share,” says Mike Roman, 3M chairman and CEO. “In an uncertain economic environment, we stayed focused on innovating for our customers, improving our operational execution and fighting the pandemic from every angle. Throughout 2020, we distributed two billion respirators globally and supported the development and manufacturing of vaccines and therapeutics to help the world respond to COVID-19. We also took significant actions to transform and build 3M for the future, while advancing our core values. Moving forward, we will continue to prioritize investments in growth, productivity and sustainability as we build on our progress and deliver strong results in 2021.”
In the fourth quarter, 3M reports year-on-year growth across all business segments and geographic areas even as the COVID-19 pandemic continues to evolve and affect its businesses in a number of ways. During the fourth quarter, end-market demand remained strong in personal safety, home improvement, general cleaning, semiconductor, data center and biopharma filtration. At the same time, several other end markets continued to experience year-on-year declines primarily driven by COVID-19-related headwinds, including health care and oral care elective procedures, consumer electronics, hospitality, office supplies and health care IT.
Sales grew 5.8 percent year-on-year to $8.6 billion. Organic local-currency sales increased 5.5 percent while acquisitions, net of divestitures, decreased sales by 1.1 percent. Foreign currency translation increased sales by 1.4 percent year-on-year. Total sales grew 12.7 percent in Safety and Industrial, 10.6 percent in Consumer, 5.4 percent in Health Care, and 2.3 percent in Transportation and Electronics. Organic local-currency sales increased 11.4 percent in Safety and Industrial, 9.9 percent in Consumer, 6.6 percent in Health Care, and 1.4 percent in Transportation and Electronics.
On a geographic basis, total sales grew 7.4 percent in EMEA (Europe, Middle East and Africa), 5.8 percent in the Americas and 5.3 percent in Asia Pacific. Organic local-currency sales grew 7.9 percent in the Americas, 5.6 percent in EMEA and 1.7 percent in Asia Pacific.
Both fourth-quarter GAAP and adjusted earnings were $2.38 per share, resulting in year-on-year increases of 43.4 percent and 22.1 percent on a GAAP-and adjusted-basis, respectively. Fourth-quarter operating income was $1.8 billion with operating margins of 21.5 percent.
The company’s operating cash flow was $2.5 billion with adjusted free cash flow of $2.1 billion contributing to adjusted free cash flow conversion of 151 percent. 3M paid $848 million in cash dividends to shareholders during the fourth quarter. The company reduced total debt by $0.8 billion, or down four percent, and net debt by $1.3 billion, or nine percent, sequentially.
Full-year 2020 sales grew 0.1 percent year-on-year to $32.2 billion. Organic local-currency sales decreased 1.7 percent while acquisitions, net of divestitures, increased sales by 2.1 percent. Foreign currency translation decreased sales by 0.3 percent year-on-year.
Looking ahead to 2021, 3M expects earnings to be in the range of $9.20 to $9.70 per share. The company anticipates its full-year total sales growth in the range of five to eight percent with organic local-currency growth between three to six percent.
