3M reported its fourth-quarter and full-year 2015 results. Q4 GAAP earnings were $1.66 per share, a decrease of 8.3 percent versus Q4 2014.
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Sales declined 5.4 percent year-on-year to $7.3 billion. Organic local-currency sales declined 1.1 percent while acquisitions, net of divestitures, added 1.5 percent to sales. Foreign currency translation reduced sales by 5.8 percent year-on-year.
During the fourth quarter the company incurred a pre-tax charge of $114 million ($88 million after-tax), or $0.14 per share, related to the corporate restructuring it announced in October.
The restructuring was primarily focused on structural overhead, largely in the U.S., along with slower-growing markets with particular emphasis on EMEA (Europe, Middle East and Africa) and Latin America. Excluding restructuring, fourth-quarter earnings were $1.80 per share, a decrease of 0.6 percent versus the prior year.
Operating income was $1.5 billion and operating income margins for the quarter were 20.5 percent, down 1.0 percentage point year-on-year.
Excluding restructuring, operating income was $1.6 billion in the quarter and operating margins were 22.1 percent, up 0.6 percentage points year-on-year. Fourth-quarter net income was $1.0 billion and the company converted 182 percent of net income to free cash flow.
3M paid $628 million in cash dividends to shareholders and repurchased $1.1 billion of its own shares during the quarter.
Organic local-currency sales growth was 4.5 percent in Health Care and 2.7 percent in Consumer with declines of 1.8 percent in Industrial, 2.5 percent in Safety and Graphics, and 7.7 percent in Electronics and Energy.
On a geographic basis, organic local-currency sales growth was 1.1 percent in EMEA with declines of 0.4 percent in the U.S., 0.6 percent in Latin America/Canada and 2.7 percent in Asia Pacific.
Full-year 2015 GAAP earnings were $7.58 per share, an increase of 1.2 percent, or up 3.1 percent excluding the fourth-quarter restructuring. Sales decreased 4.9 percent to $30.3 billion with organic local-currency growth of 1.3 percent.
Acquisitions, net of divestitures, increased sales 0.6 percent. Foreign currency translation reduced sales by 6.8 percent.
Full-year operating income margins were 22.9 percent, up 50 basis points versus 2014, or up 90 basis points excluding the fourth-quarter restructuring. 3M converted 103 percent of net income to free cash flow for the year and generated 22.5 percent return on invested capital.
For the full year, 3M paid $2.6 billion in cash dividends to shareholders and repurchased $5.2 billion of its own shares.
3M affirmed its 2016 full-year performance expectations. The company expects 2016 earnings to be in the range of $8.10 to $8.45 per share with organic local-currency sales growth of 1 to 3 percent. 3M also expects free cash flow conversion to be in the range of 95 to 105 percent. ■