Earnings Review and Free Research Report: 3M Reported Q2 FY17 Results; Updated its FY17 Outlook

Research Desk Line-up: Crane Post Earnings Coverage

LONDON, UK / ACCESSWIRE / August 1, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on 3M Co. (NYSE: MMM), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=MMM, following the Company’s release of its financial results on July 25, 2017, for Q2 FY17. The Company reported a sales increase of 1.9% y-o-y; positive growth across all five business groups; GAAP EPS of $2.58, up 24.0% y-o-y; and updated its FY17 full-year outlook of GAAP EPS from $8.70 to $9.05 to $8.80 to $9.05. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member’s account at:

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Earnings Reviewed

3M generated a net sale of $7.81 billion for Q2 FY17 compared to $7.66 billion for Q2 FY16; noting y-o-y rise of 1.9% y-o-y. The operating income for Q2 FY17 was $2.18 billion compared to $1.87 billion for Q2 FY16; an increase of 16.5% y-o-y.

The net income for Q2 FY17 was $1.58 billion compared to $1.29 billion in Q2 FY16, an increase of 22.6% y-o-y. 3M’s earnings per share (EPS) attributable to 3M’s common shareholders-diluted was $2.58 in Q2 FY17 compared to $2.08 for Q2 FY16; an increase of 24% y-o-y. The cash dividend paid per 3M’s common share in Q2 FY17 was $1.175 compared to $1.11 in Q2 FY16; an increase of 5.85% y-o-y.

3M beat EPS consensus estimates from Thomson Reuters of $2.54 but faltered in revenues which were estimated at $7.86 billion for Q2 FY17.

Segment Information

In Q2 FY17, 3M’s Industrial segment generated a net sale of $2.72 billion compared to $2.65 billion in Q2 FY16; an increase of 2.6% y-o-y. This segment’s operating income was $523 million in Q2 FY17 compared to $620 million in Q2 FY16; noting a decrease of 15.64% y-o-y.

In the Safety and Graphics segment, 3M generated a net sale of $1.55 billion in Q2 FY17 compared to $1.56 billion in Q2 FY16; noting a decrease of 1.2% y-o-y. This segments saw operating income of $852 million in Q2 FY17 compared to $421 million in Q2 FY16; an increase of 102.3% y-o-y.

In its Health Care segment, the Company generated a net sale of $1.44 billion in Q2 FY17 compared to $1.41 billion in Q2 FY16; noting a rise of 2.1% y-o-y. This segment’s operating income was $412 million in Q2 FY17 compared to $462 million in Q2 FY16; a decrease of 10.8% y-o-y.

In the Electronics and Energy segment, 3M generated a net sale of $1.21 billion in Q2 FY17 compared to $1.13 billion in Q2 FY16; noting an increase of 7.0% y-o-y. This segment’s operating income came in at $301 million in Q2 FY17 compared to $217 million in Q2 FY16; noting an increase of 38.7% y-o-y.

The Consumer segment generated a net sale of $1.14 billion in Q2 FY17 compared to $1.13 billion in Q2 FY16, noting a slight rise of 0.8% y-o-y. This segment also saw operating income of $195 million in Q2 FY17 compared to $281 million in Q2 FY176; a decrease of 30.6% y-o-y.

3M reported operating loss in its Corporate and Unallocated segment in Q2 FY17 to the tune of $44 million compared to a loss of $84 million in Q2 FY16. In the Elimination of Dual Credit head, 3M reported operating loss of $55 million compared to a loss of $51 million in Q2 FY16.

Cash Matters

In Q2 FY17, 3M reported net cash provided by investing activities in Q2 FY17 of $427 million, while it had used $630 million in investing activities in Q2 FY16. The Company also reported net cash used in financing activities of $2.86 billion in Q2 FY17 compared to $2.03 billion in Q2 FY16.

3M also reported a net increase in cash and cash equivalents in Q2 FY17 to the tune of $256 million compared to a net decrease in cash and cash equivalents of $110 million in Q2 FY16.

The Company’s operating cash flow was $1.6 billion in Q2 FY17 compared to $1.30 billion in Q2 FY16, while the free cash flow conversion of net income to free cash flow was 85% in Q2 FY17 compared to 75% in Q2 FY16. The net debt as on June 30, 2017, was $8.49 billion, while it was $8.96 billion as on December 31, 2016.

Outlook

The guidance for FY17 was updated by 3M on the basis of a strong H1 2017 performance. The Company now forecasts organic local-currency sales growth to be 3% to 5%, up from the previous guidance of 2% to 5%, and it also expects earnings in the range of $8.80 to $9.05 per share, up 8% to 11% y-o-y compared to a prior expectation of $8.70 to $9.05.

Stock Performance

3M’s share price finished yesterday’s trading session at $201.17, slightly rising 0.73%. A total volume of 1.83 million shares have exchanged hands, which was higher than the 3-month average volume of 1.81 million shares. The Company’s stock price surged 3.26% in the last three months, 14.68% in the past six months, and 12.79% in the previous twelve months. Additionally, the stock rallied 12.66% since the start of the year. Shares of the Company have a PE ratio of 22.93 and have a dividend yield of 2.34%. The stock currently has a market cap of $120.35 billion.

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