[The 2012 guidance laid out in #msg-69634061 represents YoY growth of 2-6% in sales and 7-11% in EPS. Not exactly a fireworks eruption, but the market likes it—the stock is up about 2% as I’m typing. (The company also reiterated EPS guidance for 2011, but this is not the headline story.)]
Dec 6 (Reuters) - 3M Co forecast 2012 earnings and revenue toward the high end of Wall Street expectations, citing "slow but positive growth" in the United States and an expected recovery in the global electronics market in the second half of next year.
The diversified U.S. manufacturer forecast 2012 revenue growth of 2 percent to 6 percent due to continued gains in most of its businesses -- including the two largest, transportation and health care -- and strengthening conditions in emerging markets, including Latin America and China.
Acquisitions will also boost revenue in 2012, helping offset negative impacts from taxes and foreign exchange, 3M executives told analysts and investors at a meeting in New York on Tuesday.
The Minneapolis-based company reaffirmed its 2011 guidance, calming investor concerns after its third-quarter earnings fell below expectations amid trouble in the electronics business and Western Europe.
Shares of 3M were up 1.8 percent at $82.36 in midday trade on the New York Stock Exchange, outpacing modest gains in the wider market.
Chief Executive George Buckley said 3M sees a "mild recession" in Europe and expects a decrease in display and graphics revenue to persist in 2012. He said the company can manage turbulence in Europe and that the electronics business will see "recovery" in the second half of the year.
He said 2012 "will be a pretty good year for 3M despite the challenges that we feel very able to deal with."
A big question about 2012 was left unanswered in the executives' prepared remarks: Buckley turns 65 in February, the mandatory retirement age at 3M. Presentations given by several executives did not address the succession plan.
3M forecast 2012 earnings of $6.25 to $6.50 per share, up 7 percent to 11 percent from expected 2011 results. It forecast 2012 revenue of $30.2 billion to $31.5 billion.
The midpoints of 3M's forecasts exceed what analysts had forecast for 2012. Analysts' average forecast is for earnings of $6.28 a share on revenue of $30.59 billion, according to Thomson Reuters I/B/E/S.
EUROPE'S 'MILD RECESSION'
Jefferies & Co equities analyst Laurence Alexander called 3M's outlook "conservative," noting that the company will be hurt by a higher tax rate and foreign exchange. He said those factors should offset volume growth.
But he added that next year's performance hinges on 3M's ability to raise prices and boost productivity.
The company, making products ranging from Post-It notes to films used in flat-panel televisions, said global demand for more sophisticated and efficient products will drive 2012 revenue, but executives continued to strike a cautious tone.
Although Buckley said "Western Europe seems to be getting worse" at the moment, he spent considerable time explaining why the current environment is different from the downturn that took place in 2008 and 2009. He said the "visibility" of the sovereign debt issues in Europe means "the economy is more likely to grow slowly, not collapse."‹
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