Replies to post #4113 on The Rising Influence of Rising Affluence

[DewDiligence]

There was an awkward moment on 3M's 4Q11 CC regarding this.

[DewDiligence]

3M Profit Edges Higher—CEO Succession Remain a Question

[In 4Q11, 34% of 3M’s worldwide sales came from emerging markets, and these sales grew 14% YoY. 2012 non-GAAP EPS guidance is $6.25-6.50, so the current price represents a P/E of about 13.5x.

Although some of its business segments are currently in a funk (#msg-71476535), 3M remains worthy of being a core LT play on The Global Demographic Tailwind. It is also one of the world’s few truly great technology companies, IMO.]

http://online.wsj.com/article/SB10001424052970204573704577184614127697088.html

›JANUARY 26, 2012, 2:46 P.M. ET
By JAMES R. HAGERTY

3M Co., the maker of Scotch tape, Post-it Notes [there they go again, LOL] and thousands of other industrial products reported better-than-expected fourth-quarter earnings, but it again fell short of goals for sales growth.

The St. Paul, Minn.-based conglomerate also offered little insight into its management-succession plans even though the company's chief executive is nearing the end of his contract.

Speaking to analysts Thursday, George Buckley, chairman and CEO, said the board still hasn't made a decision on succession. "I think they're trying to figure out what would be the best way forward," he said.

His remarks came in response to a question from Deane Dray, an analyst at Citigroup, who complained that 3M has been "really ambiguous" about what will happen next month when Mr. Buckley turns 65 years old, the normal retirement age for 3M's top executives.

Mr. Buckley's contract is due to expire in February unless extended by the board. Mr. Buckley, a native of Sheffield, England, who trained as an electrical engineer, has suggested in the past that he would like to remain at the company but that the decision wasn't his.

Last year, 3M's board promoted Inge Thulin, a Swede who previously headed international operations, as chief operating officer, a new position, suggesting that he might succeed Mr. Buckley. Since then, however, the company has been silent on succession plans.

"Does the board not consider this to be a priority?" Mr. Dray asked. Mr. Buckley replied: "Obviously they do consider it a priority."

3M said net income in the fourth quarter was $954 million, or $1.35 a share, up 2.7%, from $928 million, or $1.28 a share, a year earlier. Sales increased 5.7% to $7.09 billion. Analysts had projected earnings per share of $1.31 for the latest quarter, according to FactSet Research Systems.

3M's organic sales growth, which excludes the effects of recent acquisitions, price changes and currency fluctuations, was just 1.3% in the latest quarter. 3M in recent years has pledged to raise its average organic growth to between 7% and 8% a year from the 3M's previous norm of around 4%.

Mr. Buckley said the company's underlying growth is very strong and has been masked by customers' recent cutting of their inventories, particularly in such areas as films and other parts used in consumer electronics. 3M has been trying to pump up growth by churning out new products faster, focusing on fast-growing markets like China and India, and making acquisitions.

3M reaffirmed its December forecast that earnings per share in 2012 will be in a range of $6.25 to $6.50 [excluding a $0.06/sh hit from the Avery Dennison acquisition, which has not closed yet], up from $5.96 in 2011.

But the company warned that results in this year's first half will be hurt by weakness in Western Europe and by lower demand for 3M's films used to brighten images on flat-screen televisions.

"We're in a fairly weak environment at least through the first quarter," said David Meline, chief financial officer. Assuming recovery in Western Europe and in consumer electronics, "we would expect to see some acceleration in the second half."‹