M profit tops estimates amid higher demand

MINNESOTA: 3M, the maker of Post-It Notes and fuel system tune-up kits, posted higher profit than analysts estimated amid increasing demand for aerospace and auto industry products.

According to a Bloomberg report on Thursday, net income rose 2.8 per cent to $954m, or $1.35 per share, compared with $928m, or $1.28, a year ago, the St. Paul, Minnesota-based company said in a statement. The average estimate from 16 analysts surveyed by Bloomberg was $1.31.

“Despite negative macro headlines, industrial auto demand largely held in through year end,” C. Stephen Tusa, an analyst with JPMorgan Chase & Co., said in a January 18 report. Tusa has a “neutral” rating on the stock.

Slowing growth, especially in Western Europe and the electronics industry, had forced the company to reduce its full- year earnings forecast in October. 3M said in December that sales may rise as much as six per cent this year with the help of acquisitions.

Sales in the fourth quarter rose 5.7 per cent to $7.09bn, matching analysts’ estimates. A 14 percent sales increase at the Industrial and Transportation unit made up for a sales decline of 8.9 per cent at 3M’s Display and Graphics business.

“We were resilient enough to achieve these results in the face of deteriorating demand in both Western Europe and consumer electronics,” Chief Executive Officer George Buckley said in the statement.

Earlier this month, the company agreed to pay $550m to buy Avery Dennison Corporation’s office products unit, the market leader in the label business.

3M didn’t discuss whether Buckley will retire February 23 under a renewing contract that terminates on his 65th birthday. Analysts and investors increasingly have urged the company to disclose whether the board will waive its retirement policy and extend Buckley’s contract.

“Succession planning is the 800-pound gorilla in the room given that Chairman and CEO George Buckley is just one month from the mandatory retirement age and there still has been no succession announcement,” Deane Dray, an analyst with Citigroup Incorporated, wrote in a January 18 report.