3M Profit Sales Below Estimates as Latin America Slows

3M Co. (MMM), which makes goods ranging from auto insulation to bandages, reported fourth-quarter sales below analysts’ estimates as demand in Asia and Latin America slows.

Revenue rose 2.5 percent to $7.57 billion, short of analysts’ estimates of $7.71 billion. Weaker currencies also contributed to sales dropping 1.9 percent in the Asia Pacific region and 3.7 percent in Latin America and Canada, the St. Paul, Minnesota-based company said in a statement.

“You saw Latin America really slow for them,” said Shannon O’Callaghan, a New York-based analyst with Nomura Holdings Inc., in an interview today. “The industrial business remains strong and the U.S. and Europe pieces are fine.”

3M is a barometer for the global economy with sales of consumer, health-care, industrial, electronics and safety products in all regions of the world. The company’s also considered a manufacturing bellwether because the industrial tapes, films and abrasives require short order times, providing early signals in demand shifts.

Revenue rose 5.3 percent in the U.S. and 7.2 percent in Europe. 3M’s organic sales, which exclude acquisitions and currency translation, rose 3.4 percent, below O’Callaghan’s estimate of 5.2 percent.

Chief Executive Officer Inge Thulin said he maintains the company’s organic sales growth target of 3 percent to 6 percent for this year.

“We have great confidence and good momentum as we enter 2014,” Thulin said on a conference call with analysts. “We have had a very good pick up in industrial as of lately and health care is continuing to grow well for us.”

Shares Fall

The shares fell 2.7 percent to $127.15 at 10:47 a.m. in New York. They have fallen 7.1 percent this year through yesterday compared with a 4 percent drop in the Standard & Poor’s 500 Index. Last year, 3M gained 51 percent.

Net income in the fourth quarter rose 11 percent to $1.1 billion, or $1.62 a share, up from $991 million, or $1.41, a year earlier, 3M said. The per-share earnings matched the average of 14 estimates compiled by Bloomberg.

3M’s electronics and energy business had sales of $1.33 billion, a 1 percent decline from a year earlier. Consumer sales also dropped 1 percent to $1.1 billion. Sales rose at the Safety and Graphics unit, with a 2.5 percent gain to $1.34 billion.

Industrial sales rose 6.1 percent to $2.57 billion and health care climbed 2.4 percent to $1.36 billion.

In the almost two years since Thulin took over as chief executive officer, he has reorganized the company into five reporting units from six, shed assets to focus growth on businesses with more potential and set a goal of increasing research and development spending to 6 percent of sales from 5.5 percent.

“He’s laid out a pretty compelling playbook and now it just has to run its course,” O’Callaghan said.

To contact the reporter on this story: Thomas Black in Dallas at tblack@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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