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3M Drops Most in Dow Index on Slowing Sales Outlook

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3M Falls After Projecting Sales-Volume Gains May Slow
Post-It Brand notes and Scotch Matte Finish Magic Tape, both 3M Co. Photographer: Andrew Burton/Bloomberg

Dec. 7 (Bloomberg) -- 3M Co. dropped the most of any company on the Dow Jones Industrial Average after predicting sales volumes at existing businesses would rise more slowly in 2011 than this year.

So-called organic-sales volume may expand 5.5 percent to 7.5 percent in 2011, the company said in a statement today. That compares with growth of as much as 14 percent this year that 3M projected in October after gains of 16 percent in the first nine months.

Earnings next year will rise to $5.90 to $6.10 a share, including a year-over-year increase in pension costs of 27 cents a share, the St. Paul, Minnesota-based company said. That trails the $6.20 average estimate of analysts surveyed by Bloomberg.

“Investors may be disappointed with the organic-growth estimate,” Jeff Windau, a St. Louis-based analyst with Edward Jones, said in an e-mail. “In addition, investors could have some economic concerns that the developed countries (like the U.S., countries in Europe) may not grow as anticipated and put additional pressure on results.”

The company’s long-term target for organic-sales volume growth is 7 percent to 8 percent, Chief Financial Officer Patrick Campbell said today during a meeting with analysts and investors in New York.

3M slid $2.69, or 3.1 percent, to $84.19 in New York Stock Exchange composite trading. That was the worst decline among 30 stocks in the Dow index, and 3M’s biggest drop since Oct. 28.

Revenue next year may be $29 billion to $30.5 billion, 3M said. Analysts surveyed by Bloomberg estimated 2011 sales of $29.2 billion, on average.

‘International Presence’

Windau, who has a “buy” rating on the shares, said investors may benefit from 3M’s “strong international presence,” especially in emerging markets such as China and India.

Such markets make up one-third of 3M sales and may climb to 45 percent by 2015, Chief Executive Officer George W. Buckley said in the statement.

The maker of Scotch tape and films to brighten television screens maintained its 2010 earnings projection of $5.70 to $5.74 a share on sales of as much as $26.4 billion, excluding a Medicare-related charge, according to the statement. The average estimate of analysts surveyed by Bloomberg was earnings of $5.74 a share on sales of $26.5 billion.

3M has announced at least $2 billion in acquisitions this year, the highest in a decade, as the company adds to its health-care, security and industrial operations. Acquisitions in high-growth businesses include Cogent Inc. and Attenti Holdings SA in security and Arizant Inc. in health care, 3M said.

To contact the reporters on this story: James Langford in New York at jlangford2@bloomberg.net

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

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