Jan. 30--With strong industrial orders and an "OK" holiday shopping season, 3M Co. posted solid fourth-quarter earnings Thursday morning that met analysts' expectations on profits but missed a hair on revenues.
Sales rose in three of 3M's five main businesses -- industrial, healthcare and safety/graphic -- and fell in the consumer and electronics units.
3M company's stock fell 1.7 percent, one of just five decliners on the 30-company Dow Jones Industrials Average Thursday.
Analysts said 3M's modest shortfalls in consumer and electronics were probably what caused 3M to miss analysts' revenue expectations for the quarter.
3M CFO David Meline told analysts that the 2013 holiday shopping season proved just "OK but not strong." Lackluster consumer demand impacted retailers and their suppliers countrywide, he said.
But executives were broadly pleased with the quarter and noted that product sales were particularly strong in its industrial business, where factory, automotive and airplane adhesives sold well as did filtration products. 3M also benefited from its 2013 acquisition of Ceradyne, a maker of industrial grade ceramics.
"The fourth quarter was a very strong finish to a very successful year for 3M," CEO Inge Thulin told analysts during a conference call. "In 2013, we achieved good growth and solid profitability. More importantly we came out of 2013 stronger than we entered it ... We had a very good second part of the year and we feel good about that."
Results were surprisingly positive in western Europe, where automotive and manufacturing product orders spiked. Officials are now forecasting up to 3 percent growth for Europe, compared to zero a year ago.
"Europe flipped from a headwind to now a tail-wind. That was the second best organic growth region behind the United States [for 3M]," said Edward Jones equity analyst Matt Arnold.
3M's growth in Latin America slowed during the fourth quarter mainly due to political, economic or mining issues in Venezuela, Argentina and Brazil.
Goldman Sachs analyst Joe Ritchie noted that 3M showed a solid "organic growth trajectory."
The small dip in consumer and electronics didn't bother some analysts.
Matt Arnold at Edward Jones noted that 3M, which makes optical or screen-brightening films for cellphones, tablets and computers, has seen a shift from laptops to smaller cellphones and tablets. As a result, less optical film is needed. In addition, demand growth for cellphones is starting to level out, which is also impacting 3M. "Electronics is a challenging end market," Arnold said. "But it's nothing new."
3M sales grew 2.4 percent to $7.6 billion during the quarter, off slightly from the $7.7 billion analysts had expected on average. Earnings, however met expectations, rising 11 percent to $1.1 billion, or $1.62 per share.
Full-year sales grew 3.2 percent to $30.9 billion, which was just shy of the $31 billion analysts expected. The company earned $4.66 billion, or $6.72 per share, for the full year.
3M officials reaffirmed their 2014 guidance, saying that full-year earnings should reach $7.30 to $7.55 a share and that sales should grow 3 to 6 percent.