3M Earnings Call Nuggets: Inventory Stocking Dynamics, CEO’s Focus
Inventory Stocking Dynamics
Steven Winoker – Bernstein: Just maybe starting with a little bit more picture around the inventory stocking dynamics that led to the 10 basis points of volume increase. What were the puts and takes, especially around the electronics side? Do you think you’re through the destocking elements? Is it improving sequentially and when might you think about you’re planning for rebound on that front?
David W. Meline – SVP and CFO: So, what I would say Steve, is that inventory stock and destock was not a big feature of the results overall this quarter. We saw certainly last year quite dramatic impacts on the business as we saw a destocking take place. This quarter we didn’t really see anything significant in any of the segments, and that included electronics. So electronics remained weak as we talked about, but we continue to believe that we’ll see this uptick develop around midyear. So, very much consistent with what we had expected previously.
Steven Winoker – Bernstein: Then on pricing power and particularly in Heath Care, as a Company you have often talked about high 20s being kind of a sustainable run rate in Health Care margins and clearly you were back up well over 30% this quarter. To what extent was that a function of something that’s sustainable versus just taking down expenses for one quarter to help meet your commitments?
Inge G. Thulin – President and CEO: Well, you are right. We have said we would like to run that business in the high 20s and that is our objective. As I made some comments, we are now looking to accelerate our investments, specifically in the emerging markets where we have big opportunities. It’s very nice to see that the leverage is coming based on the investment we have done earlier in Health Care, specifically in emerging markets, but also in Consumer and Office. So, we have done investment there in the last couple of years and we now start to see the growth coming. It is a mix issue which is positive while for us due to the fact that many of the products that we are selling for Health Care, specifically into the developed economy, is adding a lot of value, meaning that we are able to maintain very good margins as we penetrate more there, and in the emerging market now we start to see that we take good market share and the penetration is accelerating. China specifically, we will continue to make more investment as we go and Latin America as well as I call out on the call. But you’re right, we would like to run it in the upper 20s, and by doing so I think we will able to really build out a good position on a global base.
Deane Dray – Citi: Good morning everyone, and Inge, congratulations on being the new leader for 3M, Since the transition occurred during the quarter, this would be a good opportunity to hear from you and maybe this would be better at an Analyst Day, but we don’t have that luxury, but what areas are you focused on for the Company in terms of what might be different, and specifically getting a lot of questions about your thoughts on the growth rate over the cycle, that 7% to 8% that had been set? So just a little bit more color in terms of what imprint we might expect over the near-term, and then very specifically how are you feeling about that 7% to 8% growth target?
Inge G. Thulin – President and CEO: Well, thank you. First of all, my target and objective and focus is to deliver the plan for 2012. I was part of the team to build a plan here, and that’s important for us. This as you know is a volatile time, and we are absolutely focused to make sure that we deliver what we have promised you for this year. So that’s initially what is very important for us. It’s not only important for me, it’s important for the whole team and the transition has gone very, very well and it was a very solid and robust process that we had in place. I think this is also good time to thank George for everything he did in that transition which was just extraordinary at least for me and for the team here. Relative to the growth, first of all, this is an organization that is responding very well to stretched targets and I think there is more elements to the business on a holistic way than just the top line growth. And at least for me, two other very important metrics is margins and return on invested capital. So, we are focusing on that as well. So, I would say that the 7% to 8% is a long-term target for 3M and something that the organization really are responding very well to and I would say the mindset in 3M today is changed versus many years ago where we believe today that we can win and we have the capability to do so. So, we are not at 7% to 8% as of yet as we know, but it’s a long-term target for us and our organization whatever we put out in terms of really tough stretched targets are responding very well.
Deane Dray – Citi: Then from a follow-up it is interesting that there is a change that we’ve not seen previously and (now see) you’re talking, calling out two end markets where you’d like to see growth both oil and gas and aero. Just give us a sense of what that competitive edge might be that 3M would bring to both of those end markets?
Inge G. Thulin – President and CEO: We have been in those markets for some time but at least in my mind and the organization’s mind here in total, we have not given full attention in terms of additional investment in order to accelerate our growth. So, if you combine oil and gas and mining, that’s a big market in total, which is for us where we can utilize many technology platforms in order to expand our presence into that market. So, I think in terms of integrated safety, protect and renew, it’s also for us to go into water management and filtration, and make sure that we add services into the whole environment there. So that’s a business that I believe and we believe here by combining them and make sure that we make additional investment into research and development and a strong frontend in terms of commercial decision really can move forward into and expand and accelerate. We will call that business the natural resource management and extraction division as that will be formed. Relative to aerospace, for us if you think about our technology platforms there which is everything from composite surfacing film, abrasive masking product, and personal protection, with our platforms there, that’s a good opportunity for us to enabling lighter, safer, quieter aircraft constructed faster. So, that’s a business that is growing fast for us as we speak, but we believe with additional technologies that we can accelerate that even more. So, we’re very excited about that and as David said, we move that from a department to a division recently meaning more focus and investment will go into that business.