3M Sees Higher Profits Than Predicted
3M Co. (NYSE:MMM) reported a higher profit than analysts predicted as a result of mounting demand for aerospace and auto industry products. The average estimate from 16 analysts surveyed by Bloomberg was $1.31. Net income increased 2.8 percent to $954 million, $1.35 per share. A year ago, it was $928 million, $1.28 a share. “Despite negative macro headlines, industrial auto demand largely held in through yearend,” C. Stephen Tusa, analyst at JPMorgan Chase & Co., said. Tusa has a “neutral” rating on the stock.
3M reduced its full-year earnings forecast last October due to slowing growth, especially in Western Europe and the electronics industry. In December, the company said that sales might increase as much as 6 percent this year with the help of acquisitions. The company agreed to pay $550 million to buy Avery Dennison Corp.’s office products unit, the market leader in the label business. “We were resilient enough to achieve these results in the face of deteriorating demand in both Western Europe and consumer electronics,” CEO George Buckley said. 3M didn’t disclose whether Buckley would retire February 23. His contract ends on his 65th birthday.
Analysts and investors have pressured the company to reveal whether the board will ignore 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,” said Deane Dray, an analyst with Citigroup Inc.
In May, Inge Thulin was appointed Chief Operating Officer, making him a possible replacement for Buckley. Buckley has stated he would like to stay on as CEO. “We’d love to see Buckley stick around for quite a while,” said Kevin Walkush, an analyst with Jensen Investment Management in Chicago. “We like where the company is going under his leadership.”