“3M’s fourth quarter was marked by record sales, expanded margins and robust organic growth across all business groups and geographic areas,” said Inge G. Thulin, 3M chairman, president and CEO. “Our team’s performance capped a successful year for our enterprise. For 2017, we posted organic growth of 5%, along with healthy earnings, cash flow and return on invested capital.
“Over the last several years, we have accelerated investments in the business – including stepping up research and development and our commercialization efforts – which is evident in our strong results,” Thulin continued. “Going into 2018, we will increase investments further, and are positioned to continue generating premium value for our customers and premium returns for our shareholders.”
Fourth-quarter GAAP earnings were $0.85 per share, a decrease of 55% versus the fourth quarter of 2016. The Tax Cuts and Jobs Act (TCJA), signed into law in the fourth quarter, resulted in a net tax expense in the quarter of $762 million, or $1.25 per share.
Sales were up 9.0% to $8.0 billion. Organic local-currency sales increased 6.0% while acquisitions, net of divestitures, increased sales by 0.3%. Foreign currency translation increased sales by 2.7% year-on-year. Fourth-quarter operating income was $1.8 billion and operating income margin was 22.8%.
The company’s operating cash flow was $1.9 billion, contributing to conversion of 268% of net income to free cash flow.
Total sales grew 15.0% in Safety and Graphics, 12.5% in Electronics and Energy, 7.3% in Consumer, 6.9% in Industrial, and 6.0% in Health Care. Organic local-currency sales increased 11.0% in Electronics and Energy, 10.7% in Safety and Graphics, 5.4% in Consumer, 3.9% in Industrial, and 3.1% in Health Care.
Full-Year 2017 Results
Full-year 2017 GAAP earnings were $7.93 per share, a decrease of 2.8%. Sales increased 5.1% to $31.7 billion and organic local-currency sales increased 5.2%. The combination of acquisitions and divestitures decreased sales 0.6%. Foreign currency translation increased sales 0.5%. Full-year operating income margins were 24.7%, up 70 basis points versus 2016.
The company’s operating cash flow was $6.2 billion, contributing to conversion of 100% of net income to free cash flow for the year. For the full year, 3M paid $2.8 billion in cash dividends to shareholders and repurchased $2.1 billion of its own shares.