3M Company Evaluation

Business Segments:

  • Consumer: Post-It, Scotch, Command (14.9%)
  • Electronics and Energy: sources of power, electronic devices, and telecommunications networks (16% sales)
  • Health Care: medical and oral care products, drug delivery and health information systems (18.4% sales)
  • Industrial: tapes, abrasives, adhesives (34.3% sales)
  • Safety & Graphics: personal protective equipment, safety and security products, track and trace solutions (18.8% sales)

Historical:

Income Statement:

  • Decline in net sales over past 3 years (<1% decrease 2015 to 2016)
  • Cost of Goods Sold decrease at greater rate than net sales decline (2-6%)
  • Gross Profit and Net Income increase
  • Expenses decreased (SG&A 1-4%, R&D 0-1%)

2015 experienced greater decrease b/c non-controlling interest declined as 3M purchased remaining interest in Sumitomo 3M (Japan)

Balance Sheet:

  • Current assets: all numbers decreased between 2014 and 2015, then increased between 2015 and 2016
  • current marketable securities: classification change in 2015-decrease from $1.4 billion to $118 million between 2014-2015
  • prepaid pension benefits: increased by 308% in 2015 as post retirement and benefits plan restructured
  • total assets increased by 4.84% in 2015 then .57% in 2016
  • short term borrowings and current long-term portion of debt: $2 billion in 2015 compared to $972 million in 2016 and $106 million in 2014.
  • long-term debt: increased by 22% at decreasing rate (30% 2014- 2015 and 55% 2013-2014)
  • retained earnings and treasury stock increased over past 3 years-repurchase treasury stock (20% 2014-2015 and 9% 2015 to 2016)

Ratios:

  1. Liquidity: Current and Quick ratios- increasing and good (current: 1.88 in 2016 and quick: 1.34 in 2016)
  2. Leverage: debt to assets, debt to equity, long-term debt to equity - all increasing over past 3 years. More debt leveraged than equity (65:35)
  3. Activity: turnovers all decreasing but at very slow rate - probably due to declining sales
  4. Profitability Ratios: expenses declining so gross profit, operating, and net profit margin increasing
  5. ROA and ROE: increasing b/c net income still increasing

Competitors:

Johnson & Johnson and General Electric

J&J: 70,074 million in sales compared to 30,274 (3M), much greater net income of 15 billion to 3M's 4 billion

GE: 117,386 million sales but 82,693 in cost of goods so net income is negative 6 billion

J&J , 3M, GE

Past Goals

2012 5-year plan:

  • 9-11% growth in EPS
  • 4-6% revenue growth
  • more than 20% ROIC (22.6% ROIC in 2016)
  • 100% free cash flow conversion (cash available after covering capital expenditures-profit converted to cash)
  • increase in R&D to 6% of sales by 2017

Future Goals

2016-2020 Goals:

  • 8-11% growth in EPS
  • 2-5% sales growth
  • 20% ROIC
  • 100% Free Cash Flow Conversion

Continue to pay dividend for 60th consecutive year

New R&D Facility - St.Paul, Minn.(HQ)

Credits:

Created with images by webandi - "post it note office" • Monikapp - "list sticky notes note" • Pexels - "post it notes sticky notes note" • adnovak - "cards notes stickers" • Dean Hochman - "post-it notes" • B_A - "post it postit sticky notes" • Dean Hochman - "post-it notes"

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