3M 3Q16 Earnings Call Notes

3M (MMM) Q3 2016 Results

Inge Thulin

Healthcare business in the US slowed down

“Well I think first of all, geographically, U.S. slowed down. And it slowed down basically in the last months of the quarter. And then I think there’s two other elements out there in the world that happened to that business. Some, it’s in developing economy where Brazil had a little bit of slowdown that was more than we expected. And then as you know, things are going on in Central East Europe, specifically in Turkey, that tempered it, generally speaking. So when you look upon it from a business perspective, if you tempered in United States which we did, that would go over all businesses. The U.S. I think tried to move some purchases forward maybe one to two quarter. That’s what we’re talking about, like mid-term or short-term tempering.’

Will see positive industrial growth in 4Q driven primarily by comp

“so it being U.S. that hold back Industrial during the last couple of quarters, it was better in Q3. So that’s positive, and we will see positive growth for Industrial in Q4. And that will be driven exactly as you said relative to we start to deliver now on the body armor. And we see some uptick in some of the other businesses. But it’s very much the comp that will be a driver for us in Q4 and as we go into Q1. ”

I’m very positive that we start to see industrial turning the corner

” I’m very positive that we, now we start to see Industrial turning the corner as we move forward. And we will see the first quarter happen here in Q4.”

The portfolio of acquisition targets is rich

“as I’ve said the portfolio is rich in terms of candidates. I’d rather do slightly bigger than smaller. As I said earlier, we have during the last couple of years stepped up our probability – or the output on what we have done. And by definition, in order for us to move the needle forward, they should more sizable than we did in the past. So I think I hold it for then. Then when the news are coming out, we’ll look upon the size of them. But we are ready. I mean we are ready. We are ready. I think we’re on a good position to do what we need to do in order to bolster growth with or without acquisition. Also organically, we’re doing okay.”

Not too concerned about Healthcare slowdown in the US

“Yeah. I think the reality of business is that it will be both. But it start by people holding back a little bit and then they work down the inventory. But it’s not an inventory correction in any sort or shape or form. I think it is yes, that people have a little bit of uncertainty here in the quarter of how this will shake out and then they’re ready to go again. So I think it’s a normal reaction for anyone around the world when you’re going into a period of uncertainty relative to, will there be any changes or policies as you move forward, et cetera. So I’m not too, honestly, I’m not concerned at all – as I said, and you like to see more growth there of course with the margins we have. But it’s not overall concern at all.”

Nicholas C. Gangestad – 3M Co.

Anticipating a sideways move in 2017

“. As you can imagine, we’re still working on our 2017 outlook. And on December 13, we’ll provide more details on that at our outlook meeting. At a high level, Andy, we expect an external growth market to continue moving sideways in 2017. That’s the overall external picture we’re anticipating. From a business perspective, we do expect our Industrial and Electronics & Energy businesses to have improved growth rates in 2017 versus what we’ve been seeing in 2016.”