3M 2012 Annual Report Download - page 30

24
Health Care Business (17.3% of consolidated sales):
2012
2011
2010
Sales (millions)
$
5,158
$
5,031
$
4,513
Sales change analysis:
Organic local currency
4.7
%
4.6
%
4.1
%
Acquisitions
0.3
3.8
1.2
Divestitures
―
―
(0.2)
Translation
(2.5)
3.1
0.3
Total sales change
2.5
%
11.5
%
5.4
%
Operating income (millions)
$
1,646
$
1,489
$
1,362
Percent change
10.6
%
9.3
%
1.1
%
Percent of sales
31.9
%
29.6
%
30.2
%
The Health Care segment serves markets that include medical clinics and hospitals, pharmaceuticals, dental and
orthodontic practitioners, health information systems, and food manufacturing and testing. Products and services provided
to these and other markets include medical and surgical supplies, skin health and infection prevention products, inhalation
and transdermal drug delivery systems, dental and orthodontic products (oral care), health information systems, and food
safety products.
Year 2012 results:
Health Care sales totaled $5.2 billion, an increase of 2.5 percent in U.S. dollars. Organic local-currency sales increased
4.7 percent, led by food safety, health information systems, and skin/wound care. Sales declined year-on-year in drug
delivery systems. Acquisitions added 0.3 percent, as 3M further strengthened its health information systems business in
April 2012 by acquiring CodeRyte, Inc., which provides clinical natural language processing technology and computer-
assisted coding solutions for outpatient providers. Foreign currency translation reduced sales by 2.5 percent.
On a geographic basis, organic local-currency sales increased 12.5 percent in Latin America/Canada, 10 percent in Asia
Pacific, 4 percent in the United States, and 1 percent in EMEA.
Operating income increased 10.6 percent to $1.6 billion. Operating income margins were 31.9 percent in 2012 compared
to 29.6 percent in 2011, driven by strong manufacturing cost control, improved utilization and production efficiencies.
Operating income grew in all major geographic areas.
Year 2011 results:
Health Care sales increased 11.5 percent to $5.0 billion. Organic local-currency sales increased 4.6 percent and
acquisition added 3.8 percent. Acquisition growth primarily related to Arizant Inc., a leading manufacturer of patient
warming solutions designed to prevent hypothermia in surgical settings. Currency impacts increased sales by 3.1 percent
in Health Care. On a geographic basis, all regions posted positive sales growth. Asia Pacific, Latin America/Canada, and
Europe all reported sales growth of 10 percent or more, while the U.S. grew at 9 percent. Organic local-currency sales
growth increased in the food safety, health information systems, infection prevention, skin and wound care, and oral care
businesses. Sales in the drug-delivery systems business increased in the fourth quarter of 2011 compared to the same
period in 2010, but were down slightly for total-year 2011 when compared to 2010.
Operating income in Health Care increased 9.3 percent in 2011 to $1.5 billion. Operating income margins were 29.6
percent, compared to 30.2 percent in 2010, with this decrease due in part to growth investments in the health information
systems and infection prevention businesses. 3M also invested in emerging markets to improve market penetration levels.
The year-on-year decline in operating income margins was also due in part to sales declines in drug delivery systems.