3M 2014 Annual Report Download - page 32

26
Industrial Business (34.5% of consolidated sales):
2014 2013 2012
Sales (millions)
$
10,990
$
10,657
$
10,008
Sales change analysis:
Organic local currency
4.9
%
4.6
%
5.2
%
Acquisitions
―
3.6
1.1
Translation
(1.8)
(1.7)
(3.0)
Total sales change
3.1
%
6.5
%
3.3
%
Operating income (millions)
$
2,389
$
2,307
$
2,244
Percent change
3
.6
%
2.8
%
12.9
%
Percent of sales
21.7
%
21.6
%
22.4
%
The Industrial segment serves a broad range of markets, such as automotive original equipment manufacturer (OEM) and
automotive aftermarket (auto body shops and retail), electronics, appliance, paper and printing, packaging, food and
beverage, and construction. Industrial products include tapes, a wide variety of coated, non-woven and bonded abrasives,
adhesives, advanced ceramics, sealants, specialty materials, 3M Purification Inc. (filtration products), closure systems for
personal hygiene products, acoustic systems products, and components and products that are used in the manufacture,
repair and maintenance of automotive, marine, aircraft and specialty vehicles.
Year 2014 results:
Sales in Industrial totaled $11.0 billion, up 3.1 percent in U.S. dollars. Organic local-currency sales increased 4.9 percent,
and foreign currency translation reduced sales by 1.8 percent. On an organic local-currency basis, sales growth was
positive across all businesses, led by aerospace and commercial transportation, automotive OEM, 3M Purification Inc.,
advanced materials, and abrasive systems.
Geographically, organic local-currency sales increased 6 percent in the United States, 5 percent in Asia Pacific, and 3
percent in both EMEA and Latin America/Canada.
Operating income was $2.4 billion in 2014, an increase of 3.6 percent. Operating income margins increased by 0.1
percentage points to 21.7 percent. Operating income margins improved due to sales volume leverage, plus the
combination of selling price increases and raw material cost decreases. As indicated in the preceding Operating Business
Segments section, each of 3M’s five business segments absorbed incremental investments in 2014 related to business
transformation and global ERP implementation. This reduced operating income margins in each of the businesses by
approximately 0.2 percentage points year-on-year.
Year 2013 results:
Sales in Industrial totaled $10.7 billion, up 6.5 percent in U.S. dollars. Organic local-currency sales increased 4.6 percent,
acquisitions added 3.6 percent, and foreign currency translation reduced sales by 1.7 percent. On an organic local-
currency basis, all of Industrial’s businesses experienced positive sales growth in 2013, led by aerospace and commercial
transportation, automotive OEM, 3M Purification Inc. (filtration products), and industrial adhesives and tapes. Acquisition
growth related to the 2012 acquisition of Ceradyne, Inc. (Ceradyne). As disclosed in Note 2, in November 2012, 3M
acquired Ceradyne, which is headquartered in Costa Mesa, California. Ceradyne is involved in the development and
production of advanced technical ceramics for demanding applications in the automotive, oil and gas, solar, industrial,
electronics and defense industries.
Geographically, organic local-currency sales increased 8 percent in Latin America/Canada, 5 percent in the United States,
4 percent in EMEA, and 3 percent in Asia Pacific.
Operating income was $2.3 billion in 2013, up 2.8 percent year-on-year. Operating income margins decreased by 0.8
percentage points to 21.6 percent. This decline in margins largely related to the Ceradyne acquisition, which reduced
2013 operating income margins by 0.7 percentage points. As indicated in the preceding Operating Business Segments
section, each of 3M’s five business segments absorbed incremental investments related to business transformation,
enabled by 3M’s global ERP implementation, which reduced operating income margins in each of 3M’s five business
segments by approximately 0.3 percentage points when comparing 2013 to 2012.