3M 2014 Annual Report Download - page 34

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28
Electronics and Energy Business (17.6% of consolidated sales):
2014
2013 2012
Sales (millions)
$
5,604
$
5,393
$
5,458
Sales change analysis:
Organic local currency
5.2
%
―
%
(3.7)
%
Translation
(1.3)
(1.2)
(1.1)
Total sales change
3.9
%
(1.2)
%
(4.8)
%
Operating income (millions)
$
1,115
$
954
$
1,026
Percent change
16.8
%
(7.0)
%
(10.0)
%
Percent of sales
19.9
%
17.7
%
18.8
%
The Electronics and Energy segment serves customers in electronics and energy markets, including solutions that
improve the dependability, cost-effectiveness, and performance of electronic devices; electrical products, including
infrastructure protection; telecommunications networks, and power generation and distribution. This segment’s electronics
solutions include optical film solutions for the electronic display industry; packaging and interconnection devices; high
performance fluids and abrasives; high-temperature and display tapes; flexible circuits, which use electronic packaging
and interconnection technology; and touch systems products, which includes touch screens, touch monitors, and touch
sensor components. This segment’s energy solutions include pressure sensitive tapes and resins; electrical insulation;
infrastructure products that provide both protection and detection solutions; a wide array of fiber-optic and copper-based
telecommunications systems; and renewable energy component solutions for the solar and wind power industries.
The display materials and systems business provides films that serve numerous market segments of the electronic
display industry. 3M provides distinct products for five market segments, including products for: 1) LCD computer monitors
2) LCD televisions 3) handheld devices such as cellular phones and tablets 4) notebook PCs and 5) automotive displays.
The optical business includes a number of different products that are protected by various patents and groups of patents.
These patents provide varying levels of exclusivity to 3M for a number of such products. As some of 3M’s multi-layer
optical film patents expired at the end of 2013 and will expire over several years thereafter, 3M will likely see more
competition in these products. 3M continues to innovate in the area of optical films and files patents on its new technology
and products. 3M’s proprietary manufacturing technology and know-how also provide a competitive advantage to 3M
independent of its patents.
Year 2014 results:
Electronics and Energy sales totaled $5.6 billion, up 3.9 percent in U.S. dollars. Organic local-currency sales increased
5.2 percent, and foreign currency translation reduced sales by 1.3 percent.
Organic local-currency sales increased approximately 8 percent in 3M’s electronics-related businesses, with growth led by
display materials and systems. In 3M’s energy-related businesses, organic local-currency sales increased approximately
1 percent, with growth in electrical markets and telecommunications, partially offset by reductions in renewable energy.
On a geographic basis, organic local-currency sales increased 8 percent in Latin America/Canada, 7 percent in Asia
Pacific, and 1 percent in EMEA, while sales in the United States were flat.
Operating income increased 16.8 percent to $1.1 billion in 2014. Operating income margins were 19.9 percent compared
to 17.7 percent in 2013, helped by sales volume leverage. In addition, recent portfolio management actions are enhancing
3M’s relevance with customers and generating operational efficiencies, which also contributed to the operating income
margin improvement in 2014.
Year 2013 results:
Electronics and Energy sales totaled $5.4 billion, down 1.2 percent in U.S. dollars, with this decrease related to foreign
currency translation. Organic local-currency sales were flat in 3M’s electronics-related businesses, with sales increases in
display materials and systems offset by declines in electronics materials solutions. Organic local-currency sales were also
flat in 3M’s energy-related businesses, where sales gains in electrical markets were offset by sales declines in
telecommunication markets, and renewable energy.
On a geographic basis, organic local-currency sales increased slightly in Latin America/Canada and Asia Pacific. Organic
local-currency sales declined slightly in the United States and EMEA.