3M 2013 Annual Report Download - page 30

24
Industrial Business (34.3% of consolidated sales):
2013 2012 2011
Sales (millions)
$
10,584
$ 9,943 $ 9,629
Sales change analysis:
Organic local currency
4.6
%
5.2 % 9.0 %
Acquisitions
3.6
1.1 6.1
Translation
(1.7)
(3.0)
3.5
Total sales change
6.5
%
3.3 % 18.6 %
Operating income (millions)
$
2,296
$ 2,236 $ 1,983
Percent change
2.7
%
12.8 % 15.3 %
Percent of sales
21.7
%
22.5 % 20.6 %
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 2013 results:
Sales in Industrial totaled $10.6 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, 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 2.7 percent year-on-year. Operating income margins decreased by 0.8
percentage points to 21.7 percent. This decline in margins largely related to the Ceradyne acquisition, which reduced
2013 operating income margins by 0.7 percentage points.
Year 2012 results:
Sales in Industrial totaled $9.9 billion, up 3.3 percent in U.S. dollars. Organic local-currency sales increased 5.2 percent,
acquisitions added 1.1 percent, and foreign currency translation reduced sales by 3.0 percent. Acquisitions growth was
primarily driven by Winterthur Technologie AG (Winterthur) in the abrasives market, Ceradyne, Inc. (Ceradyne) in the
advanced technical ceramics market, and Alpha Beta Enterprise Co. Ltd. (Alpha Beta) in industrial tapes, all of which are
discussed further below. On an organic local-currency basis, sales growth was strongest in automotive OEM, aerospace,
abrasives and 3M Purification Inc.
Geographically, organic local-currency sales increased 8 percent in the United States, 7 percent in Latin America/Canada,
5 percent in Asia Pacific, and 1 percent in EMEA.
Operating income was $2.2 billion in 2012, 12.8 percent higher than 2011, with the primary benefit related to the
combination of selling price increases and raw material cost decreases. Operating income growth was led by the United
States. Operating income margins increased by 1.9 percentage points to 22.5 percent.
3M continued to invest in its Industrial business. In November 2012, 3M acquired Ceradyne. In March 2011, 3M acquired
a controlling interest in Winterthur via completion of a public tender offer. Winterthur, based in Zug, Switzerland, is a
leading global supplier of precision grinding technology serving customers in the area of hard-to-grind precision
applications in industrial, automotive, aircraft, and cutting tools. In addition, in February 2011, 3M completed its acquisition