3M Stands by Mexico Business Plan -- 2nd Update

Features Dow Jones Newswires

3M Co. isn't planning to alter its production strategy in Mexico despite President Donald Trump's criticism of some U.S. companies operating in the country.

Continue Reading Below

"We are not changing anything," Chairman and Chief Executive Inge Thulin said Tuesday in a call with analysts, without mentioning Mr. Trump or specific proposed shifts in U.S. policies.

Describing Mexico as "an important local market for us" where 3M's business saw 10% growth in organic local-currency sales in the fourth quarter, Mr. Thulin said the company locates production near customers for its myriad consumer and industrial products. "We never left [the] United States," Mr. Thulin added. "We expanded internationally based on the local market opportunity."

The St. Paul, Minn.-based maker of Scotch tape, Post-it Notes and industrial adhesives reported stronger-than-expected growth in its core industrial business in the fourth quarter, offsetting declines in its consumer and electronics and energy segments.

3M maintained its 2017 outlook, saying it still expects organic local-currency sales growth of 1% to 3% this year with per-share earnings between $8.45 and $8.80. The company reported sales of $30.1 billion in all of 2016, down slightly from the prior year, with earnings of $8.16 a share. Full-year results were in-line with analysts' expectations.

The U.S. dollar's volatility will challenge the company in coming quarters, said Chief Financial Officer Nick Gangestad. A stronger dollar has made U.S. exports more expensive abroad and foreign sales less valuable. "The dollar has been moving a lot," he said.

Continue Reading Below

In the fourth quarter, revenue edged up 0.4% to $7.33 billion. The industrial segment was boosted by the automotive sector, which offset declines in the aerospace business. Profit of $1.16 billion, or $1.88 a share, was up from $1.04 billion, or $1.66, a year earlier.

The industrial segment accounts for roughly one-third of 3M's business. "When we start to get good momentum in that business, that is helping us a lot," Mr. Thulin said.

3M's electronics and energy business continued to face difficulties. Sales in this segment were off about 1% to $1.2 billion amid flat electronics-related sales and declines in the energy market. Nevertheless, the segment posted $326 million of operating income, a 61% year-over-year increase.

Analysts were surprised by a weaker-than-expected performance in 3M's consumer products division, whose organic sales declined about 1% for the quarter.

The company saw sales growth in its home-improvement and consumer-health businesses, but declines in its stationery and office businesses.

--Imani Moise contributed to this article.

Write to Andrew Tangel at Andrew.Tangel@wsj.com