3M Sticks to Core Businesses for Higher Sales

3M Co.'s fourth-quarter sales increased 9%, as a revamped electronics business continued to drive growth.

The Maplewood, Minn.-based maker of Post-it Notes, Scotch tape and Ace bandages topped expectations for the quarter and raised its profit forecast for 2018 on the expectation of lower U.S. income taxes. 3M shares rose 0.43% Thursday morning to trade at $248.97. 3M's net income, though, fell 55% as the company recorded expenses of $762 million to comply with provisions in the new federal tax code.

After years of lackluster sales growth, 3M's performance has improved as a result a renewed focus on in its electronics-and-energy business, whose customers include makers of semiconductors, data centers, automotive electrification and energy grids.

"These investments are paying off." Chief Executive Inge Thulin said Thursday. "Going into 2018, we will increase investments further."

Fourth-quarter sales from the electronics-and-energy unit climbed 12.5% to $1.3 billion as operating income grew by 2.6% to $334 million. Demand for 3M's products have been aided by expanding industrial activity globally and strong sales growth overseas, particularly in Asia.

The safety and graphics business-which supplies granules for roofing shingles, traffic safety materials and personal safety gear-reported a 15% increase in sales to $1.5 billion, driven by construction activity to repair hurricane damage in the southern U.S. "That is our next breakout business," Mr. Thulin said.

Operating income, helped by the proceeds from a business sale, rose 50% to $406 million, 3M's pretax operating margin for the quarter rose slightly from last year to 22.8%. Overall for the year-ending quarter, 3M earned $523 million, or 85 cents a share, compared with $1.15 billion, or $1.88 a share, a year earlier.

3M raised its per-share profit outlook for 2018 to a range of $10.20 to $10.70 from $9.60 to $10 as a result of a lower U.S. tax rate.

-- Write to Bob Tita at robert.tita@wsj.com

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January 25, 2018 11:07 ET (16:07 GMT)