George Buckley presented on innovation and growth at 3M. He discussed 3M's strong financial results in the second quarter with sales growth of 8% and EPS growth of 17.1%. Buckley outlined 3M's plan to drive growth through reinvigorating R&D, accelerating international expansion, investing in supply chain capabilities, and acquiring companies to accelerate growth in core businesses. He emphasized 3M's focus on continuing to innovate, serve customers, and improve efficiency through initiatives like Six Sigma and Lean.
Morgan Stanley Global Industrials CEOs Unplugged Conference
1. Innovation and Growth at 3M
George W. Buckley
Chairman, President and Chief Executive Officer
2007 Morgan Stanley Global Industrials
CEOs Unplugged Conference
September 10, 2007
2. Forward-Looking Statements
This presentation contains forward-looking information (within the meaning of the Private Securities
Litigation Reform Act of 1995) about the company’s financial results and estimates, business prospects,
and products under development that involve substantial risks and uncertainties. You can identify these
statements by the use of words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,”
“believe,” “will,” and other words and terms of similar meaning in connection with any discussion of future
operating or financial performance. Among the factors that could cause actual results to differ materially
are the following: (1) worldwide economic conditions; (2) competitive conditions and customer preferences;
(3) foreign currency exchange rates and fluctuations in those rates; (4) the timing and acceptance of new
product offerings; (5) the availability and cost of purchased components, compounds, raw materials and
energy (including oil and natural gas and their derivatives) due to shortages, increased demand or supply
interruptions (including those caused by natural and other disasters and other events); (6) the impact of
acquisitions, strategic alliances, divestitures, and other unusual events resulting from portfolio
management actions and other evolving business strategies, and possible organizational restructuring; (7)
generating less productivity improvements than estimated; and (8) legal proceedings, including significant
developments that could occur in the legal and regulatory proceedings described in the company’s Annual
Report on Form 10-K for the year ended Dec. 31, 2006 and its subsequent Quarterly Reports on Form 10-
Q (the “Reports”). Changes in such assumptions or factors could produce significantly different results. A
further description of these factors is located in the Reports under Part I, Item 1A (Annual Report) and Part
II, Item 1A (Quarterly Report), “Risk Factors.” The information contained in this presentation is as of the
date indicated. The company assumes no obligation to update any forward-looking statements contained
in this presentation as a result of new information or future events or developments.
2007 Morgan Stanley CEOs Unplugged Conference (#)
3. Outstanding Second Quarter
+11.8% +23.0%
ex. pharma ex. pharma
$1.23
$6.1 Billion
+8% +17.1%
Sales EPS*
*Excludes special items. Refer to 3M’s July 26, 2007 press release for a complete list and explanation of these items.
2007 Morgan Stanley CEOs Unplugged Conference (#)
4. Working Our Plan
Reinvigorate R&D
●
11% increase over 2006* ex. pharma
Accelerate International Growth
●
Building local/regional brands
Pursue profitable adjacencies
Invest in Our Supply Chain
●
Korea - Respiratory facility (July 2007)
Poland - Optical facility (June 2007)
Canada – CHIM Tapes facility (June 2007)
OHES
China - Industrial Tapes facility (July 2007)
Optical
Others largely on-track
CHIM Tape Industrial
Tapes
Accelerate Growth in the Core
●
Eight acquisitions YTD in 2007
*Excludes special items. Refer to 3M’s July 26, 2007 press release for a
complete list and explanation of these items.
2007 Morgan Stanley CEOs Unplugged Conference (#)
5. Sales Recap
Q2 2007 vs. Q2 2006
Int’l
WW U.S.
Volume - organic 6.9% 2.1% 9.9%
Volume - acquired 2.8% 2.8% 2.8%
Price (0.4%) 1.3% (1.4%)
Total Local Currency* 9.3% 6.2% 11.3%
Divestiture (3.8%) (4.0%) (3.7%)
Translation 2.5% -- 4.1%
Total Sales Growth 8.0% 2.2% 11.7%
*Total Local Currency = Volume + Price + Acquisitions
2007 Morgan Stanley CEOs Unplugged Conference (#)
6. Balance Sheet & Cash Flow
Q2 2006 Q1 2007 Q2 2007
($ in Millions)
$866(a)
$670(a)
Free Cash Flow $539
Net W/C Turns 5.0
5.0
5.2
Inventories $2,779
$2,714
$2,557
Receivables-Net $3,620
$3,444
$3,171
Cap-ex $348
$304
$261
Dividends Paid $346
$350
$348
Share Repurchases $1,035
$1,164
$527
Excludes certain special items that impacted cash flow. Refer to 3M's July 26, 2007 press release for an explanation of these items.
(a)
Note: Refer to 3M’s July 26, 2007 press release for a complete discussion of net working capital turns and free cash flow
(non-GAAP measures).
2007 Morgan Stanley CEOs Unplugged Conference (#)
8. Start By Growing The Current Core
Grow the
Current Core
Invent a
Extend The Core ● Constant reinvention
New Future
● Localization and
differentiation
● Imagine, dream and invent
● Build where we’re strong
● Key customer partnerships
● Beat competitors to the
● Get scale & relative share
future
● Fill in the “white spaces”
● Plan for cannibalization
Build Broad Long
● Define markets broadly
● Licensing as a route
Term Competencies
● Become important to
● Avoid NIH syndrome
customers
● Dual branding
● Local acquisitions ● Develop broad based long-term capabilities
● Private labeling ● Acquire supporting core technology
● Build volume and scale
2007 Morgan Stanley CEOs Unplugged Conference (#)
9. And Then Extend It With Simple Concepts
Market
Expansion
Grow the Current Complementary Build New International
Grow the Current Complementary Build New International
Core Acquisitions Business via EBOs Growth
Core Acquisitions Business via EBOs Growth
● Defend and extend the ● Follows core strategy ● Follow Mega Trends ● Go “local” in brands
core and manufacturing
● Supports adjacencies ● Seeded by small M&A
● Build scale and relative ● BRICP emphasis
● Mostly tuck-ins ● Targeted areas
share ● Gulf and LA
● Technology, capacity, ● RFID/Wireless/GPS
● Localization distribution and local ● Eastern Europe
● Minerals extraction
brands
● Disruptive technologies ● Growth everywhere
● Oil & Gas
● Build long term
● Food safety
competencies
Customer Focus Critical on All Four Fronts
2007 Morgan Stanley CEOs Unplugged Conference (#)
10. First You Must Create the Environment for Growth
Profitable
Growth
Products Efficiency
● Stimulating a creative
● Lean Methods
environment
● Six Sigma
● Foster Imagination
● Systemic Supply
● Increased R&D spend
Chain
in the core Product Operational Improvements
Innovation Excellence
● Technology Focus
● IT Systems
● See it through the
● Better S&OP
customers’ eyes
Process
● Mix in a little magic
● Market Expansion
● White space fill in
Customers ● Geographic expansion
● Adjacencies and EBOs
2007 Morgan Stanley CEOs Unplugged Conference (#)
11. Our Foundational Beliefs on Competitiveness
6σ & Lean
Cost Global sourcing
It’s not just about efficiency or just about
Low Factory costs
invention Taxes
● We compete on six platforms Build on our enduring
Marketing
franchises
& Brands
● Low cost is the ultimate competitive Secondary for local
deadly weapon Secure the best
Distribution Secure the broadest
● Scale and relative share are vital for
efficiency and competitiveness Build on a firm
foundation
Technology
● Follow the customer value chain Differentiation
OTIF fill rates
● Pristine service and brands can Quality
Service
overcome price in some markets Speed to market
Inspire and guide
Develop leadership
People
Continuing education
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12. 3M’s Convoluted Supply Chain
• Any plant may have up to eight
Plant A Plant B “owners” in 40 combinations
Six Owners Four Owners • Lead owner varies plant to plant
• Under absorbed costs in one
business impacts another
Raw Material In
Distribution
Center
Plant D
Plant C
Four Owners
Eight Owners
2007 Morgan Stanley CEOs Unplugged Conference (#)
13. And Here’s What We Are Beginning To Do
Plant A Plant B
Six Owners Four Owners
Distribution
Center
Plant D
Plant C
Four Owners
Eight Owners
2007 Morgan Stanley CEOs Unplugged Conference (#)
14. Historical Capital Spending
$1,600 Growth Capital increase
53% Decline in
almost all Optical Films
Capital Spending
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Sustain Strategic Growth Optical
Since 2000, Optical spending equaled all other growth capital combined
2007 Morgan Stanley CEOs Unplugged Conference (#)
15. Supply Chain – Focused Factories
Plant C
Plant A Eight Product Lines
Six Product Lines
Raw Distribution
Material In Center
Plant B Plant D
Four Product Lines Four Product Lines
2007 Morgan Stanley CEOs Unplugged Conference (#)
16. Supply Chain – Focused Factories
Plant A
Six Product Lines
Plant C
Eight Product Lines
Raw Distribution
Focused Factory
Material In Center
Plant B Plant D
Four Product Lines Four Product Lines
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17. Stretched Supply Chains Drive Working Capital Use
United States
65% Product Source
35% Consumption
International
35% Product Source
65% Consumption
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18. Reducing To Its Simplest Form, What Must We Do?
● Growth is a pipeline; repair the inputs and outputs and clear the pipe of pluggage
● At the “sending end” of the pipe: Invent more things
Prioritize R&D spending, focus and inspire our people
Get scientists and engineers back in the business of inventing new products
● At the “receiving end” of the pipe; Sell and market better
Put more feet of the street, and more advertising and merchandising
Bring increased competency and professionalism to marketing
Stop unnecessary complexity in SKUs and specifications
Acquire local brands to penetrate distribution faster
● The pipe itself
Provide a large enough diameter pipe: Capacity
Keep the pipe as short and simple as possible
● Stop the pipe leaking
Price giveaways
Market share loss
2007 Morgan Stanley CEOs Unplugged Conference (#)
19. Capacity And Supply Chain Improvements In Progress
CANADA CHIM Tape
Medical: M6 Solvent
Coater-Brookings, SD
USA
Northridge DDSD
Packaging Line
Automotive Acrylic Tape- MEXICO
Aberdeen, SD
Polyester
Greenville, NC
CHIM: LFBMF Lines, D11 MOF Line
Aberdeen, SD Filtrete Mfg.
Decatur, AL
2007 Morgan Stanley CEOs Unplugged Conference (#)
20. Capacity And Supply Chain Improvements In Progress
RUSSIA
OHES
Manufacturing
POLAND
CHINA
KOREA
INDIA
Optical Suzhou LCD II
Tapes
CHJ III Mfg
Industrial Tapes Medical Mfg. GuangZhou
2007 Morgan Stanley CEOs Unplugged Conference (#)
21. 3M Market Dynamics and Defense
Shouldn’t we exit
the Scotch Tape
market? It’s
Push into upper
commoditized! middle level market
Competitors push into the lower
market … we refuse to defend
The objective is to bulwark and defend the
markets that we created, not just to grow
2007 Morgan Stanley CEOs Unplugged Conference (#)
22. Differentiated Brands & Technology to Grow Category
Industrial Consumer
Principal brands
and differentiated
features
Diamond Grade™
Secondary
Brands &
Technologies
High Intensity Grade
Selective private
labeling or
manufacturing JVs to
support partnership
customers
Engineering Grade
2007 Morgan Stanley CEOs Unplugged Conference (#)
23. And Then Extend It With Simple Concepts
Market
Expansion
Grow the Current Complementary Build New International
Grow the Current Complementary Build New International
Core Acquisitions Business via EBOs Growth
Core Acquisitions Business via EBOs Growth
● Defend and extend the ● Follows core strategy ● Follow Mega Trends ● Go “local” in brands
core and manufacturing
● Supports adjacencies ● Seeded by small M&A
● Build scale and relative ● BRICP emphasis
● Mostly tuck-ins ● Targeted areas
share ● Gulf and LA
● Technology, capacity, ● RFID/Wireless/GPS
● Localization distribution and local ● Eastern Europe
● Minerals extraction
brands
● Disruptive technologies ● Growth everywhere
● Oil & Gas
● Build long term
● Food safety
competencies
Customer Focus Critical on All Four Fronts
2007 Morgan Stanley CEOs Unplugged Conference (#)
24. Acquisitions
Higher organic growth results from more frequent acquisitions
Acquisitions are not only
about bulk, but can be
helpful in:
Acquisitions
1. Strengthening the base by
filling in white spaces
2. May facilitate growth through
Growth
entry into a new market
3. May provide a key new
Base
technology or brand
4. Fast capacity acquisition
2007 Morgan Stanley CEOs Unplugged Conference (#)
25. Thoughtful Acquisitions Help Drive Core Growth
High Jump
20%
Info-X
Siemen's
Interchemall Dom
Interconnect
Target Growth Rate %
15% Mercury
CUNO Omni
Hornell
10%
Gen'l Ind'l Diamond
5%
3M Historical Growth ~4%
0%
2004 2005 2006
Less than $100MM Greater than $100MM
2007 Morgan Stanley CEOs Unplugged Conference (#)
27. Track & Trace Has Broad-Based Opportunities
Existing and Potential 3M Solution Spaces
Improve and
Advantage Me!
Location-Based Services
How Am I?
Supply Chain Optimization
Sensor Networks Competitive “Superiority”
Where Am I? Sensors in Order Fulfillment
Temp Supply Chain
Tracking Software
Who Am I? Vibration Distribution
RFID Network
Humidity
RFID Wireless Location
Light
BarCode RTLS
Contaminants
Database GPS
Road Tolling
2007 Morgan Stanley CEOs Unplugged Conference (#)
30. And Then Extend It With Simple Concepts
Market
Expansion
Grow the Current Complementary Build New International
Grow the Current Complementary Build New International
Core Acquisitions Business via EBOs Growth
Core Acquisitions Business via EBOs Growth
● Defend and extend the ● Follows core strategy ● Follow Mega Trends ● Go “local” in brands
core and manufacturing
● Supports adjacencies ● Seeded by small M&A
● Build scale and relative ● BRICP emphasis
● Mostly tuck-ins ● Targeted areas
share ● Gulf and LA
● Technology, capacity, ● RFID/Wireless/GPS
● Localization distribution and local ● Eastern Europe
● Minerals extraction
brands
● Disruptive technologies ● Growth everywhere
● Oil & Gas
● Build long term
● Food safety
competencies
Customer Focus Critical on All Four Fronts
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31. 3M’s Subsidiary Network: A Platform For Growth
Poland Switzerland Hungary
Norway
Ukraine
Canada East
Czech
Trinidad Austria Romania
Finland
Republic Sweden
& Tobago
Puerto Rico
Russia
Germany
Dominican
Republic
Denmark
Jamaica Korea
Netherlands
Belgium
Japan
Ireland
Mexico
China
United
Guatemala Kingdom
Hong Kong
El Salvador Portugal
Taiwan
Costa Rica Pakistan
Spain
Vietnam
Panama France
UAE
Colombia
Philippines
Morocco Kuwait
Indonesia
Venezuela Thailand
Saudi
Tunisia
Arabia
Ecuador Malaysia Singapore
Italy
Lebanon
Peru
Sri New Zealand
Greece Australia
Lanka
Brazil Israel
India
Turkey
Chile Egypt
South Africa Key
Kenya
Uruguay
Argentina Sales & Marketing
Manufacturing/Converting
Technical Capabilities
2007 Morgan Stanley CEOs Unplugged Conference (#)
34. 3M’s Strategy Reduces to Five Principal Elements
Get our labs back in the business of developing and releasing new
●
products faster
Better prioritization of what we do, and don’t do, and where we do it
Go local (or regional) in brands and sales coverage to drive growth
●
● Get all elements of the supply chain closer to customers to facilitate
growth and reduce costs and W/C demands
● Accelerate technological capability, distribution penetration,
customer satisfaction and manufacturing capacity through
acquisitions
Becoming more important to customers
Leverage the growth
●
Stop price leakage and share losses
Trim non-essential corporate services
2007 Morgan Stanley CEOs Unplugged Conference (#)
35. Coordinated Value Creation Strategy
Strategy ► Focus on mega trends, scale and relative ► Review business units by key
Strategy
share in core business metrics including growth and capital
efficiency
► Safety & Protection
Near Term ► Put ongoing review metrics in place
Near Term
► Display & Graphics (Optics & Films)
Tactics ► Divestiture of Pharmaceuticals
Tactics
► Track & Trace (RFID/Wireless/GPS)
► Examine others for divestiture
► Wider Consumer Offerings
► Medical, Dental & Orthodontics
Organic Selected
Growth Divestitures
Capital
Acquisitions
Strategy
► Increase leverage on the balance
Strategy
Strategy ► Work in high growth spaces with
sheet. Be willing, if necessary, to dip
reasonable EPS targets. Value creation
below AA rating to A
orientation. Less margin obsessive
► Use cash flow for investment,
Near Term
► Focus on adjacent segments
Near Term
acquisitions and increased share
with higher growth, cost and Tactics
Tactics
buybacks
revenue synergies
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36. Cash Back to Shareholders
2500
For The Period 2001-06:
Stock Repurchases $'000s
2000
$8.9 billion in share
●
1500
repurchases
1000
$6.7 billion in dividends paid
500
●
0
Dividend CAGR of 9%
●
2001 2002 2003 2004 2005 2006
1400
No equity dilution policy
●
Dividends $'000s
1200
Returned ~103% of reported
●
net income via dividends and
1000
share repurchases
800
600
2001 2002 2003 2004 2005 2006
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37. 3M’s Summary Longer Term Strategy
20%+
► Drill into the core.
Move towards
12 -15%
scale where markets are large
2X IPI ≈ 8%
and up
► Innovation remains vital
► Move towards higher relative share
in smaller markets
► Heavy up on globalization
► Accelerated M&A to improve core Investment
Organic Sales EPS
growth and fill gaps Returns
Growth Growth
► Careful tradeoffs of share and ● Technology lattice protects the downsides and ensures
growth upsides
● Investment through the economic cycles
► Building brands and technology ● Driving growth as a way of doing business
2007 Morgan Stanley CEOs Unplugged Conference (#)
39. Year-To-Date Highlights*
Operating Income ($ in millions)
Sales ($ in millions)
Pharma
+14.2%
+10.9% $3,000
$13,000 ex. pharma
ex. pharma +8.9%
+7.1%
$2,823
$12,079
$120
$2,500
$11,500
$389 $2,473
$10,894
$10,000 $2,000
YTD '06 YTD '07 YTD '06 YTD '07
Margin
LC Growth 8.8% 8.4% (ex pharma) 22.7% 23.4%
Earnings Per Share (US dollars) Return on Invested Capital
+17.9% +80 bps
25.0%
$2.75 ex. pharma ex. pharma
+10 bps
+12.6%
22.7%
22.6%
$2.50
20.0%
$2.25
$0.10
$2.12
$1.75 15.0%
YTD '06 YTD '07
YTD '06 YTD '07
*Excludes special items. Refer to 3M’s July 26, 2007 press release for a complete list and explanation of these items.
40. Segment Highlights* – Display & Graphics
Second Quarter
Q2 Drivers
$1,200 • Local currency growth of 8.8%
Operating
+10.2%
Income Margins
$1,006 • Optical films business leads with strong double digit
Q2 ’06 Q2 ‘07
$800 $913 sales and profit growth
26.0% 28.7%
• Commercial graphics and traffic safety continue
$400 track record of delivering consistent performance
+21.5%
$288
• LCD industry continues to remain healthy
$237
$0 • Solid YTD operating income performance with
Q2 ‘06 Q2 ‘07 Q2 ‘06 Q2 ‘07
operating income up over 10% and margins over
Sales Operating Income
30%
Year-to-Date Other Highlights
$2,100 +5.2% • LCD Poland facility online (June 2007)
Operating
Income Margins
$1,927 • DBEF manufacturing capacity additions for LCD TV
YTD ’06 YTD ‘07
$1,832
industry on track
$1,400 28.9% 30.3%
• LCD industry accelerates back-half of year as TV
becomes bigger piece of mix
$700 +10.2%
• New service business for vehicle registration & road
$583
$529 maintenance
$0
YTD ‘06 YTD ‘07 YTD ‘06 YTD ‘07
Sales Operating Income
*Excludes special items. Refer to 3M’s July 26, 2007 press release for a complete list and explanation of these items.
41. Segment Highlights* – Industrial & Transportation
Second Quarter
Q2 Drivers
+8.5%
$1,800 Operating • Local currency growth of 5.6% including 1.0% from
$1,804
Income Margins
acquisitions
$1,662
Q2 ’06 Q2 ‘07
$1,200 • Continued growth leadership by industrial adhesives
19.3% 20.0%
and tapes, automotive aftermarket, energy and
advanced materials and abrasives businesses
$600 +12.5%
• Good solid performance in auto OEM market
$361
$320
• Broad based geographic performance with growth led
$0 Q2 ‘06 Q2 ‘07 Q2 ‘06 Q2 ‘07
by Europe and Latin America Canada regions
Sales Operating Income
• Good operational discipline with double digit operating
income increase of 12.5% in Q206 and 10.4% YTD
Year-to-Date
+7.6%
$3,600 Operating
Other Highlights
$3,589 Income Margins
$3,334 YTD ’06 YTD ‘07 • Organic new products and complimentary gap fill
$2,400 acquisitions
21.0% 21.5%
• Continued emerging market penetration, particularly
BRICP countries
$1,200
+10.4%
• Driving 3M technologies into oil and gas market to
$772
$700 meet needs of major energy customers
$0
• Weak US auto OEM & residential housing market
YTD ‘06 YTD ‘07 YTD ‘06 YTD ‘07
Sales Operating Income
*Excludes special items. Refer to 3M’s July 26, 2007 press release for a complete list and explanation of these items.
42. Segment Highlights – Consumer & Office
Second Quarter Q2 Drivers
$900 +8.2% • Local currency growth of 6.1% including 1.3% from
Operating
Nylonge acquisition
$832 Income Margins
Q2 ’06 Q2 ‘07
$769
$600 • Sales and profit growth led by office retail channel
17.6% 19.7%
• Solid growth in DIY and consumer mass retail
channels
$300 +21.3%
• Double-digit international growth rates
$164
$135
$0 • Outstanding Q2 and YTD operating leverage with
Q2 ‘06 Q2 ‘07 Q2 ‘06 Q2 ‘07
profits up 21.3% and 19.6% respectively
Sales Operating Income
Year-to-Date Other Highlights
$1,800 +9.0% Operating • Invigorating existing categories with higher-value
Income Margins
innovative products
$1,646
YTD ’06 YTD ‘07
$1,510
• Introducing products that change consumer behavior
$1,200 18.9% 20.7%
and solve everyday problems
• Increased investment in Q3 and Q4 for sales and
$600
marketing activities for back-to-school and holiday
+19.6%
season
$341
$285
• Improving international penetration
$0
YTD ‘06 YTD ‘07 YTD ‘06 YTD ‘07
• Slow U.S. residential housing construction persists
Sales Operating Income
43. Segment Highlights* – Safety, Security & Protection
Q2 Drivers
Second Quarter
• Local currency growth of 16.7%
$900 +20.7% Operating
• Acquisitions added 11.6%; primarily Security Printing
Income Margins
$799
Q2 ’06 Q2 ‘07 Systems Ltd. and E. Wood
$600 $662 21.0% 21.2%
• Growth led by respiratory protection, corrosion protection
and building and commercial services
$300 +21.9%
• Industrial mineral up 5% sequentially; down 13% YOY
$169
$139
• Europe delivers strong growth and profits
$0 Q2 ‘06 Q2 ‘07 Q2 ‘06 Q2 ‘07
• Operating income up 22%
Sales Operating Income
• Consistent 20%+ operating margins
Year-to-Date
Other Highlights
$1,800 Operating
+19.7% • Korea respiratory facility opening effective July 11, 2007
Income Margins
$1,557 YTD ’06 YTD ‘07
• Continued global demand for personal protective
$1,200 22.8% 22.5%
$1,301 equipment particularly disposable respiratory protection
• Driving growth in passports, document readers and
access control in security market
$600
+18.1%
• International commercial construction drives increased
$350
$297
demand for fire protection and window films
$0
YTD ‘06 YTD ‘07 YTD ‘06 YTD ‘07
Sales Operating Income
*Excludes special items. Refer to 3M’s July 26, 2007 press release for a complete list and explanation of these items.
44. Segment Highlights* – Electro & Communications
Second Quarter Q2 Drivers
$900 • Local currency growth of 1.2%; 2.2% from acquisitions
Operating
+3.4% Income Margins
• Double-digit sales and profit growth in electrical markets
Q2 ’06 Q2 ‘07
$693
$600 for insulating, protecting and sensing
$670 17.1% 19.1%
• Double-digit sales and profit growth in communications
markets
$300
+15.7%
• Weakness in consumer electronic applications
$132
$114
$0 • Productivity focus continues to drive double-digit profits
Q2 ‘06 Q2 ‘07 Q2 ‘06 Q2 ‘07
growth
Sales Operating Income
• Q2 and YTD margins more than 19.0%
Year-to-Date
Other Highlights
$1,500 Operating
+3.5%
• Strong bench-to-bench relationships with big global
Income Margins
$1,361 YTD ’06 YTD ‘07
$1,315 customers
$1,000 17.8% 19.3% • Steady flow of new products into adjacent markets
• Continued penetration in consumer electronics and
other electronic devices
$500
+12.0%
$262
$234
$0
YTD ‘06 YTD ‘07 YTD ‘06 YTD ‘07
Sales Operating Income
*Excludes special items. Refer to 3M’s July 26, 2007 press release for a complete list and explanation of these items.
45. Segment Highlights* – Health Care
Second Quarter
Pharma
Q2 Drivers
Operating
$1,050 Income Margins
23.1%
(1.1%)
• Local currency growth of 19.5% including 4.4% from
(ex. Pharma)
ex. pharma
$196 acquisitions
$988 Q2 ’06 Q2 ‘07
26.1% 28.1% • Sales growth was broad-based across Drug Delivery,
$700 $804
Dental, Medical and Health Info Systems
32.3%
• Geographic growth led by Europe and US
ex. pharma
$350 +2.9%
$60 • Excellent operating income performance up 32.3%,
ex. pharma
$277
$210
• Pharma divestiture reduced reported sales and
$0
Q2 ‘06 Q2 ‘07
Q2 ‘06 Q2 ‘07 operating income by 24.2% and 29.4%, respectively
Operating Income
Sales
Other Highlights
Year-to-Date
• Technology leadership in medical, dental, health
Operating
Income Margins
$2,100 information management and drug delivery industries
23.7%
(0.8%)
(ex. Pharma)
ex. pharma
$389 • Strategic focus in medical on infection prevention,
YTD ’06 YTD ‘07
$1,950
acute/chronic wound care management
28.4% 28.0%
$1,400 $1,577
• Dental launched Pro TempTM malleable materials for
21.9%
temporary crowns
ex. pharma
$700 (3.8%) • Product and technology gap fill acquisitions help build
$120
scale and market leadership in medical and dental
$546
$448
• Emerging market penetration
$0
YTD ‘06 YTD ‘07
YTD ‘06 YTD ‘07
Operating Income
Sales
*Excludes special items. Refer to 3M’s July 26, 2007 press release for a complete list and explanation of these items.