Loath to be stuck on one thing, 3M makes everything from tape to high-tech security gear. The diversified company makes products through six operating segments: Consumer and Office; Display and Graphics; Electro and Communications; Health Care (through 3M Health Care); Industrial and Transportation; and Safety, Security, and Protection Services. Well-known brands include Post-it notes, Scotch tapes, Scotchgard fabric protectors, Scotch-Brite scouring pads, and Filtrete home air filters. 3M has operations in more than 65 countries. About two-thirds of its sales are made outside the US. It sells products directly to users and through numerous wholesalers, retailers, distributors, and dealers worldwide.
Despite a challenging year in 2011 that included both natural disasters in Asia and economic crises in Europe impacting different operations of 3M, the company posted sales of $29.6 billion, an 11% jump over the previous year. Sales were led by three segments with double-digit growth: Industrial and Transportation; Safety, Security and Protection Services; and Health Care.
Latin America and Canada led the increase in global sales, although all major regions showed an improvement, reflecting better growth in markets such as general industrial and personal safety. Despite increases in raw materials costs, R&D expenses, and costs related to acquisitions, net income reached $4.3 billion in 2011, edging out the $4.1 billion reported in 2010 by 5%.
As a technology-driven company, 3M continues to make research and development a top priority, investing heftily in new product development efforts. Through significant investments in R&D, sales, and manufacturing, the company ranks among the most innovative companies in the world. It also competes on a global scale and likes to develop, manufacture, hire, and purchase locally in whatever region it is in to get close to its customers. Although 3M tries to keep costs down in response to the uncertainty of global economic conditions, it remains flexible enough to act quickly if opportunities arise.
It also continues to see emerging markets like China and other developing countries as promising avenues for growth. Although China has made recent moves to curb inflation, 3M believes that China holds great potential for the company's growth in the long term.
Mergers and Acquisitions
3M completed nine acquisitions in 2011 that totaled $649 million, including the do-it-yourself unit and professional division of France's GPI Group, a manufacturer and marketer of home improvement products such as tapes, hooks, insulation, and floor protection products. The deal boosts 3M's presence in Western Europe. It also added to its growing Industrial and Transportation segment by acquiring a majority stake in Switzerland-based Winterthur Technology Group, an international supplier of precision grinding technologies that makes grinding tools used in the aircraft, automotive, industrial, and steel industries.
Back in the US, it acquired Florida-based Nida-Core, a manufacturer of structural honeycomb core and fiber-reinforced foam core materials, and Nida-Core's French affiliate, Structiso SARL. The acquisition allows 3M's Engineered Products and Solutions department to build on its composite and engineered materials product portfolio.
3M continued its buying spree in 2012, acquiring Maryland-based CodeRyte, which provides clinical natural language processing (NLP) technology and computer-assisted coding for healthcare outpatient providers. Terms of the sale were not disclosed. 3M will apply CodeRyte's NLP technology to its new 3M 360 Encompass system, used by its 3M Health Information Systems division for clinical documentation and coding workflows. More than 5,000 hospitals worldwide use 3M's coding for patient data for measurement and reimbursement purposes. The 3M system also addresses data problems resulting from health care reform requirements.
Continuing a quest for technology buys, 3M acquired the Federal Signal Technologies Group (FSTech) from Federal Signal Corp. for $110 million in cash. FSTech focuses on hardware and software services for the $3 billion electronic tolling industry. The business also complements offerings from 3M's Traffic Safety Systems Division.
Growing its ceramics portfolio, in 2012 it also bought advanced technical ceramics producer Ceradyne for $860 million. The deal adds Ceradyne's advanced ceramics technologies portfolio to its own diversified product line.