St. Paul, MN, May 11--3M Co. reaffirmed its 2005 earnings guidance on Tuesday despite what it called slowing growth in the global economy.
Chairman and CEO, James McNerney Jr., said, "This year we are seeing slowing growth in the world's mature economies, and we continue to get mixed signals from economic reports and first-quarter corporate earnings."
Most of the company's growth will continue to come from overseas markets, he said. Sales outside the United States now account for 61 percent of 3M's revenue, McNerney told about 3,000 shareholders at the company's annual meeting.
"Looking ahead, we see our real opportunity for growth in the world's developing economies," he said. "These include greater China, Russia, Eastern Europe, Brazil and India."
Those countries will represent nearly half of the company's growth in the next three years, or $2 billion in new sales. In Russia alone, he said, annual sales have nearly reached $100 million.
"But our biggest opportunity, by far, remains mainland China where our sales have more than doubled over the last two years and are quickly approaching the billion-dollar mark."
The company reaffirmed it's expecting profit to range between $4.15 and $4.25 per share for 2005. Second-quarter earnings are expected to be between $1.08 and $1.10 per share. Analysts are looking for profit of $4.23 for the year and $1.09 for the second quarter.
Last month, 3M announced that first-quarter earnings rose 12 percent from the year before as net income grew to $809 million, or $1.03 per share, from $722 million, or 90 cents a share, in the same period a year ago.
McNerney said 3M's pension is about 95 percent funded, and that funding it is the company's top priority for the use of its cash. He said 3M would consider increasing pension payouts once it's fully funded.
He said the company still expects to repatriate about $900 million to $950 million in overseas earnings once it examines the tax law more closely. 3M and many other companies with overseas profits can bring that money back to the U.S. at a much lower tax rate under the American Jobs Creation Act of 2004.
