OREANDA-NEWS. 3M will announce today that it is poised for a successful 2016, forecasting strong earnings growth in the face of a challenging global economy.

Inge G. Thulin, 3M Chairman, President and CEO, will tell analysts and investors on 3M’s 2016 outlook conference call that the company continues to make investments to build strength-on-strength and position itself for long-term success.

These actions include strengthening and focusing its portfolio of businesses, investing in research and development, and moving to a more efficient business model through a global ERP system.

Senior Vice President and Chief Financial Officer Nicholas C. Gangestad will provide an update on 3M’s current year and 2016 earnings outlook, along with its actions to deploy capital and enhance capital structure.

Reflecting the realities of a continued slow-growth global economy, 3M expects 2015 full-year organic growth of approximately 1 percent, versus prior guidance of 1.5 to 2 percent. Earnings per share is anticipated to be approximately $7.55, against a prior range of $7.60 to $7.65.

For 2016, the company anticipates:

  • Earnings per share of $8.10 to $8.45, an increase of 7 to 12 percent
  • Organic local-currency sales growth of 1 to 3 percent
  • Free cash flow conversion rate of 95 to 105 percent

“We remain committed to executing our playbook, controlling the controllable, and making investments for long-term success,” said Thulin. “We are building our company for efficient growth in 2016 and beyond.”

Strengthening and focusing its portfolio of businesses is a key initiative for 3M. Since 2012, 3M has realigned from six sectors to five business groups, and from 40 businesses to 26. These actions are improving customer relevance, scale, productivity and speed, while making the company leaner and better positioned to allocate resources to its most promising opportunities.

Research and development is the heartbeat of 3M; it drives organic growth, and supports the company’s premium margins and return on invested capital. In 2016, 3M plans to invest approximately $1.8 billion in R&D, or about 5.8 percent of total sales. Strategic acquisitions will continue to complement organic growth and create greater value.

The company is also progressing toward a more efficient business model, which includes standardizing business processes through a new, global ERP system. By 2020, 3M expects these efforts to result in $500 to $700 million in annual operational savings, and an additional $500 million reduction in working capital.