I created this presentation about 3M company with my teammates during Finace class

1. Savino Bartolomeo
Paula Biste
Camesha Cody-Vera
Renan Dault
Mathieu Picca
Lucas Pilleri

2.  Company Profile
 Capital Structure
 Dividend Policy
 Valuation
Strategic Finance 23.11.2012 2

3. 3M is a diversified technology company serving customers
and communities with innovative products and services.
More than 35 business units, organized into six
businesses:
 Consumer and Office
 Display and Graphics
 Electro and Communications
 Health Care
 Industrial and Transportation
 Safety, Security and Protection Services
Strategic Finance 23.11.2012 3

4. Year-end 2011:
 Global sales: $30 billion
 International (non-US) sales: $19.5 billion (66% of
total)
 Operations in more than 65 countries
 Products sold in nearly 200 countries
 84,000 employees globally
Five-year financial objectives:
 9% to 11% growth in earnings per share
 4% to 6% organic revenue growth
 More than 20% return on invested capital
 100% free cash flow conversion
Strategic Finance 23.11.2012 4

5.  Global expansion:
◦ Emerging countries as a long-term growth opportunity
◦ Planed investment in China: $50 million in the next five years
◦ Increase annual sales in China from 15% to 20%
R&D Investments
Year Mil. USD % of sales
 Innovation revenue
◦ Development of new products 2011 1,570 5.30
◦ About 30% of 3M‘s total sales are
2010 1,434 5.38
currently derived from products
introduced within the last 5 years. 2009 1,293 5.59
◦ 3M is one of the most innovative 2008 1,404 5.56
companies in the world, after Apple 2007 1,368 5.50
and Google.
Strategic Finance 23.11.2012 5

6. Rising energy and facility costs:
 Negative effect on prices of raw materials, increasing cost and
reducing operating margins
Environmental regulations
 Increase of “environmental remediation” costs, recorded at
$28 Million by December 31 2011
 Development of additional Prevention Programs
Currency risk
 Currency exchange rates volability may affect the achievement
of projected growth rates in sales and earnings.
Economic Conditions
 Weak economic conditions in certain markets, resulting in
lowering of inventory levels by customers.
Strategic Finance 23.11.2012 6

7. Other borrowing 2
6
Long Term Debt
USD fixed 71 2010
68
27 Long Term Debt
Eurobond
26 2011
0 20 40 60 80
At December 31 (USD Mil.) 2011 2010
Total debt 5,166 5,452
- Cash, cash equivalents and marketable securities 4,576 5,018
= Net Debt 590 434
Strategic Finance 23.11.2012 7

8. Million $
Free Cash Flow
4100
4050
4000 CAGR=-1,7%
3950
3900
3850
3800
2009 2010 2011
• The reason why the Free Cash Flow decreased depend on the
Capital spending. Capital Spending increased to $1.379 billion
in 2011, compared to $1.091 billion in 2010 and $903 million in
2009.
• In 2011, a large portion of the investment is addressing supply
constraints in a number of businesses with significant growth
potential.
Strategic Finance 23.11.2012 8

9. Cash Flow from Operating Activities
In 2011, cash flows provided
5300 by operating activities
increased $110 million
5200
CAGR=3,4% compared to 2010. The main
Million $
5100 positive contribution to
5000
operating cash flows related
to year-on-year increases in
4900 net income including
4800
noncontrolling interest.
4700
2009 2010 2011
3M maintain high cash balances,
because cash is a risk-free asset that
reduces the average risk of the firm’s
assets
Strategic Finance 23.11.2012 9

10. Debt/Equity ratio indicates
Debt/Equity Ratio
what proportion of equity and
0,43 debt the company is using to
0,45 finance its assets.
0,4 0,34
0,33
0,35
0,3 This mean that 3M is a
0,25 low risk for shareholders
0,2
because it’s mainly
financed from equity.
0,15
0,1
0,05
0
31 Dec 2009 31 Dec 2010 31 Dec 2011
Strategic Finance 23.11.2012 10

11. Cash, cash-equivalents and marketable securities at
December 31, 2011 totaled approximately $4.6 billion, helped
by cash flows from operating activities of $5.3 billion.
The Company has sufficient liquidity to meet currently
anticipated growth plans, including capital expenditures,
working capital investments and acquisitions.
High
Less
Cash Flexibility
Debt
FLow
Strategic Finance 23.11.2012 11

12. Institutional Investors:
0%
 Active involvement and 29%
influence in corporate
governance
 Influencing the conduct 71%
and capital requirements
of listed companies.
Institutions
 Top institutional Mutual Funds
shareholder owns 4,85% Insiders
Strategic Finance 23.11.2012 12

13.  Consistent increase of dividends for 51 consecutive years.
 Annual increase in its EPS from 1999 to 2007.
 Slow dividend growth during tough economic conditions,
while compensating with stronger dividend growth during
boom times.
 3M’s dividend is safe, given the strong cashflows that the
company generates from its diversified businesses.
 5-Year average payout ratio of 39%
7
6
Titolo asse
5
4
EPS (USD)
3
Dividends (USD)
2
1
0
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
Strategic Finance 23.11.2012 13

14. The company has recovered Declining profit margins.
from 2008-2009 crisis and
The perspective of the rising
reported earnings 4.5% higher
energy costs, 3M has to find
than 2007 compared with
alternatives to keep cost
2011.
structure stable otherwise this
Positive cash flow, necessary will influence future cash flows
to pay its dividends and make and in long term the dividend
acquisitions. policy.
Strategic Finance 23.11.2012 14

15. Thank you for your
attention!
Strategic Finance 23.11.2012 15