Weitere ähnliche Inhalte Ähnlich wie 3M Company 2009 Outlook Meeting Ähnlich wie 3M Company 2009 Outlook Meeting (20) Kürzlich hochgeladen (20) 3M Company 2009 Outlook Meeting1. George W. Buckley
Chairman, President and Chief Executive Officer
2009 Outlook
Meeting
December 8, 2008
© 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
2. Patrick D. Campbell
Senior Vice President and Chief Financial Officer
2009 Outlook
Meeting
December 8, 2008
© 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
3. Forward Looking Statements
This presentation contains forward-looking information about 3M’s financial results and estimates and business
prospects 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,” “target,” “forecast”
and other words and terms of similar meaning in connection with any discussion of future operating or financial
performance or business plans or prospects. Among the factors that could cause actual results to differ
materially are the following: (1) worldwide economic and capital markets 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 fewer 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 December 31, 2007 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 “Risk Factors” in Part I, Item 1A (Annual
Report) and in Part II, Item 1A (Quarterly Report). 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.
3 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
4. Topics Of Discussion
Update on 2008 finish
1
2009 scenario planning
2
Summary
3
Q&A
4
4 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
5. Topics Of Discussion
Update on 2008 finish
1
2009 scenario planning
2
Summary
3
Q&A
4
5 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
6. Summary – Q3 Earnings Call (October 21, 2008)
The 3M advantage – diversification of geographies, markets, products & technologies
106-year company history; proven ability to prosper during economic downturns
Strong balance sheet and consistent cash flow
Continuous assessment and rebalancing
– More restructuring likely in slower growth markets
– Investing prudently in under-penetrated businesses and geographic areas
2008 full-year financial expectations:
– $5.40 to $5.48 per share
– Operating margins 22.5% to 23%
– Tax rate 31.5% to 32%
– Cap-ex $1.3B to $1.4B
*Excludes special items. Please refer to 3M’s October 21, 2008 press release for a complete list and explanation of the special items for the first nine months of 2008.
6 3M 2009 Outlook Meeting
7. Q4 2008 Trends
Rapid Deterioration In Business Activity As Quarter Progresses
October – sales were a little soft, but profits were in-line with guidance
– Organic local currency sales down 3%
– Currency down 5%
November – rapid volume slowdown, many businesses impacted
– Organic local currency sales down 17%
– Currency down 6%
December – highly uncertain but expecting another month similar to
November
Customers Aggressively Responding To Economic Perfect Storm
7 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
8. 2008 EPS Update
Q4 and FY ‘08 Expectations: 2008 Full Year EPS
Q4 organic volume growth $5.40 - $5.48
$5.50
Was: -1% to -2%
Q4 FX EPS impact $5.40
Was: flat to -$0.02
FY 2008 operating margin $5.30
Was: 22.5% to 23%
FY 2008 Tax rate
$5.20
Was: 31.5% to 32% $5.10 - $5.15
FY 2008 Cap-ex
$5.10
$1.3B to $1.4B
Q3 Earnings
Call 10/21/08
*Excludes special items. Please refer to 3M’s October 21, 2008 press release for a complete list and explanation of the special items for the first nine months of 2008.
8 3M 2009 Outlook Meeting
9. 2008 EPS Update
Q4 and FY ‘08 Expectations: 2008 Full Year EPS
Q4 organic volume growth $5.50
Was: -1% to -2%
Now: -10% to -12%
$5.40
Q4 FX EPS impact
Was: flat to -$0.02 Organic
Volume
$5.30
FY 2008 operating margin -$0.22 to
Was: 22.5% to 23% -$0.25
$5.20
FY 2008 Tax rate $5.10 - $5.15
Was: 31.5% to 32%
$5.10
FY 2008 Cap-ex
$1.3B to $1.4B
Q3 Earnings
Call 10/21/08
*Excludes special items. Please refer to 3M’s October 21, 2008 press release for a complete list and explanation of the special items for the first nine months of 2008.
9 3M 2009 Outlook Meeting
10. 2008 EPS Update
Q4 and FY ‘08 Expectations: 2008 Full Year EPS
Q4 organic volume growth $5.50
Was: -1% to -2%
Now: -10% to -12%
$5.40
Q4 FX EPS impact
Was: flat to -$0.02
Now: -$0.08 $5.30
FY 2008 operating margin
Was: 22.5% to 23%
$5.20
FX
FY 2008 Tax rate
-$0.08
Was: 31.5% to 32%
$5.10
FY 2008 Cap-ex
$1.3B to $1.4B
Q3 Earnings
Call 10/21/08
*Excludes special items. Please refer to 3M’s October 21, 2008 press release for a complete list and explanation of the special items for the first nine months of 2008.
10 3M 2009 Outlook Meeting
11. 2008 EPS Update
Q4 and FY ‘08 Expectations: 2008 Full Year EPS
Q4 organic volume growth $5.50
Was: -1% to -2%
Now: -10% to -12%
$5.40
Q4 FX EPS impact
Was: flat to -$0.02
Now: -$0.08 $5.30
FY 2008 operating margin
Was: 22.5% to 23%
$5.20
Now: 21.5% to 22.0%
$5.10 - $5.15
FY 2008 Tax rate
$5.10
Was: 31.5% to 32%
Now: 31.0% to 31.5%
FY 2008 Cap-ex
Revised
$1.3B to $1.4B (no change)
2008 EPS
*Excludes special items. Please refer to 3M’s October 21, 2008 press release for a complete list and explanation of the special items for the first nine months of 2008.
11 3M 2009 Outlook Meeting
12. Q4 2008 Restructuring Actions
Continue To Aggressively Restructure The Business To Address Challenges
Have reduced positions across all businesses and staffs
– ≈1,800 internally announced
– Another ≈500 before year-end; mostly international
– More possible pending business conditions
All geographies impacted somewhat but heavy focus on developed
economies
– U.S., Western Europe and Japan
Rationalizing 10 manufacturing, technical and office facilities
Aggregate Costs Of $215M (≈$0.22 Q4 Special Item)
With 2009 Savings Of $225M
12 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
13. Topics Of Discussion
Update on 2008 finish
1
2009 scenario planning
2
Summary
3
Q&A
4
13 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
14. 2009 Planning Mindset
Adjusting To Low-Growth Economy In Short-Term While Maintaining Long-Term Growth Focus
Cash optimization in highly uncertain world – planning conservatively and
preserving cash
– Capital expenditures < $1.2B Disciplined A/R management
– Tighter acquisition screens Careful demand planning
– Minimal share repurchase
Facing into headwinds
– Organic volume growth Currency
– Pension Higher net interest expense
Maximizing opportunities
– Going after market share gains Productivity programs
– Restructuring Raw materials/pricing
– Deferring annual pay increases Modifying working schedules
Driving Sufficient Cost Reduction To Offset Volume Risk
14 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
15. 2009 Scenario Planning
Organic volume
– -3% to -7%
Foreign currency
– -6% to -7%
Earnings-per-share
– -3% to -12%
Margins steady vs. 2008
Free cash flow will approximate net income, however pension
and severance funding will be a wild card
15 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
16. WW IPI Forecasts For 2009
Source: Global Insight
-0.4% 0% -0.4%
Goldman Sachs
UBS
Global Insight
Some Are Expecting A “V” Shaped
Recovery – We Are Not
Our Plan
Assumes
-2 % to -3%
Planning For Softness Throughout 2009
16 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
17. Forecasting 09 Organic Volume Growth
Learning From The Recession Of 2001-02
Quarterly % YOY Growth, 2000-03
During the 4 worst quarters of
the
2001-02 economic slowdown:
1) Global IPI was down 3%
2) 3M organic volume was down
5% to 6%
Notes:1) 3M data excludes divested pharmaceutical business; 2) economic data from Global Insight
17 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
18. We Have Been Experiencing A Slowing Economy For Some Time…
• U.S.
•Office retail
• Telecom
•Housing
• Advertising
•Auto OEM
• Credit market crisis
• Japan, Korea • Industrial
• Economic slowdown
• Western Europe
spreads rapidly
across industries
U.S. Recession
Started Q4 2007!
(12/1/08)
Organic Volume Growth
…And We Expect To Come Out Faster On The Recovery
18 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
19. Forecasting 09 Organic Volume Growth
Working The Model Sequentially…A Hypothetical ‘09 Progression
Organic Volume Growth %
2%
Q408e Q109e Q209e Q309e Q409e FY09e
0%
-2%
-4%
-6%
-8%
-10%
Possible
Trough
Ave Organic Volume Down 5%
19 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
20. Forecasting 09 Organic Volume Growth
Working The Model Sequentially…A Hypothetical ‘09 Progression
Organic Volume Growth %
2%
Q408e Q109e Q209e Q309e Q409e FY09e
0%
-2%
-4%
-6%
-8%
-10%
Possible
Trough
Ave Organic Volume Down 7%
20 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
21. Forecasting 09 Organic Volume Growth
Working The Model Sequentially…A Hypothetical ‘09 Progression
Organic Volume Growth %
2%
Q408e Q109e Q209e Q309e Q409e FY09e
0%
-2%
-4%
-6%
-8%
Range:
-3% to -7%
-10%
Ave Organic Volume Down 3%
Our Planning Headset Is Closer To The Upper End Of the Range
21 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
22. Industrial Production Forecast – Past And Future
Expecting Wide Variations Of Growth Across Regions
(Global Insight: Industrial Production, YOY percent change)
Growth Is Slowing Everywhere, But There Is Still Growth To
Be Had In Developing Markets
22 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
23. Emerging Markets A Bigger Factor Today Vs. 2001-02
And While Economic Growth Will Slow There In 2009, It Remains Robust
3M Sales To Emerging Market Industrial Production Growth %
Countries
$7.5B
20%
China
Brazil
Central Eur/Balkans
15%
India
Russia
10%
$2.7B
5%
0%
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409
2001 2008e
% of 3M 17% 30% Source: Global Insight
Even In This Environment There Will Be Good Growth Opportunities
Note: Emerging Markets = Central/East Europe + Middle East + APAC ex-Japan/ANZ + Latin America; economic data from Global Insight
23 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
24. Organic Volume Impact
2009 EPS Impact Organic volumes to be in the range of -3% to -7%
Recognizing Q4 2008 organic volume @ -10%
Developing economies expected to have positive
growth albeit at lower rates
Developed economies expected to be negative
Managing developed economies for operating
leverage and investing in developing economies
to drive growth
-$0.30 to -$0.70
24 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
25. Foreign Currency
Step Change In Foreign Currency Rates Coincident With Credit Crisis
Percent Change
Foreign Currency A Significant Headwind In 2009
Note: currency mix based on Q3 2008 YTD weighted average sales
25 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
26. Foreign Currency
Step Change In Foreign Currency Rates Coincident With Credit Crisis
Percent Change
Ave 2008 November
Currencies Rates End Rates
EUR 1.47 1.29
JPY 103.5 95.2
BRL 1.83 2.34
CAD .93 0.81
RMB 6.92 6.83
GBP 1.85 1.52
KRW 1123 1478
Foreign Currency A Significant Headwind In 2009
Note: currency mix based on Q3 2008 YTD weighted average sales
26 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
27. Foreign Currency Headwind
2009 EPS Impact Used spot rates as of November month-end
$0.50
Tremendous volatility in rates over last couple of
months
Estimated 2009 sales impact in the range of -6%
$0.25
to -7%
-$0.45 toHedge approximately ½ of foreign currency
-$0.50 exposures on a rolling 12-month basis
$0.00
($0.25)
-$0.45
($0.50)
27 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
28. Restructuring
Proactively Reducing Structure In A Slower Growth World
Continuously assessing and rebalancing structure
2009 EPS Impact
$0.50
to meet business needs
Actions to date:
$0.25 to $0.30
– Q2 2008: ≈200 positions
$0.25
– Q3 2008: ≈900 positions
– Q4 2008: ≈2,300 positions
$0.00 Consolidating facilities
Aggressive actions in slower growth mature
economies
($0.25)
More restructuring likely in 2009
($0.50)
28 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
29. Raw Materials And Selling Prices
Raw Materials:
2009 EPS Impact
In midst of rapid declines in many commodities;
full benefit not expected until H2 2009
Commodities to trend down; more upside is
$0.15 to $0.20
possible
Raw materials represent ½ of COGS or
approximately 25% to sales
Selling prices:
Focusing on maintaining 2008 price increases
Drive opportunities to optimize price/value
Category-defining brands a major strength
Highly Fluid Environment But Net Upside in 2009
29 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
30. Productivity
Continuing To Aggressively Reduce Costs And Improve Processes
2009 EPS Impact Reducing indirect costs – a $4B+ category
Lean Six Sigma
Continued supply chain improvements
$0.20 to $0.25
Redesigning employee benefit programs
G&A cost containment
Deferring annual pay increases
Modifying working schedules
30 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
31. Pension Expense
Managing Through A Very Unique Market Environment
Fully funded through Q3 2008 however Q4
2009 EPS Impact
$0.50
market returns pressuring asset values
Contributed $200M to U.S. plan in Q3 2008
Higher discount rate expected for year-end
$0.25
liability measurement given current credit
environment
No mandatory funding obligation
$0.00
Effective 2009, all new U.S. employees
-$0.08 to -$0.12 participate exclusively in a new defined
contribution plan
($0.25)
($0.50)
31 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
32. Net Interest Expense
Expecting Higher Costs But Improving Liquidity And Certainty
AA/Aaa credit rating
2009 EPS Impact
Uninterrupted access to CP market; strong demand for 3M
paper; CP maturities out to Feb ’09
Strong, consistent FCF; unused $1.5B credit facility
Opportunistic bond issuances: Aug ‘08: $850M, 5 yr @
4.375%; Oct ‘08: $800M, 3 yr @ 4.5%
2009 expense higher due to extending duration on debt
portfolio (less reliance on commercial paper) & lower interest
rates on cash & marketable securities
Q3 ‘08 Capital Structure Long-Term Debt Maturities
$B $B
-$0.05 to -$0.10
Q4’08 includes $0.4B in puttable securities with
longer final maturities
Cash > CP
32 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
33. Putting It All Together
$5.10
to
$5.15
$0.20 to
$0.25
$0.15 to
$0.20
-$0.08 to
$0.25 to -$0.12 -$0.05 to
$0.30
-$0.10
-$0.30 to
-$0.70
-$0.45
Productivity Efforts Cover The Volume Risk, But FX Too Much To Overcome
*Excludes special items.
33 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
34. Putting It All Together
2009 EPS
-3% to -12%
$5.10
to
$5.15
$0.20 to
$0.25
EPS
$0.08 Range
$0.15 to
$4.50
$0.20
-$0.08 to
to
$0.25 to -$0.12 -$0.05 to
$0.30 $4.95
-$0.10
-$0.30 to
-$0.70
-$0.45
Productivity Efforts Cover The Volume Risk, But FX Too Much To Overcome
*Excludes special items.
34 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
35. Topics Of Discussion
Update on 2008 finish
1
2009 scenario planning
2
Summary
3
Q&A
4
35 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
36. 2009 Planning Mindset
Adjusting To Low-Growth Economy In Short-Term While Maintaining Long-Term Growth Focus
Cash optimization in highly uncertain world – planning conservatively and
preserving cash
– Capital expenditures < $1.2B Disciplined A/R management
– Tighter acquisition screens Careful demand planning
– Minimal share repurchase
Facing into headwinds
– Organic volume growth Currency
– Pension Higher net interest expense
Maximizing opportunities
– Going after market share gains Productivity programs
– Restructuring Raw materials/pricing
– Deferring annual pay increases Modifying working schedules
Driving Sufficient Cost Reduction To Offset Volume Risk
36 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
37. Questions
and
Answers
37 © 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting
38. 2009 Outlook
Meeting
December 8, 2008
© 3M 2008. All Rights Reserved. 3M 2009 Outlook Meeting