3M in the United States
The United States is 3M’s (MMM) largest regional market, accounting for approximately 40% of its annual sales. The United States was one of two of its regional markets in which volume and price both saw an uptick. However, this rise was marginal and resulted in an organic sales growth of just 0.4%.
While sales in the region have grown organically in consumer-focused businesses, the story is quite different in its industrial segments. Manufacturing activity was weak in the United States in 2Q16. A severe weakness in the oil and gas end markets weighed on sales in the Electronics and Energy segment.
3M in EMEA
Among 3M’s regional markets, the EMEA (Europe, the Middle East, and Africa) region delivered the best performance in total growth terms. The EMEA region accounts for roughly 20% of 3M’s annual sales.
Revenues in EMEA grew 3.3%, led by organic gains of 3% with most of it coming from Western Europe. This is quite remarkable given the widespread belief that Europe is slowing down.
3M is the second industrial (XLI) company in our coverage after Stanley Black & Decker (SWK) where we’ve seen Europe putting up a positive surprise. The region offered mixed results for Caterpillar (CAT). Its sales have declined in the double digits in the mining equipment segment and increased by 3% in the construction equipment segment.
3M’s sales in EMEA increased, largely in the industrial (IYF) segments where trends are closely related to economic growth within the region.
3M in Asia-Pacific
The Asia-Pacific region is 3M’s (MMM) second-largest market. It accounts for roughly 30% of annual sales. This is also the region where 3M earns its highest margins. Sales in the region witnessed organic declines of 5.4% led by double-digit declines in the Electronics and Energy segment.
In China, sales declined 7%. A 9% growth in the consumer unit and an 11% uptick in healthcare failed to offset the weakness in the industrial segments.