3M’s Electronics and Energy segment in 3Q17
3M’s (MMM) Electronics and Energy segment contributed a revenue share of 17.30% in 3Q17, compared to a revenue share of 16.80% in 3Q16—an increase of 0.50 percentage points on a year-over-year basis. The segment reported revenue of $1.41 billion in 3Q17, an increase of 9.40% on a year-over-year basis. In 3Q16, the segment reported revenue of $1.29 billion.
Revenue for the Electronics and Energy segment rose mainly due to splendid growth in display materials and systems and electronics materials solutions that witnessed growth of 18% while the energy business grew by only 2%. Geographically, Asia-Pacific led the growth at 20.0%. Latin America and Canada witnessed growth of 6%, EMEA (Europe, the Middle East, and Africa) grew by 1%, while the United States fell 2%. The segment was also adversely impacted by divestitures to the extent of 0.1%.
The segment’s exploration in the semiconductor, electronic assembly, data center, and other businesses pushed up organic growth.
Net income and margins
The Electronics and Energy segment reported operating income of $394.0 million in 3Q17, compared to $312.0 million in 3Q16, a rise of 26.30% year-over-year. It had an operating profit margin of 27.90% in 3Q17, compared to 24.10% in 3Q16, up by 380 bps (basis points) year-over-year.
The Electronics business under this segment is expected to continue its upward trend, led by Asia-Pacific. Further, the foreign currency hedge may turn positive for the segment.
Investors can get exposure to 3M by investing in the iShares Edge MSCI Multifactor Industrials ETF (INDF), which has invested 4.0% of its portfolio in 3M as of October 24. The fund’s top holdings include General Electric (GE), Boeing (BA), and Honeywell (HON) with weights of 6.9%, 4.10%, and 2.60%, respectively.