Paul Steece
    Vice President and General Manager
    Electrical Markets Division




                           Reinvent...
Electrical Markets Division


                        The Re-invention of One of 3M’s
                              Enduri...
Core Market Overview
Electric Utility                 Customers                 Products                  Drivers
        ...
Key Market Dynamics

           Electrical Utility
                   Steady worldwide growth: ~6-8%
                   Ne...
Products
    Vinyl & Mastic Tapes                 Medium Voltage Cable                    High Voltage Cable     EMC Solut...
Scotch Super 33+ Vinyl Electrical Tape Turns 60!




6
    © 3M 2008. All Rights Reserved.   2008 3M Investor Conference
Industry Size and Market Segments
                 Electric Materials & Supplies Market ($335 Billion)
                   ...
2007 Results

           Sales by Area                                 Sales by Product        Sales by Segment

         ...
Recent History of EMD’s
                                   Performance




9
    © 3M 2008. All Rights Reserved.   2008 3M...
Historic Landscape…Where We Were
         EMD From 1998 to 2003 was highly profitable, but …
          • Flat top-line per...
EMD Investment…Further Evidence
        EMD investment followed the classic “Manage for Cash” model

                     ...
Where We Were…Summary

          Not growing despite good people / talent
          Team was not energized …managing for c...
Key Growth Strategies and
                          Current Performance




13
     © 3M 2008. All Rights Reserved.   2008...
Develop Winning Strategies
     WINNING STRATEGY                   KEY PROGRAMS / ACTIONS
     Grow the Core              ...
New Product Sales
           Re-vitalized and Re-focused R&D Investment

                                                 ...
Major Development Programs
                            Program                                             Core / Adjacent...
Regional Results Have Been Impressive…
                                                                                   ...
Financial Results to Date
                The Strategy has Delivered…

                            EMD Revenue            ...
Summary
          EMD is a growth division
                   Q2 2008 was the 13th consecutive quarter of double digit sal...
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Paul Steece Presentation

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Paul Steece Presentation

  1. 1. Paul Steece Vice President and General Manager Electrical Markets Division Reinventing an Enduring Franchise September 9, 2008 1 © 3M 2008. All Rights Reserved. 2008 3M Investor Conference
  2. 2. Electrical Markets Division The Re-invention of One of 3M’s Enduring Franchises How We Moved from Manage for Cash to Growth 2 © 3M 2008. All Rights Reserved. 2008 3M Investor Conference
  3. 3. Core Market Overview Electric Utility Customers Products Drivers • Investor owned utilities • Underground cable • Electrical infrastructure • Govt. owned utilities accessories expansion • Electric co-ops • Sealing & insulating tubes • Upgrade for reliability & & tapes quality • Specialty OH conductor Electrical Construction & Customers Products Drivers Maintenance • Electrical contractors • Vinyl & mastic tapes • Economic and industrial • Connectors • Industrial & commercial expansion facility electricians • Electrical supplies • Commercial and • Cable accessories residential construction Electrical OEM Customers Products Drivers • Electrical OEMs • Insulating tapes and • Electrical equipment • Electronic OEMs papers manufacturing • EMC materials • Consumer electronics • Heat shrink growth 3 © 3M 2008. All Rights Reserved. 2008 3M Investor Conference
  4. 4. Key Market Dynamics Electrical Utility Steady worldwide growth: ~6-8% Need for increased electrical transmission and distribution capability to meet global demand Electrical Construction and Maintenance Steady worldwide growth: ~4% Expansion of industrial infrastructure in developing economies and re- investment in developed countries Electrical OEM Moderate growth, but opportunity to drive share via recent acquisition Market migrating to China… A core geographic area of strength for EMD EMD’s Core Markets Are Stable and Continue to Grow 4 © 3M 2008. All Rights Reserved. 2008 3M Investor Conference
  5. 5. Products Vinyl & Mastic Tapes Medium Voltage Cable High Voltage Cable EMC Solutions Accessories Accessories Electrical Supplies High Voltage Transmission Insulating Tape and Paper Heat Shrink & Resin Cable (ACCR) 5 © 3M 2008. All Rights Reserved. 2008 3M Investor Conference
  6. 6. Scotch Super 33+ Vinyl Electrical Tape Turns 60! 6 © 3M 2008. All Rights Reserved. 2008 3M Investor Conference
  7. 7. Industry Size and Market Segments Electric Materials & Supplies Market ($335 Billion) Electrical OEM & Electrical Construction Select Portions of Utility ~ $90B & Maintenance ~ $220B Electronic OEMS ~ $25B Insulated Rigid Electrical Supplies Adhesives Cable Insulation Design & & Tape – 2% 3% Accessories – 14% 3% Engineering Other Wire & Services - 13% Electrical Cable 11% Other 13% Supplies Cable 21% 26% Tapes – 5% Lighting Fixtures Wire & Switches & Heat Shrink 21% Cable Breakers 8% 51% 13% Other Equipment Equipment Overhead Resins 4% & Controls 31% Cable 21% Accessories Monitor & Conduit & Flexible 9% Control Fittings – 11% Materials 17% 13% Indicates areas in which EMD participates Huge Market Space with Adjacent Opportunities… Addressable Market ~$14.1B 7
  8. 8. 2007 Results Sales by Area Sales by Product Sales by Segment Electrical ACCR Construction & Canada 2% Maintenance Latin 4% Supplies Energy OEM 46% U.S. America 11% 33% 27% 38% 12% Tape 28% Europe 22% Utility OEM 27% APAC 26% 24% EMD Breadth Provides a Steady Platform Reducing ECB Volatility 8 © 3M 2008. All Rights Reserved.
  9. 9. Recent History of EMD’s Performance 9 © 3M 2008. All Rights Reserved. 2008 3M Investor Conference
  10. 10. Historic Landscape…Where We Were EMD From 1998 to 2003 was highly profitable, but … • Flat top-line performance in a growing market • Operating margins expanding ... But driven by decreased investment • ROIC 3x company average…Little to no investment in capital or M&A TOTAL 3M SALES EMD SALES AND OP INCOME ($Billions) $20 $18 Sales CAGR: 0% $16 Sales CAGR: 4% $14 OI CAGR: 7% $12 $10 1998 1999 2000 2001 2002 2003 1998 1999 2000 2001 2002 2003 ($B) ($M) 1998 1999 2000 2001 2002 2003 1998 1999 2000 2001 2002 2003 Total 3M $ 15.1 $ 15.7 $ 16.7 $ 16.1 $ 16.3 $ 18.2 EMD Sales $ 520 $ 527 $ 529 $ 488 $ 495 $ 515 % Growth 4.2% 6.2% -3.9% 1.7% 11.6% % Growth 1.3% 0.4% -7.8% 1.4% 4.0% EMD was a “Manage For Cash” Business 10 © 3M 2008. All Rights Reserved. 2008 3M Investor Conference
  11. 11. EMD Investment…Further Evidence EMD investment followed the classic “Manage for Cash” model LAB / SG&A INVESTMENT MARCOM INVESTMENT 1998 1999 2000 2001 2002 2003 1998 1999 2000 2001 2002 2003 40% Decline 20% Decline Left on it’s Own … EMD was Going Nowhere 11 © 3M 2008. All Rights Reserved. 2008 3M Investor Conference
  12. 12. Where We Were…Summary Not growing despite good people / talent Team was not energized …managing for cash isn’t fun Many small development programs versus a few high impact programs, hence low new product sales But… An outstanding stable of products with strong market positions and high margins (e.g., Vinyl Tape & Cold Shrink Technology) Stable markets experiencing consistent growth with opportunity in every country Strong relationships with industry channel partners In 2003, We Decided to Resurrect this Enduring Franchise 12 © 3M 2008. All Rights Reserved. 2008 3M Investor Conference
  13. 13. Key Growth Strategies and Current Performance 13 © 3M 2008. All Rights Reserved. 2008 3M Investor Conference
  14. 14. Develop Winning Strategies WINNING STRATEGY KEY PROGRAMS / ACTIONS Grow the Core • Increased marcom investment • Increased channel programs • Improved service • Re-investment in sales and marketing resources Create a • Seat Sensor • Low Voltage New Growth via NPI for Clear Path • EMC • ACCR our Core and Adjacent Forward for • High Voltage • New Tapes Markets All Division (Mining/Solar) Personnel Geographic Penetration • Build stronger capabilities OUS • Focus on China, EE and India Operational Excellence • Service • Focus on improved productivity across all functions Investment in People, R&D, Brand and Service Led to An Energized Team 14 © 3M 2008. All Rights Reserved. 2008 3M Investor Conference
  15. 15. New Product Sales Re-vitalized and Re-focused R&D Investment $205 $174 $150 $138 USD ($M) $80 $48 $6 $2 $1 2000 2001 2002 2005 2006 2007 2008 2009E 2010E NPI Process Yields Fruit … and Pipeline Stronger than Ever Sales from products launched in previous 5 years 15 © 3M 2008. All Rights Reserved. 2008 3M Investor Conference
  16. 16. Major Development Programs Program Core / Adjacent EMC for RFID Applications Adjacent EMC Shielding and Absorbing Adjacent ACCR Adjacent Medium Voltage Re-vitalization Core High Voltage Adjacent Low Voltage Re-vitalization Core Mining Tapes and Splice Kits Core New Products For Core and Adjacent Markets will Continue to Drive Growth 16 © 3M 2008. All Rights Reserved. 2008 3M Investor Conference
  17. 17. Regional Results Have Been Impressive… Europe APAC 14.5% CAGR 12.4% CAGR 201 ($ Million) ($ Million) 229 182 204 156 142 167 152 2005 2006 2007 2008 2005 2006 2007 2008 United States L.A. / Canada 15.6% CAGR 11.3% CAGR 336 157 ($ Million) ($ Million) 316 142 119 276 102 244 2005 2006 2007 2008 2005 2006 2007 2008 Consistent Strategy and Solid Execution Driving Growth Across All Regions 17 © 3M 2008. All Rights Reserved. 2008 3M Investor Conference
  18. 18. Financial Results to Date The Strategy has Delivered… EMD Revenue EMD OI $M ’03-’08 CAGR: ’03-’08 CAGR: 900 13.4% 14.7% 750 ’98-’03 CAGR: 0% ’98-’03 CAGR: 7% 600 450 300 150 0 98 99 00 01 02 03 04 05 06 07 98 99 00 01 02 03 04 05 06 07 E E 08 08 19 19 20 20 20 20 20 20 20 20 19 19 20 20 20 20 20 20 20 20 20 20 Have Effectively Transitioned From Manage for Cash to Invest for Growth 18 © 3M 2008. All Rights Reserved. 2008 3M Investor Conference
  19. 19. Summary EMD is a growth division Q2 2008 was the 13th consecutive quarter of double digit sales and OI growth Team remains committed and energized Future outlook remains bright with investment in the electrical infrastructure here to stay…Global investment will continue in both mature and emerging markets Continued new product innovation to serve our growing markets Selective M&A to expand our portfolio and reach new markets Expand our presence in emerging markets (CEE, China and India) Continued Double Digit Growth is Anticipated in Core and Adjacent Markets 19 © 3M 2008. All Rights Reserved. 2008 3M Investor Conference
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