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3M company

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

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3M company

  1. 1. Savino BartolomeoPaula BisteCamesha Cody-VeraRenan DaultMathieu PiccaLucas Pilleri
  2. 2.  Company Profile Capital Structure Dividend Policy Valuation Strategic Finance 23.11.2012 2
  3. 3. 3M is a diversified technology company serving customersand communities with innovative products and services.More than 35 business units, organized into sixbusinesses: 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. 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 globallyFive-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. 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. 6. Rising energy and facility costs: Negative effect on prices of raw materials, increasing cost and reducing operating marginsEnvironmental regulations Increase of “environmental remediation” costs, recorded at $28 Million by December 31 2011 Development of additional Prevention ProgramsCurrency 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. 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 2010Total 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. 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 theCapital spending. Capital Spending increased to $1.379 billionin 2011, compared to $1.091 billion in 2010 and $903 million in2009.• In 2011, a large portion of the investment is addressing supplyconstraints in a number of businesses with significant growthpotential. Strategic Finance 23.11.2012 8
  9. 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 mainMillion $ 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. 10. Debt/Equity ratio indicates Debt/Equity Ratio what proportion of equity and 0,43 debt the company is using to0,45 finance its assets. 0,4 0,34 0,330,35 0,3 This mean that 3M is a0,25 low risk for shareholders 0,2 because it’s mainly financed from equity.0,15 0,10,05 0 31 Dec 2009 31 Dec 2010 31 Dec 2011 Strategic Finance 23.11.2012 10
  11. 11. Cash, cash-equivalents and marketable securities atDecember 31, 2011 totaled approximately $4.6 billion, helpedby cash flows from operating activities of $5.3 billion.The Company has sufficient liquidity to meet currentlyanticipated growth plans, including capital expenditures,working capital investments and acquisitions. High Less Cash Flexibility Debt FLow Strategic Finance 23.11.2012 11
  12. 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. 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 6Titolo 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. 14. The company has recovered Declining profit margins.from 2008-2009 crisis and The perspective of the risingreported earnings 4.5% higher energy costs, 3M has to findthan 2007 compared with alternatives to keep cost2011. structure stable otherwise thisPositive cash flow, necessary will influence future cash flowsto pay its dividends and make and in long term the dividendacquisitions. policy. Strategic Finance 23.11.2012 14
  15. 15. Thank you for your attention! Strategic Finance 23.11.2012 15

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