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3M ( MMM ) targets annual growth of 4-6% in sales and 9-11% in earnings over the next five years.
In order to achieve these targets, 3M plans to: 1) increase investment in research and
development; 2) capitalize on opportunities that developing markets present for 3M's business
segments; and, 3) acquire companies that help strengthen and enhance its technological
capabilities.
3M's last acquisition was Ceradyne Inc in 2012, a global leader in development and production of
advanced technical ceramics. The company is a disciplined buyer and has yet to announce a deal
this year; though its possesses the financing capacity for a deal, it apparently has yet to find a
target. 3M allocates $1-$2 billion annually for acquisitions to boost inorganic sales growth.
Shareholders To See Significant Returns
If 3M achieves its sales and earnings growth targets, it will likely return more cash to shareholders
through higher dividends and share repurchases. It raised its quarterly dividends this year from 59
cents to 63.5 cents per share, an increase of 7.6%, making it the 55th consecutive increase in its
dividends. 3M has already purchased $3.53 billion of stock this year and has increased the
expected gross share repurchase for 2013, from $3.5-$4.5 billion to $4.5-$5 billion, citing good
business growth and significant cash flow. Approximately, $4.1 billion is still available under the
new repurchase program authorized in February 2013. Looking at 3M's history of regular dividend
growth, and the increased share repurchase expectations for the year, shareholders can expect to
see further increases in shareholder value, even if a down market offers headwinds to a higher
share price.