3M 2013 Annual Report Download - page 33

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27
Electronics and Energy Business (17.5% of consolidated sales):
2013 2012 2011
Sales (millions)
$
5,393
$
5,458
$
5,732
Sales change analysis:
Organic local currency
―
%
(3.7)
%
(0.5)
%
Translation
(1.2)
(1.1)
2.3
Total sales change
(1.2)
%
(4.8)
%
1.8
%
Operating income (millions)
$
954
$
1,026
$
1,140
Percent change
(7.0)
%
(10.0)
%
(5.5)
%
Percent of sales
17.7
%
18.8
%
19.9
%
The Electronics and Energy segment serves customers in the electronics and energy markets, including solutions for
dependable, cost-effective, high-performance electronic devices, telecommunications networks, electrical products, power
generation and distribution, and infrastructure protection. This segment’s electronics solutions include optical film
solutions for the electronic display industry; packaging and interconnection devices; high performance fluids and
abrasives; high-temperature and display tapes; 3M™ Flexible Circuits, which use electronic packaging and
interconnection technology; and the touch systems business, which includes touch screens, touch monitors, and touch
sensor components. This segment’s energy solutions include pressure sensitive tapes and resins; electrical insulation; a
wide array of fiber-optic and copper-based telecommunications systems; renewable energy component solutions for the
solar and wind power industries; and infrastructure products that provide both protection and detection solutions.
The optical film business provides films that serve numerous market segments of the electronic display industry. 3M
provides distinct products for five market segments, including products for: 1) LCD computer monitors 2) LCD televisions
3) handheld devices such as cellular phones and tablets 4) notebook PCs and 5) automotive displays. The optical
business includes a number of different products that are protected by various patents and groups of patents. These
patents provide varying levels of exclusivity to 3M for a number of such products. As some of 3M’s multi-layer optical film
patents expired at the end of 2013 and will expire over several years thereafter, 3M will likely see more competition in
these products. 3M continues to innovate in the area of optical films and files patents on its new technology and products.
3M’s proprietary manufacturing technology and know-how also provide a competitive advantage to 3M independent of its
patents.
Year 2013 results:
Electronics and Energy sales totaled $5.4 billion, down 1.2 percent in U.S. dollars, with this decrease related to foreign
currency translation. Organic local-currency sales were flat in 3M’s electronics-related businesses, with increases in touch
systems and optical systems offset by decreases in electronics markets materials. Organic local-currency sales were also
flat in 3M’s energy-related businesses, where sales gains in electrical markets were offset by sales declines in
infrastructure protection, telecommunication markets, and renewable energy.
On a geographic basis, organic local-currency sales increased slightly in Latin America/Canada and Asia Pacific. Organic
local-currency sales declined slightly in the United States and EMEA.
Operating income decreased 7.0 percent to $954 million in 2013. Operating income margins were 17.7 percent, compared
to 18.8 percent in 2012. The operating margin decline was primarily attributable to lower factory utilization and flat year-
on-year organic local-currency sales.
Year 2012 results:
Electronics and Energy sales totaled $5.5 billion, down 4.8 percent in U.S. dollars. Organic local-currency sales declined
3.7 percent and foreign currency translation reduced sales by 1.1 percent. Organic local-currency sales declined in the
consumer electronics-related businesses, including a 9 percent decline in optical systems, driven by lower optical film
volumes for LCD TVs. In addition, organic local-currency sales declined in the renewable energy and telecommunications
markets business. Organic local-currency sales increased in 3M’s touch systems, infrastructure protection, and electrical
markets businesses.
On a geographic basis, organic local-currency sales increased 14 percent in Latin America/Canada and 3 percent in the
United States. Organic local-currency sales declined 6 percent in EMEA and 7 percent in Asia Pacific.