3M Co. expects sales and profit to expand next year as the maker of everything from Post-it notes to dental tools reshapes the company around high-growth markets.

Revenue will increase as much as 7 percent next year, or as much as 5 percent on a local-currency basis, the company said. Earnings will be $9.60 to $10 a share, a potential rise of 10 percent from this year.

The guidance is “nicely ahead of expectations,” Deane Dray, an analyst at RBC Capital Markets, said in a note. Expectations for growth reflect “the still-healthy macro environment.”

3M sees momentum carrying over into 2018 after recent strength in emerging markets and favorable exchange rates helped it overcome sluggishness in several businesses. As a manufacturer specializing in a broad array of products in many countries, the St. Paul, Minnesota-based company is tied closely to global economic trends.

3M plans to boost investment in research and development to $1.9 billion next year while focusing on what it calls “priority growth platforms,” including automotive electrification, air quality and personal safety.

“We have been able to build a portfolio that is very diverse,” Chief Executive Officer Inge Thulin said on a conference call with analysts. “We’ve made sure we are more relevant.”

Shares Climb

The shares rose 34 percent this year through, outpacing the 19 percent advance in the Standard & Poor’s 500 Index. The stock climbed 1.3 percent in premarket trading.

The company has made a series of deals this year to reshape its portfolio, including buying Scott Safety in March for $2 billion. 3M said that it agreed to sell the bulk of its Communications Markets division, which makes optical fibers and other equipment for the telecommunications industry, to Corning Inc. for $900 million.

3M said it is trending toward the top end of its previous earnings forecast of $9 to $9.10 a share for this year. Analysts expect adjusted profit of $9.07 a share, according to the average of estimates compiled by Bloomberg. 3M also expects to be near the top end of its organic-growth range of 4 percent to 5 percent.

Wall Street anticipated 2018 earnings of $9.68 a share based on generally accepted accounting principles. Analysts predicted $9.63 on an adjusted basis.

“The 3M team is delivering a robust performance in 2017, and is well-positioned to build on that momentum in 2018 including strong, broad-based organic growth and expanded profitability,” Thulin said in a statement. The company plans to announce fourth-quarter and full-year earnings next month.

Source: Bloomberg

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