What Does 3M’s Five-Year Growth Plan Entail?

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3M Company

3M recently hosted a meeting with its investors and analysts and issued a new five-year plan, which listed the financial objectives of the company and described how the company can position itself to deliver consistently strong performances in the current year, as well as in the future. President and CEO Inge G. Thulin also discussed plans to strengthen and streamline its supply chain and a how a greater focus on lean six sigma would result in improved customer service, operational efficiencies, and an increased cash flow. Their focus on R&D was highlighted by the showcasing of their newly opened facility which would house 700 scientists to foster innovation and close collaboration between businesses and customers. The company also reaffirmed their 2016 guidance. While the plan is ambitious, it does seem achievable. As long as the U.S. Dollar doesn’t continue rising, the foreign currency headwinds will abate, and would reduce the pressure on the company’s earnings immensely. For the past four years, 3M’s organic revenue growth rate has been 1.5 times the Industrial Production Index, and its margins are in the top decile of its peers. While a recession or supply interruptions may cause havoc, the company should be able to achieve their financial goals.

3m growth plan 2

3m growth plan 1

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for 3M.
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