3M signals rocky recovery in autos, housing

(AP) — 3M is signaling that a steady recovery in the U.S. autos and housing markets is far from certain in 2010.

The company, considered a window into economic health because of the wide variety of products it makes, said Thursday "there is still no real sign of sustained demand" in domestic markets including automotive, housing and commercial construction. In contrast, "China and India are seeing rocket ship growth in those segments," CEO George Buckley said in a conference call following release of 3M's 2009 earnings.

Buckley thinks high unemployment will be the culprit in curtailing U.S. growth.

"While we might be through the worst, we were still sailing in very choppy economic waters," he said. Economists have predicted growth in gross domestic product of just over 3 percent for this year.

The CEO's comments overshadowed strong results for the fourth quarter. 3M's profit rose 74 percent in the last three months of 2009. The company even raised its profit expectations for the new year. But 3M shares dropped following the conference call.

The automotive segment was a bright spot for 3M in the fourth quarter. December was one of the best months of 2009 for U.S. auto sales. 3M's automotive division makes over 1,000 products for cars, including abrasives and paint finishings, and is part of the industrial and production division, where sales rose 10 percent.

Buckley said continued government investment overseas will determine the segment's growth.

"I think the wild card here is a number of governments spend a fair amount of money stimulus for Cash for Clunkers last year. It's unclear if that will continue," he said. "That could be a significant headwind on a global basis."

Cash for Clunkers spurred auto sales in the U.S. last summer. Similar incentive programs were run in Europe and are now ongoing in Asia.

3M, based in Maplewood, Minn., also makes household names like Post-its and Scotch tape. It earned $935 million, or $1.30 per share in the last three months of 2008, compared with $536 million, or 77 cents per share a year earlier. Excluding some one-time items in the year-ago period, fourth-quarter earnings per share rose 34 percent.

3M increased its 2010 earnings projection to $4.90 to $5.10 per share from $4.85 to $5 per share previously.

Quarterly revenue increased 11 percent to $6.12 billion, thanks to improved revenue in all business segments.

The company saw growth in renewable energy products, including films for solar panels and windows as well as sealants and tapes for wind turbines. Renewable energy companies have been expanding rapidly as the industry benefits from billions of dollars in government stimulus money. President Obama has advocated more investment in renewable energy as a way to create jobs.

Strong sales in other segments were led by products including H1N1-related respirators, food safety solutions and TV and computer display products. Sales of international office supplies were a weak point.

CEO Buckley said he expects film for windows and LCD televisions to continue to drive sales.

For all of 2009, 3M's profit fell to $3.19 billion, or $4.52 per share, from $3.46 billion, or $4.89 per share in 2008.

Shares fell $2.06, or 2.5 percent, to $80.24 in midday trading.