Excluding the year-ago sale, 3M's earnings grew 14%, reflecting robust demand in all major markets for its industrial, transportation and health-care products.

The St. Paul, Minn., company earned $851 million, or $1.17 a share, down from $1.18 billion, or $1.57, in the final three months of 2006. On an adjusted basis, 3M earned $1.19 a share.
3M, known for Post-It notes and Scotchgard fabric protector as well as graphic-display screens and home-building materials, said sales rose 7.3%, reaching $6.21 billion.

Analysts polled by Thomson Financial had expected quarterly earnings to come in at $1.17 a share on revenue of $6.14 billion.
3M shares were recently up a fraction to $78. The stock's down nearly 20% from its all-time high of $97 set Oct. 10, primarily on recessionary fears.

As has been the case for many blue-chip manufacturers, 3M has been benefiting from a diverse international portfolio that helped offset a cooling U.S. economy. 3M currently draws more than half of its revenue from overseas markets.
For the fourth quarter, 3M said local-currency sales, including acquisitions, increased 6.3%. Currency translations added 4.7% to the quarter's 11% revenue growth after adjusting for divestitures.

"3M's indelible strength is the breadth of the portfolio," Chief Financial Officer Patrick Campbell said. "In dollar terms, all six of the businesses grew year on year," led by health care, which grew more than 22%.

3M also reiterated its 2008 outlook, calling for earnings growth of at least 10%. That suggests adjusted profit of $5.47 a share or higher. Analysts are currently looking for $5.44 a share.

Some analysts have expressed concern that the company had been overly optimistic coming into 2008 because 10% to 12% of its product portfolio is tied to consumer, residential and office-products spending.

In 3M's largest segment, industrial and transportation, all major markets posted double-digit sales growth for the quarter driven by demand for adhesives and abrasives, as well as "outstanding growth" in its automotive business. Altogether, segment profit climbed nearly 14% to $360 million.

"We made specific manufacturing investments in India, China and Poland to simplify the supply chains and get closer to local customers," Campbell said. "As a result, the industrial-transportation business continues to generate over 20% of the growth in emerging economies."

For health care, sales were up 17% while operating profit, excluding the pharmaceutical divestures, rose 19%.