3M shares five year growth, profit blueprint

3M wowed investors on Tuesday by sharing aggressive organic growth plans, doubling a share repurchase program, raising the prospect of billion dollar acquisitions and increasing its dividend by 35%.

The $30 billion company offered the details during a meeting with investors to update a five-year growth plan that extends through 2017. The plan envisions 9% to 11% growth in earnings per share, 4% to 6% organic revenue growth and approximately a 20% return on invested capital.

More immediately, the company said it expects to earn between $7.30 and $7.55 a share next year, a range which encompasses analysts’ consensus estimate of $7.40. It also plans to increase its quarterly dividend to 85.5 cents from 63.5 cents for an annual payout of $3.43 a share.

A portion of the company’s earnings per share growth will be driven by a massive increase in share repurchase activity. The company said it expects to spend $17 billion to $22 billion on share repurchases between 2013 and 2017 compared to a prior range of $7.5 billion to $15 billion.

In addition, the company plans to drive growth by opening its checkbook and spending between $5 billion and $10 billion on acquisitions. It also conceded that possible deals could exceed that range given the right strategic opportunity.

“The strength and diversity of our business model supports more aggressive capital deployment and reflects our confidence in 3M’s future,” said 3M chairman, president and CEO Inge Thulin. “We are building the company for long-term success and are committed to creating sustainable value for our shareholders.”


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