Latin America Rosa Miller Vice President
Sustaining Credibility &
Profitable Growth
Investors Presentation September 9, 2008 © 3M 2008. All Rights Reserved.
2008 3M Investor Conference
Latin America Area
21,076,501 square kilometers 578 million people well-related to the U.S. Improved political, social and economic stability GDP growth of 4.2% Literacy rate of 89% Spanish, Portuguese, English primary languages Well-educated middle class Brand drives people’s behavior Strong and competitive manufacturing base in Brazil and Mexico Huge Opportunity… In Our Backyard
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© 3M 2008. All Rights Reserved.
2008 3M Investor Conference
Latin America Area
21,076,501 square kilometers 578 million people well-related to the U.S. Improved political, social and economic stability GDP growth of 4.2% Literacy rate of 89% Spanish, Portuguese, English primary languages Well-educated middle class Brand drives people’s behavior Strong and competitive manufacturing base in Brazil and Mexico Huge Opportunity… In Our Backyard
6
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2008 3M Investor Conference
Latin America Area Key Economics
Economic Outlook Strong historical GDP growth performance Domestic demand remains generally vigorous to drive growth in the range of 4+ percent in 2008 Impact of exports and US economy (*) Sources: IMF, National Authorities, Global Insight, Citigroup Global Markets and Prudential Economical Outlook
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2008 3M Investor Conference
Latin America Area Key Economics
Changing the Landscape
Unemployment improvement Inflation dynamics Real exchange rates appreciation Raising productivity Political, economical and monetary policies (*) Sources: IMF, National Authorities, Global Insight, Citigroup Global Markets and Prudential Economical Outlook
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2008 3M Investor Conference
3M Has A Long History in Latin America Ecuador Chile Dominican Republic Costa Rica Panama Venezuela
Peru Colombia Puerto Rico Argentina Mexico
Brazil
1960
1940 9
1970
…and Create aa Successful …and We We Continue Continue to to Successful Future Future 2008 Create 3M Investor Conference
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1980
3M Latin America Recent Performance Revenue ($B)
Operating Income ($M)
CAGR CAGR 14% 14%
CAGR CAGR 13% 13% $428
$1.7
$1.0
$1.2
$1.3
$351
$1.4 $1.0
$0.9
2002 2003 2004 2005 2006 2007 2008 1st
Half
$234
$259
$287
* Excluding pharma business and special items. © 3M 2008. All Rights Reserved.
$273
2002 2003 2004 2005 2006 2007 2008
3X GDP/IPI Growth 10
$305
2008 3M Investor Conference
1st Half
3M Latin America Recent Performance Doubled the size in the last 5 years Bigger than Optical Business, China, India and Central Eastern Europe 3M Brazil larger than 3M Italy and 3M France Growth Drivers: consumer and office, oil and gas, manufacturing, mining, agriculture and construction Creative, talented and passionate employees 3X GDP/IPI Growth 11
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2008 3M Investor Conference
3M Latin America Strategies
Growing the core Investing in the future
CENTRAL AMERICA: PANAMA PACIFICO as a new company
Improving supply chain speed and efficiency Penetrating new markets Making talent a strategic priority 12
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3M Latin America Growth Top Opportunities Market Focus: oil and gas, mining, construction Localization: Brazil, Mexico, Panama Pacifico Penetration in Brazil and Mexico Targeted M&A Key account management Management Innovation: people & talent 13
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Strategy Across Four Primary Drivers Strategic Thrust
Grow the Current Core
Complementary Acquisitions
Build New Businesses
International Growth
The Four Cornerstones of the International Growth Plan
Portfolio Management & Geographic Expansion
Brand & Reputation Building
R&D & Supply Chain Localization
Human Capital Planning
Corporate Corporate Strategies Strategies and and International International Cornerstones Cornerstones Totally Totally Aligned Aligned 14
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2008 3M Investor Conference
Building Global and Local Strength
Globalization Four Cornerstones of Localization Portfolio Management & Geographic Expansion
15
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Brand and Reputation Building
R&D and Supply Chain Localization
2008 3M Investor Conference
Human Capital Planning
Building Global and Local Strength
Globalization Four Cornerstones of Localization Portfolio Management & Geographic Expansion
16
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Brand and Reputation Building
R&D and Supply Chain Localization
2008 3M Investor Conference
Human Capital Planning
3M Latin America Local Market Penetration Health Care Consumer
Food & Beverage
Oil & Gas
Construction
17
Mining
Transportation
Priority Priority Markets Markets Critical Critical to to Deliver Deliver the the Growth Growth
Government
3M Latin America Key Customers
Key Accounts are a Significant Part of Latin America Growth 18
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2008 3M Investor Conference
Building Global and Local Strength
Globalization Four Cornerstones of Localization Portfolio Management & Geographic Expansion
19
© 3M 2008. All Rights Reserved.
Brand and Reputation Building
R&D and Supply Chain Localization
2008 3M Investor Conference
Human Capital Planning
3M Latin America Consumer & Office Business 5 Years Sales Growth CAGR CAGR 24 24 % %
($M)
$290
$233 $232 $199 $198
$166 $123
2004
2005
2006
2007
2008E
Double Double the the Size Size in in 55 Years… Years… The The Power Power of of the the Brand Brand 20
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2008 3M Investor Conference
3M Latin America 2004-2008 Consumer and Office Growth Drivers Brand building through advertising/merchandising spending increase ®
Successful commercialization of new-to-the-market products Mass retailers’ relationship excellence Marketing innovation: in-store execution
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2008 3M Investor Conference
Scotch-Brite™ Twister
22
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Post-it® Twister
Cristal
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Building the Brand… Cero Rayas
Opportunity: Large scouring market size: Create a new product category to penetrate non-scratch scrub sponge segment
Expected Results: Upgrade the scrub laminate market and increase differentiation over competition
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Costa Rica – Building a New Category
Leadership
Growth
Mature
Cero-Rayas 400% sales increase
Urethane
Aqua Pad 15% sales increase 27% Incr.
Tenable
Favorable Strong
49% sales increase 36% Incr.
Gross Margin % 25 25
Early Growth
Weak
Competitive Position
Embryonic
50%-60%
60%-70%
Local Local Markets, Markets, Local Local Teams Teams … … Full Full Localization Localization
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Aging
Cero Rayas Twister
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Integrated Marketing Campaign Strengthen an emotional bond between the consumer & the brand by adopting their lifestyle through a usage experience
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… … and and Continue Continue to to Expand Expand the the New New Category Category © 3M 2008. All Rights Reserved.
2008 3M Investor Conference
Building Global and Local Strength
Globalization Four Cornerstones of Localization Portfolio Management & Geographic Expansion
28
© 3M 2008. All Rights Reserved.
Brand and Reputation Building
R&D and Supply Chain Localization
2008 3M Investor Conference
Human Capital Planning
3M Latin America R&D and Manufacturing Key Sites CENTRAL AMERICA: PANAMA PACIFICO as a new company
MEXICO: SANTA FE, SAN LUIS POTOSI, MONTERREY (*) (*) Mexican Maquilas not Included
BRAZIL: SUMARE, ITAPETININGA, RIBEIRAO PRETO, MAIRINQUE, MANAUS, SAO JOSE DO RIO PRETO
3M Brazil Laboratory R & D Capacities • Abrasives • Adhesives Am Bi Ad • Films • Filtration Ab Dd • Non Woven • Pol ymer Processing Ac Dm Fc • Precision Processing As Do Fi • Molding Ce Ep Fl • Surface Modification • Flexible Converting & Cp E t Fo Packaging • Acoustic Control • Particle & Dispersion Processing • Reclosable Fastening • Vegetal Oil Chemistry • Ethanol Processing Adhe siv es
Dr ug Del vi er y
Ac oustics
D si pl ay Ma ter a ils
Appl ci at o in Sof w t are
C era mi cs
Chem ci a l Pow er
Sou rc es
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A dvanced Ma ter a ils
Abr a siv e s
Den tal & Or h t odont ci Ma ter a ils
Elect r onic P ackagi n g
Etha nol Pr oc es s ing
Rf
Bi otech
Re closa ble Fas te ners
Mr M ci r or epli cati o n
Nt Nano Techn ology
Fle x ible Conv e rting & Pa c k a ging
Film s
Fs Filtra tion, Se pa ra tion, Purific a tion
Im Imag n ig
Fl uor om at eri als
Fibe r
O pti cs
Ip In ks & Pigm ent s
Ir
Md
Im m un e R espon se
M edi cal Dat a
M odi fi e rs
M gm t
In tegr a t ed
Is
Me
Syst m es D esig n
Mat r xi Co mposi tes
Lm Li ght M gmt
M etal
Mi Mci r obia l De t ect o in &Cont r ol
Mo Molding
Nm
Pe
Rp
En g i n e ri n g & Mo d e il n g
R adiat o in Pr ocessing
P re d ci tvi e
Pm
Non wov e n M a te ria ls
Po y l mer M e lt Pr oc es s in g
Pc
Po
P reci sio n
P or ous Mat er a i l s&
Coa ti n g
Pd P ar ticle & D ispe rs io n Pr oce ss ing
Sm S pecial ty M at eri als
Su
M em bra nes
Surf a ce Modific ation
Pr
Wo
Pr ocess D esign &
W oun d M gmt
C ontr ol
Pp
Vo
P re c ision Proc e ss ing
Ve ge ta l O il Che m is try
Vp V acuum Pr ocessi ng
3M Latin America Acquisitions Higher organic growth results from more frequent acquisitions
Pomp – Brazil
Abzil – Brazil
•Safety market re-usable ear plug products eyewear & barrier creams
• Dental products • Brasilian orthodontic center 3M Brazil
He alth Care Busi ness Review
of excellence
Acquisitions Apr. 2008
Confi denti al
3
Growth
Base
Adding Adding Leading Leading Brand Brand Position Position in in Local Local Markets Markets 30
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Fiorentina - Argentina
Medisor – Chile
•Consumer market – innovative branding
•Medical products
•High-quality and differentiateddesigned products 2008 3M Investor Conference
Building Global and Local Strength
Globalization Four Cornerstones of Localization Portfolio Management & Geographic Expansion
31
© 3M 2008. All Rights Reserved.
Brand and Reputation Building
R&D and Supply Chain Localization
2008 3M Investor Conference
Human Capital Planning
3M Latin America Human Capital Planning
Robust systems/processes for recruiting, developing & retaining talented employees Focus on talent management at all levels Continue to re-allocate resources to high growth markets
Employees….The Sustainable Competitive Advantage 32
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2008 3M Investor Conference
3M Latin America Productivity Performance Sales per Employee ($000)
OI per Employee ($000)
CAGR CAGR 16 16 % %
CAGR CAGR 24 24 % %
Sales per Employee
OI per Employee
$302 $302
$260 $260
$69 $69
$226 $226
'06 ‘06
$87 $87
$57 $57
'07 ‘07
'08 Est ’08 est
'06 ‘06
'07 ‘07
'08 Est ’08 est
Competitive Competitive Advantage Advantage Model Model Driving Driving Sustainable Sustainable Growth Growth
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3M Latin America Summary Credible and sustainable performance Doubled the size in the last 5 years Profitable and healthy growth 3M portfolio well-aligned to Latin America market opportunities Outpace area GDP/IPI growth Targeted investment to support local growth Talented, creative, entrepreneurial and professional employees
Again, Double the Size in the Next 5 Years 34
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2008 3M Investor Conference