Organic growth companywide was 1% on top of 6% in last year's Q4, with earnings of $2.31 per share driven by a good December strong execution and a lower-than-anticipated tax rate.
While focusing on customers, we also saw good benefits from our actions to drive productivity, improve yields and control costs, which helped offset the margin impact of supply chain disruptions, inflation and COVID-19.
In addition, our selling price actions continued to gain traction with a year-on-year increase of 2.6% in Q4 versus 1.4% in Q3.
Sales were $8.6 billion, up 0.3% year-on-year or an increase of 1.3% on an organic local currency basis against our toughest quarterly comparison last year.
Operating income was $1.6 billion with operating margins of 18.8% and earnings per share of $2.31.
All in, these impacts lowered operating margins by 2.4 percentage points and earnings per share by $0.33 year on year.
On a year-on-year perspective, Q4 selling prices increased 260 basis points as compared to 140 basis points in Q3 and 10 basis points in Q2.
In dollar terms, higher year-on-year selling prices offset raw material and logistics cost inflation in Q4, which resulted in an increase in earnings of $0.03, however, remained a headwind of 20 basis points to operating margins.
Next, foreign currency, net of hedging impacts, was a headwind of 10 basis points to margins and $0.04 per share year on year.
First, a reduction in other expenses resulted in a $0.10 earnings benefit.
This included a $0.06 benefit from non-operating pension, which was similar to prior quarters.
We also have been proactively managing our debt portfolio, including the early redemption of $1.5 billion, which helped drive a $0.04 benefit year on year from lower net interest expense.
Second, a lower tax rate versus last year provided a $0.12 benefit to earnings per share.
And for the full year, our tax rate was 17.8%.
And finally, average diluted shares outstanding decreased 1% versus Q4 last year, increasing per-share earnings by $0.02.
Fourth-quarter adjusted free cash flow was $1.5 billion or down 30% year on year, with conversion of 110%.
For the full year, adjusted free cash flow was $6 billion with adjusted free cash flow conversion of 101%.
Fourth-quarter capital expenditures were $556 million, up $134 million year on year and $213 million sequentially as we continue to invest in growth, productivity and sustainability.
Looking at the full year, capital expenditures totaled $1.6 billion.
During the quarter, we returned $1.8 billion to shareholders through the combination of cash dividends of $848 million and share repurchases of $938 million.
For the full year, we returned $5.6 billion to shareholders in the form of dividends and share repurchases.
We ended the year with $4.8 billion in cash and marketable securities on hand and reduced net debt by $1.2 billion or 8% versus year-end 2020.
As a result, we exited the year with net debt-to-EBITDA of 1.4 times.
I will start with our Safety and Industrial business, which posted an organic sales decline of 1.3% year on year in the fourth quarter.
This result included a disposable respirator sales decline of approximately $110 million year on year, which negatively impacted Safety and Industrial's Q4 organic growth by nearly 4 percentage points.
Our personal safety business declined mid-teens organically versus last year's 40% pandemic-driven comparison.
Safety and industrial's fourth-quarter operating income was $543 million, down 22% versus last year.
Operating margin was 17.7%, down 440 basis points versus Q4 last year.
Our auto OEM business was down mid-teens organically year on year, compared to the 13% decline in global car and light truck builds.
As we mentioned last quarter, we experienced an increase in channel inventory levels with the tier suppliers in Q3 as auto OEM production volumes decelerated from 18.5 million builds in Q2 to 16.3 million in Q3.
During the fourth quarter, OEM production volumes increased to 20.2 million builds or up over 20% sequentially.
This sequential increase in build activity drove a reduction of channel inventory levels with the tier suppliers during the quarter, which negatively impacted Q4 organic growth for our automotive business by approximately 10 percentage points.
For the full year, our auto OEM business was up low double digits, as compared to global car and light truck builds growth of 2%.
Fourth-quarter operating income was $406 million, down 15% year on year.
Operating margins were 17.6%, down 270 basis points year on year.
Turning to our healthcare business, which posted a fourth-quarter organic sales increase of 1.6%.
Fourth-quarter elective medical procedure volumes were approximately 90% of pre-COVID levels, which is similar to Q3 and last year's Q4.
Health care's fourth-quarter operating income was $536 million, down 2% year on year.
Operating margins were 23.6%, down 50 basis points.
For the quarter and full year, healthcare's adjusted EBITDA margins were strong, coming in at nearly 31%.
Lastly, our consumer business finished out the year strong with organic growth of 4.9% year on year on top of last year's 10% comparison.
Consumer's operating income was $316 million, flat compared to last year.
Operating margins were 21.4%, down 100 basis points year on year.
Against this backdrop, the 3M team kept a relentless focus on serving customers, ensured continuity of raw material supply, managed ever-changing manufacturing production plans, navigated logistic constraints, and delivered strong full-year organic growth of 9%, with all business segments posting high single-digit growth.
These actions, combined with strong organic growth, helped to deliver full-year operating margins of 20.8% or down 50 basis points year on year on an adjusted basis.
In addition, we continue to focus on working capital improvement, which helped contribute to another year of robust adjusted free cash flow coming in at $6 billion.
In the face of an uncertain environment, we delivered strong organic growth of 9%, with strength across all business groups, along with margins of 21%.
This drove a 14% increase in adjusted earnings per share.
We generated robust free cash flow of $6 billion with an adjusted conversion rate of 101%, enabling us to invest in the business, reduce net debt by $1 billion and return significant cash to shareholders.
All in, 3M returned $5.6 billion to our shareholders through dividends and share repurchases, and 2021 marked our 63rd consecutive year of dividend increases.
We continue to help the world respond to COVID-19 with 2.3 billion respirators distributed last year for a total of 4.3 billion since the onset of the pandemic, while engaging with governments on how to prepare for future emergencies.
In Zwijndrecht, Belgium, we installed and activated a treatment system last month to reduce PFAS discharges by up to 90%.
This is part of a EUR 125 million commitment to improve water quality and support the local community.
This includes multiple programs to make STEM education more available to underrepresented groups and achieve our goal to deliver 5 million learning experiences.
We are innovating faster and differently, including new ways to collaborate with customers and partners virtually, while investing $3.6 billion in the combination of R&D and capex to strengthen 3M for the future.
In 2021, for example, our automotive electrification platform grew 30% organically, and our biopharma business grew 26%.
Our home improvement business grew 12% on top of 13% growth in 2020, driven by iconic brands, including our Command damage-free hanging solutions and Filtrete home filtration products.
To accelerate our ability to meet increasing demand for Command and Filtrete, last week, we announced a nearly $500 million investment to expand our operations in Clinton, Tennessee, adding nearly 600 manufacturing jobs by 2025.
This includes the ongoing deployment of our ERP system, which went live in Japan in Q4, and also moving more than 60% of our enterprise applications and global data center infrastructure to the cloud, while streamlining our business group-led operating model.

Summary:
Organic growth companywide was 1% on top of 6% in last year's Q4, with earnings of $2.31 per share driven by a good December strong execution and a lower-than-anticipated tax rate.
While focusing on customers, we also saw good benefits from our actions to drive productivity, improve yields and control costs, which helped offset the margin impact of supply chain disruptions, inflation and COVID-19.
Sales were $8.6 billion, up 0.3% year-on-year or an increase of 1.3% on an organic local currency basis against our toughest quarterly comparison last year.
Operating income was $1.6 billion with operating margins of 18.8% and earnings per share of $2.31.
Fourth-quarter adjusted free cash flow was $1.5 billion or down 30% year on year, with conversion of 110%.
I will start with our Safety and Industrial business, which posted an organic sales decline of 1.3% year on year in the fourth quarter.
We continue to help the world respond to COVID-19 with 2.3 billion respirators distributed last year for a total of 4.3 billion since the onset of the pandemic, while engaging with governments on how to prepare for future emergencies.