3M raises full-year profit target after deep spending cuts

3M BOOSTED its full-year adjusted profit and cash flow targets as it reported third-quarter results that easily topped Wall Street estimates, lifted by sweeping cost cuts and efforts to combat an ongoing sales slump.

Adjusted earnings in 2023 will be US$8.95 to US$9.15 per share, 3M said in a statement on Tuesday (Oct 24). That compares with its earlier forecast of US$8.60 to US$9.10, and an average of US$8.88 based on analyst estimates compiled by Bloomberg. 

The company also expects its adjusted operating cash flow will be from US$6.5 billion to US$6.9 billion, up from a range of US$5.9 billion to US$6.3 billion. 

“We are building momentum through strong operational execution,” 3M chief executive officer Mike Roman said in a statement. The results “position us for a solid close to 2023.”

The higher targets reflect deep cost cuts, thousands of layoffs and other actions taken by Roman to streamline the complex company amid a lengthy sales slump. 

3M reported a third-quarter adjusted profit of US$2.68 per share, blowing past the US$2.34 estimated by Wall Street. The company attributed its improved bottom line to operational improvements at its factories, restructuring actions gaining traction and spending controls. 

Sales of US$8.02 billion were at the high end of 3M’s third-quarter forecast and slightly above the average analysts estimate. Full-year sales will be down about 3 per cent on an organic basis, a change from 3M’s previous forecast of a 3 per cent decline to no better than flat, the company said.

Shares of the St Paul, Minnesota-based manufacturing giant had declined 29 per cent this year through Monday’s close on meagre sales growth, uneven earnings and billions of dollars in legal settlements to resolve environmental and product liability claims.

The company took a major step toward resolving its legal entanglements in August when it agreed to pay US$6 billion to resolve hundreds of thousands of lawsuits alleging it supplied defective earplugs to US combat troops. 

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The company took a US$4.2 billion pre-tax charge in the third quarter because of the agreement, which was adjusted out of its reported results. BLOOMBERG