3M took a hefty loss this summer after agreeing to pay $6 billion to settle lawsuits over its Combat Arms earplugs.
While 3M had a loss of $2 billion for the third quarter, or -$3.74 per share, when it recorded a $4.2 billion charge for the earplug settlement, the Maplewood-based company raised its full-year outlook, sending its stock higher in early morning trading.
When excluding one-time costs — related to the discontinuation of PFAS (forever chemicals), ongoing litigation and the health care spinoff — 3M beat expectations for the quarter, with an adjusted $2.68 a share.
“Our momentum accelerates our ability to define where we go next at 3M,” CEO Mike Roman said on a conference call Tuesday morning, “as we prioritize attractive markets where we have the right to win and the opportunity to differentiate ourselves through our unique capabilities and strengths.”
Wall Street analysts expected adjusted earnings of $2.34 per share.
3M shares jumped 5% early Tuesday. The company’s stock price had recently reached its lowest point in more than a decade.
Productivity improvements and benefits from restructuring helped improve profit margins even as sales shrank. Adjusted earnings were up 3% year over year.
The Post-it and N95 manufacturer had $8.3 billion in total sales during the quarter. 3M’s third-quarter revenue was $8.6 billion last year.
Sales were down across nearly every business group. The auto parts segment was a bright spot of growth but is now threatened by the ongoing autoworkers strike.
“We’re staying connected on what happens week to week and impacting our demand,” Roman said. “It has had some impact, but relatively small impact to this point.”
Roman highlighted the company’s $600 million auto electrification business as a way the company is “prioritizing emerging global trends that have attractive growth rates and customer needs that match up well with our capabilities.”
“Our material science expertise has led us to build a new business, and we see similar opportunities in other core platforms such as safety, home improvement, and consumer electronics,” he said.
3M increased its financial forecast for the rest of 2023 and now expects an annual profit of up to an adjusted $9.15 per share, up from a $9.10 top-end estimate. Sales are expected to fall 5% year over year.
“We are very focused on our priorities by driving improved performance through strong operational execution, progressing on our restructuring actions and spending discipline, successfully spinning off health care and reducing risk by managing litigation exposures,” said Monish Patolawala, 3M president and chief financial officer.
The health care spinoff has been pushed into the first half of 2024; the company initially wanted to finish the separation by the end of this year.
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