3M CEO Roman Admits ‘Mistake’ as Inflation Continues to Get Worse
2022.06.01 20:20
© Bloomberg. Michael Roman, chief executive officer of 3M Co., speaks during a Bloomberg Television interview in New York, U.S., on Tuesday, April 30, 2019. Roman discussed first-quarter results, aggressively taking down costs, and the Chinese and U.S. markets.
(Bloomberg) — 3M Co.’s leader said the company is battling persistently rising expenses, walking back comments earlier this year suggesting that inflation may be nearing a peak.
High costs are spreading to new areas such as services, and inflation is running as much as $50 million above its previous expectations for the second quarter, Chief Executive Officer Mike Roman said. For the full year, the impact is trending toward the high end of the $350 million to $450 million headwind the company had forecast.
The comments are a departure from the optimistic remarks Roman offered during the company’s first-quarter earnings call about a moderation in the pace of inflation. Speaking Wednesday at an industry conference, the CEO called those earlier comments a “mistake.”
“That wasn’t true, we’re obviously seeing higher than our estimate for this year,” he said. “I think you have to be careful about calling a couple of data points early.”
Soaring costs are one of the challenges buffeting 3M as it also wrestles with lockdowns in China to curb the spread of Covid-19, currency fluctuations and broad supply-chain disruptions.
The stringent measures in China and constrained logistics have hit 3M’s “significant” presence near Shanghai, Roman said. The factors could reduce earnings in the second quarter by 30 cents a share.
“We’re expecting some recovery in June,” Roman said. “June is an important month and we’ll see how much, how fast.”
3M’s shares fell 2% at 10:12 a.m. in New York.
©2022 Bloomberg L.P.
