3M expects $300 million revenue hit from China COVID lockdowns
2022.06.01 18:47
FILE PHOTO: The 3M logo is pictured on products at an Orchard Supply Hardware store in Pasadena, California U.S., January 24, 2017. REUTERS/Mario Anzuoni
(Reuters) – Industrial conglomerate 3M CO on Wednesday warned of a $300 million hit to revenue in the current quarter as COVID lockdowns in China slam demand and worsen supply chain issues.
The company also expects an impact of 30 cents to per-share earnings in the second quarter, Chief Executive Michael Roman said at the Bernstein Strategic Decisions Conference.
China’s “zero Covid” policy to combat the Omicron variant triggered fresh lockdowns and shut factories, hurting the sales prospects of businesses worldwide as consumers dialed back spending in the world’s second-biggest economy.
“COVID shutdowns in China impacted our manufacturing operations in the country,” Roman said.
The comments come over a month after 3M said China’s lockdowns and the Ukraine crisis had slowed sales in April.
The diversified manufacturer, which makes everything from Post-It notes to industrial sandpaper, also flagged impacts to the automotive and electronics end markets due to chip shortages driven by supply chain snags.
“The outlook for automotive build rates is about 4% year-over-year improvement. We started the year at 9%,” Roman said.
Still, 3M expects some recovery in June even as inflation soars.
“We’re able to offset it (inflation) with price and sourcing actions and productivity and yield, and that’s how we’re managing it,” Roman said.
In a bright spot, Shanghai earlier this week announced an end to its two-month long COVID-19 lockdown.
