3M raises full-year profit forecast as cost-cut measures pay off

By Kannaki Deka

(Reuters) -U.S. industrial conglomerate 3M Co on Tuesday raised its full-year profit forecast and reported better-than-expected quarterly results helped by higher prices and cost-cut measures, sending its shares to a four-month high of nearly 6%.

3M, which makes electronic displays for smartphones and tablets, raised prices to offset high raw material and labor costs. It also reduced its total global workforce by 10% this year as demand for consumer electronics waned.

The diversified manufacturer said in April it expects to save up to $900 million through restructuring by 2025 as it shifts focus to high-growth businesses, including automotive electrification and home improvement, and prioritize emerging growth areas such as climate technology among others.

It reported adjusted revenue of $7.99 billion in the fourth quarter ended June 30, beating analysts’ average expectation of $7.87 billion, according to Refinitiv IBES.

“Improving supply chain dynamics as well as MMM’s past restructuring and productivity actions have started to gain some traction and we think are reflected in the company’s relatively better margin performance in the quarter,” Citi analysts said in a note.

The company, however, flagged it continues to see slow recovery in China as weakness in consumer electronics demand continues.

3M reported a fourth-quarter loss compared to a year-ago profit, as it took a hit from a $10.3 billion settlement related to water pollution claims tied to “forever chemicals”.

The company is facing thousands of lawsuits related to its use of “forever chemicals” that are linked to cancer, hormonal dysfunction and environmental damage, and defective earplugs that caused hearing loss for U.S. military members.

Still, the company expects a full-year profit between $8.60 and $9.10 per share, up from its prior guidance of $8.50 to $9.

It reported fourth-quarter adjusted earnings of $2.17 per share, above Street estimates of $1.72.