3M Co Raises Full-Year Profit Forecast

By Kannaki Deka

(Reuters) – 3M Co raised its full-year profit forecast on Tuesday, thanks to strong demand for roofing materials, industrial adhesives, and electronic equipment, which enabled the U.S. manufacturing giant to exceed quarterly profit estimates.

Shares surged 5.6% to $142.36 in pre-market trading after 3M announced a review of its portfolio and the initiation of a sale process for "a few small businesses."

CEO Bill Brown, who succeeded Mike Roman in May, indicated in July that he would concentrate on new product development, which had lagged as the company redirected funds to address legal liabilities and cut supply-chain costs.

Headquartered in Saint Paul, Minnesota, 3M has reported positive results in recent quarters following a decline in consumer demand last year due to high inflation and a weak market in China. In response to these challenges, 3M implemented thousands of job cuts and spun off its healthcare division into a separate publicly traded company, which helped mitigate the demand downturn. Investors have reacted positively, boosting 3M shares by 47.5% this year.

The company reported on Tuesday that two of its three main business segments experienced organic sales increases, while the consumer segment suffered from weak demand for packaging and home and auto care products.

Additionally, 3M continues to contend with lawsuits concerning water pollution claims linked to Per- and polyfluoroalkyl substances, also referred to as "forever chemicals."

RBC Capital Markets analyst Deane Dray noted, "While the 3M story has some new positive momentum with the leadership change, we still believe the ultimate cost of PFAS liabilities remains a significant risk to cash flow and implied valuation."

3M forecasts full-year adjusted profits of between $7.20 and $7.30 per share, revising its previous estimate of $7.00 to $7.30 per share. This positive forecast aligns with analysts’ expectations that the broader industrial sector will benefit after the U.S. Federal Reserve reduced borrowing costs in September.

3M’s adjusted profit for the third quarter was $1.98 per share, surpassing expectations of $1.90, while sales reached $6.07 billion, slightly exceeding forecasts.