3M Raises Its Full-year Profit Target After Deep Spending Cuts

3M Co. has raised its adjusted profit and cash flow targets for the full year as it reported third-quarter results that exceeded Wall Street expectations. This improvement is attributed to significant cost reductions and actions taken to counter a persistent sales decline.

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3M announced that its adjusted earnings for 2023 will range from $8.95 to $9.15 per share. This is an increase from its earlier forecast of $8.60 to $9.10 and surpasses the average estimate of $8.88 from analysts compiled by Bloomberg. The company also anticipates that its adjusted operating cash flow will be in the range of $6.5 billion to $6.9 billion, an improvement from the previous range of $5.9 billion to $6.3 billion.

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"We are gaining momentum through effective operational execution," stated 3M's Chief Executive Officer, Mike Roman. He added that these results "position us for a strong finish to 2023."

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In response to these positive developments, 3M's shares rose by 4.8% to $89.29 as of 9:34 a.m. in New York.

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These revised targets are a reflection of the substantial cost reductions and efficiency measures implemented by Roman to simplify the company's operations amid a prolonged period of reduced sales.

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For the third quarter, 3M reported an adjusted profit of $2.68 per share, significantly surpassing Wall Street's estimated figure of $2.34. The company attributed its improved financial performance to operational enhancements at its manufacturing facilities, the successful implementation of restructuring measures, and rigorous cost controls.

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3M's sales for the quarter, totaling $8.02 billion, were at the upper end of its third-quarter projection and slightly higher than the average estimate of financial analysts. However, the company anticipates that full-year sales will decline by approximately 3% on an organic basis, a shift from 3M's previous forecast of a 3% decline to a flat performance at best.

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Throughout the year, shares of the Minnesota-based manufacturing conglomerate had experienced a 29% decline due to modest sales growth, inconsistent earnings, and significant legal settlements to resolve environmental and product liability claims.

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In August, 3M took a significant step toward resolving its legal issues by agreeing to pay $6 billion to settle hundreds of thousands of lawsuits alleging that it had provided defective earplugs to U.S. combat troops. This resulted in a $4.2 billion pretax charge in the third quarter, which was adjusted out of its reported financial results.

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