3M raises full-year profit forecast, beats quarterly estimates

By Kannaki Deka

(Reuters) -3M Co on Tuesday raised its full-year adjusted profit forecast and reported upbeat quarterly earnings, as the diversified manufacturer was able to offset slow demand with price hikes and cost-cut measures, sending its shares up 4%.

3M hiked prices to offset high raw material and labor costs, and undertook a workforce reduction amid waning demand for consumer electronics.

However, more price hikes would be difficult for the company as U.S. households are delaying big-ticket purchases and cutting back on discretionary spending amid recessionary fears.

3M, which makes electronic displays for smartphones and tablets, last month flagged weakness in its electronics and consumer segments for the fourth quarter.

“We do not expect the shares to sustain any bounce … pending the litigation backdrop/further news to come in December on Combat Arms and the PFAS water settlement,” Barclays analysts said in a note.

3M in June reached a $10.3 billion settlement with a host of U.S. public water systems to resolve water pollution claims tied to “forever chemicals”, which are linked to cancer, hormonal dysfunction and environmental damage.

The company also faces more than 230,000 lawsuits accusing it of selling defective earplugs that caused hearing loss for U.S. military members.

3M reported a third-quarter loss of $3.74, compared to a year-ago profit of $6.77, as it took a pretax charge of $4.2 billion related to its Combat Arms earplugs settlement.

The St. Paul, Minnesota-based company now expects full-year adjusted earnings per share to be in the range of $8.95 to $9.15 per share, versus prior forecast of $8.60 to $9.10 per share.

Adjusted profit for the third quarter came in at $2.68 per share, above analysts’ estimates of $2.34. Adjusted revenue of $8.02 billion also beat Street estimates of $7.98 billion.