3M forecasts underwhelm, shares fall

(Sharecast News) - Shares in 3M came under pressure on Tuesday, after the industrial conglomerate forecast full-year profits and sales below analyst expectations. The US firm, best known for Post-it notes and Scotch tape, said adjusted total sales growth was likely to be between 0.25% and 2.25% in 2024, reflecting organic sales growth in the range of flat to 2%. Adjusted earnings per share were forecast to come in between $9.35 and $9.75.

Analysts had previously forecast organic sales growth of around 2.7% and EPS of up to $9.81.

As at 1245 GMT, the stock was down 7% in pre-market trading.

The cautious outlook came as 3M posted fourth-quarter numbers showing a 1.9% decline in organic sales to $8bn. However, adjusted EPS strengthened to $2.42 from $2.18, ahead of forecasts.

Mike Roman, chief executive, said: "The fourth quarter capped a strong year for 3M. Throughout 2023 we executed our priorities and delivered on our commitments, including expanding underlying operating margins and cash flow.

"We initiated actions to restructure our organisation and simplify our supply, while progressing with our healthcare spin and addressing legal matters."

3M intends to spin out its healthcare unit in the first half of the current year.

It is part of a wider restructuring programme intended to boost sluggish sales and streamline the business, which has seen it cut thousands of jobs as well as settle long-standing legal issues.

Last summer 3M agreed to pay out $10.3m over a 13-year period over claims it had polluted drinking water with toxic chemicals. It also agreed a $6bn settlement with thousands of veterans who claimed earplugs supplied to the US Army had failed to prevent hearing loss.

3M said its 2024 full-year forecasts continued to assume the healthcare business was part of the company. But they do not include the potential impact of funding amounts due under the legal settlements.