Embattled 3M Beats Expectations In Financial Results, But Still Loses The War

Black and Gray Laptop Computer

 Image Source: Pexels

  • U.S. Embattled 3M beat expectations in its announcement of the company's Q4 2023 financial results today.
  • However, 3M still lost big when it came to the combat arms earplug settlement.
  • Nevertheless, the company says it considers its results a strong cap to the end of the year.

On January 23rd, Post Its and safety equipment creator 3M (the Minnesota Mining and Manufacturing Company) reported above-expectations financial results, considering the ongoing costs of the company’s combat arms earplug settlement.

The results included an adjusted operating income margin of 20.3 percent, a loss per share of $12.63, and an operating margin of minus 27.9 percent including the previously announced settlements for CAE and PWS in the United States regarding PFAS, resulting in a pre-tax charge of $4.3 billion and $10.5 billion, respectively, negatively impacting EPS by a total of $20.39.
 

Silver linings

They did, however, also include an adjusted free cash flow of $2 billion, up 18 percent year-on-year (YoY) and an operating cash flow also sitting at $2 billion (three percent higher YoY).

Its adjusted EPS was also up 11 percent year-on-year and adjusted operating income margin which were up 1.8 percentage points year-on-year.

Sales also declined less than expected: down 0.8 percent YoY to $8 billion, and adjusted sales down just 0.3 percent in total.
 

A strong year?

Nevertheless, 3M was happy with the results, saying in a statement that:

 

‘The fourth quarter capped a strong year for 3M,’ said 3M chairman and CEO Mike Roman. “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 chain, while progressing our Health Care spin and addressing legal matters.”

These ‘legal matters’, namely the combat arms earplug settlement and also the public water systems settlement, took a sizable chunk out of investors’ earnings, subtracting $5.94 and $14.45 from the EPS for the year respectively, leaving 3M investors with a loss of -12.63 per share for 2023, where they had instead had $10.18 EPS in 2022.
 

The financial results at a glance: 

  • Sales of $8.0 billion, down 0.8 percent year-on-year, with organic sales decline of 1.9 percent year-on-year.
  • Adjusted sales of $7.7 billion, down 0.3 percent year-on-year with adjusted organic sales decline of 1.4 percent year-on-year.
  • Operating cash flow of $2.0 billion, up 3 percent year-on-year; adjusted free cash flow of $2.0 billion, up 18 percent year-on-year.
  • 3M returned $828 million to shareholders via dividends.
     

3M’s 2024 outlook

The company also provided its 2024 outlook for Q1 and beyond in the same release. These were:

  • Adjusted total sales growth in the range of 0.25 to 2.25 percent, reflecting adjusted organic sales3 growth of flat to up 2 percent
  • Adjusted EPS in the range of $9.35 to $9.75.
  • Adjusted operating cash flow of $6.5 to $7.1 billion, contributing to 95 to 105 percent adjusted free cash flow conversion

More By This Author:

Ripple: Strategic Whale Activities Highlight Potential Recoveries
Zscaler Is Reportedly In Talks To Buy Avalor
Grayscale Could Lose All Its Holdings Within The Next Two Months

Disclaimer: Invezz is a place where people can find reliable, unbiased information about finance, trading, and investing – but we do not offer financial advice and users should always ...

more
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.
Or Sign in with