Latest news with #AnuragMaheshwari
Yahoo
22-07-2025
- Business
- Yahoo
3M sees ‘strong' Q2 with $6.3B net sales
This story was originally published on Manufacturing Dive. To receive daily news and insights, subscribe to our free daily Manufacturing Dive newsletter. Dive Brief: 3M saw its second quarter net sales increase 1.4% year over year to $6.3 billion, topping its expectations, according to the chemical and consumer goods manufacturer's earnings report last week. By geography, China led the company's growth with strength in industrial adhesives, films and electronics bonding products. 3M's 'strong' delivery on its commercial plan drove growth, EVP and CFO Anurag Maheshwari said during the July 18 earnings call. The company's 'strong operational improvement' prompted it to adjust its outlook upward, Maheshwari said. 3M upped its earnings per share guidance from $7.60 to $7.90 to between $7.75 and $8. The modified range now includes tariff impacts as well, according to a Q2 presentation. Dive Insight: 3M previously did not factor tariffs into its guidance due to the situation's uncertainty, Maheshwari said. But the company decided to include tariff impacts in its guidance for the second half of 2025 as conditions evolve. Additionally, the company is more than halfway through the year, 'and any changes from here, we'd only have a couple of months in the balance of the year that would impact '25,' Chairman and CEO William Brown said during the earnings call. 'The rest would roll into 2026. So we feel we're pretty well calibrated.' Brown noted that the tariff rates have decreased to a cumulative 30% after the United States and China agreed in May to de-escalate their trade war for 90 days. The previous rate increased to 145% and 3M initially expected to incur $850 million in tariff-related expenses this year. The Scotch tape maker began planning and adjusting its product sourcing and logistics last quarter to mitigate the tariff burden. Still, the 30% rate may change. China and the U.S. have reached a proposed agreement under which the U.S. would impose 55% tariffs on Chinese imports, and China would impose 10% tariffs on U.S. imports. Though as of July 22, the deal has yet to be finalized. While things have stabilized at least somewhat, 3M is keeping a close eye on the European Union's trade negotiations, as well as any potential re-escalation and trade tensions with China, Brown said. 'From the way we see it today, I think we know enough about it in terms of the gross and net impact to roll it through into guidance, which I think is cleaner for investors,' the CEO added. Looking ahead to the second half of 2025, 3M will continue to invest in its growth initiatives as it navigates the unpredictable economic climate, including the launch of new products, Brown said. In February, 3M announced it will spend $3.5 billion on research and development from 2025 to 2027 as part of its goal to launch 1,000 products over the next three years. The consumer product maker's efforts include moving away from PFAS in its manufacturing processes and product development, as the company is on track to end the use of these toxic substances by 2026. In Q2, 3M launched 64 new products, up 70% YoY, Brown said. The new products in H1 total 126, putting 3M on track to exceed its target of 215 new products this year. The company expects to see improvements in growth from product innovation and margin, Brown said. 'But really, what we're focused on is delivering against customer expectations, beating the competition, regaining share of wallet and just getting back to that spirit of innovation at the company,' the CEO said. While things are looking up for 3M, the manufacturing giant is working through several lawsuits that accused it of PFAS contamination over the last few decades. In May, 3M reached a proposed agreement with the New Jersey Department of Environmental Protection to pay up to $450 million to resolve all legacy PFAS-related claims in the state. The deal is awaiting a judge's approval. While 3M began issuing payments to public water suppliers that opt in to receive the $10.5 billion settlement, the manufacturer still faces several cases from state attorneys general, according to its securities filing. Some of the cases are associated with the multidistrict litigation involving aqueous film-forming foam. 3M, along with other chemical titans such as DuPont de Nemours and Chemours Co., are slated to have a court date on Oct. 20 for the first bellwether personal injury trial, according to the filing. The plaintiffs are accusing the companies of causing kidney cancer due to their PFAS usage. The court has directed all parties to negotiate and reach a settlement ahead of the trial. 'We're managing as best that we can,' Brown said. 'It's important for us to make sure that we maintain the cash flexibility to handle these issues as they come, yet still invest in the growth of the company. And that's what we're trying to do.' Recommended Reading 3M expects up to $850M tariff hit
Yahoo
24-04-2025
- Business
- Yahoo
MMM Q1 Earnings Call: Revenue Exceeds Expectations Amid Tariff Uncertainty and Operating Improvements
Industrial conglomerate 3M (NYSE:MMM) reported Q1 CY2025 results beating Wall Street's revenue expectations , but sales fell by 1% year on year to $5.95 billion. Its non-GAAP profit of $1.88 per share was 6.4% above analysts' consensus estimates. Is now the time to buy MMM? Find out in our full research report (it's free). Revenue: $5.95 billion vs analyst estimates of $5.69 billion (1% year-on-year decline, 4.6% beat) Adjusted EPS: $1.88 vs analyst estimates of $1.77 (6.4% beat) Adjusted EBITDA: $1.65 billion vs analyst estimates of $1.6 billion (27.7% margin, 3.2% beat) Management reiterated its full-year Adjusted EPS guidance of $7.75 at the midpoint Operating Margin: 20.9%, up from 19.1% in the same quarter last year Free Cash Flow Margin: 8.2%, down from 13.8% in the same quarter last year Organic Revenue rose 1.5% year on year, in line with the same quarter last year Market Capitalization: $73.22 billion 3M's first quarter results were shaped by operational improvements and a continued focus on commercial excellence. Management pointed to higher productivity, cost discipline, and a faster pace of new product launches as key factors underpinning year-over-year margin expansion, despite a slight decline in sales compared to the same period last year. CEO Bill Brown explained, 'We launched 62 new products in Q1, up about 60% year on year, and achieved more than 70% on-time launch attainment.' Looking ahead, management maintained its full-year adjusted earnings guidance, but flagged a softer global macroeconomic environment and escalating tariffs as headwinds. CFO Anurag Maheshwari noted, "We are not flowing through the upside in our Q1 results to our full-year outlook given the uncertain macro environment with recent data reflecting some softening in GDP, IPI, and global auto build." The company is working on multiple mitigation measures, including supply chain adjustments and selective price increases, but expects the net impact of tariffs to weigh on second-half results. 3M's leadership highlighted several major factors impacting results and provided insight into ongoing operational changes and market trends: New Product Launch Acceleration: The company launched 62 new products during the quarter, representing a 60% increase from the prior year, with management emphasizing that new product sales are on track to grow more than 15% by year-end. This uptick is seen as a key driver for future growth. Commercial Excellence Initiatives: Management described progress in sales processes, including tripling structured sales reviews and deploying predictive analytics to reduce customer churn. More than 100 joint business plans were completed with large customers to better align on growth opportunities. Operational Performance Gains: Notable improvements were made in on-time delivery (OTIF) and equipment utilization (OEE), which management believes will help offset some volatility in demand and supply chain disruptions. OTIF reached its highest level in five years, while equipment utilization expanded to cover 50% of production volume. End Market Performance Divergence: Growth in industrial adhesives, aerospace, and electrical markets helped offset ongoing softness in automotive and certain consumer categories. The management team noted particular strength in China, driven by industrial and electronics demand, while Europe remained weak due to declining auto builds. Tariff and Trade Policy Response: The company is actively adjusting sourcing, logistics, and pricing strategies to mitigate new U.S.-China tariffs. Management estimates a potential $850 million annualized tariff impact, with mitigation efforts expected to partially offset this headwind in 2025. Management's outlook for the rest of the year centers on balancing growth initiatives with proactive risk management, especially in light of macroeconomic uncertainty and trade policy changes. Tariff Mitigation and Supply Chain Adjustments: The company is pursuing a combination of supply chain reconfiguration, localizing production, and selective pricing actions to offset tariff-related costs. Management expects roughly half of the full-year tariff impact to materialize in the second half. Growth from New Product Pipeline: Sustained investment in research and development, as well as a goal to launch 1,000 new products over three years, are central to driving above-market growth. Progress in cross-selling initiatives and customer retention is also expected to support organic revenue. Exposure to Macroeconomic Volatility: Management acknowledged that slower global economic growth, particularly in automotive and electronics, could weigh on results. The company is monitoring market conditions closely and may adjust investment levels or operational priorities as needed. Jeff Sprague (Vertical Research Partners): Asked if recent order strength was due to pre-buying ahead of tariffs; CEO Bill Brown stated only about $10 million shifted from Q2 into Q1, mostly in China, and that industrial order rates remained steady in April. Scott Davis (Melius Research): Questioned 3M's relative exposure to tariffs versus competitors; Brown replied that the company's flexible manufacturing footprint may provide some advantage, though effects will vary by business and region. Julian Mitchell (Barclays): Sought clarification on organic growth expectations by segment; CFO Anurag Maheshwari explained that industrial strength should persist while electronics and auto are likely to remain soft, with balanced growth expected through the year. Andrew Oben (Bank of America): Asked if tariff-driven price changes could hurt demand; management responded that pricing actions are being implemented strategically and in consultation with customers, with minimal demand destruction anticipated. Joe O'Dea (Wells Fargo): Probed whether imports from China for the consumer segment would be paused in light of tariffs; management confirmed that no such pauses are planned and that mitigation strategies are being developed. In upcoming quarters, the StockStory team will be focused on (1) the effectiveness of 3M's tariff mitigation strategies and whether the company can limit the financial impact of new trade policies, (2) the pace of new product introductions and whether these efforts translate into sustained organic revenue growth, and (3) the resilience of order rates in the industrial segment in the face of a softer macroeconomic backdrop. Execution on operational improvements and maintaining commercial momentum will also be key indicators to watch. In the wake of earnings, is MMM a buy or sell? The answer lies in our free research report. The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years. Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today. Sign in to access your portfolio
