3M Co.’s profit topped Wall Street estimates in the second quarter, driving a rise in the annual outlook, after sweeping cost cuts fueled better-than-expected earnings and cash flow.
Adjusted earnings were $2.17 per share compared to analyst estimates of $1.73 per share. The St. Paul, Minnesota-based company now expects full-year adjusted profit of $8.60 to $9.10, up from $8.50 to $9 previously.
“As we execute our strategy, we are positioning 3M for long-term performance, including progressing the planned spin of our Health Care business and addressing a significant portion of PFAS litigation,” Chief Executive Officer Mike Roman said in a statement.
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Sales declined 2.2% organically, better than the 4.5% drop estimated by analysts. Revenue at 3M’s key Transportation and Electronics division fell 1.3% organically, much less than the 7.6% decline expected by Wall Street.
3M is a central defendant in a sprawling courtroom brawl over so-called forever chemicals that stands to be one of the largest pollution cases in history. It recently agreed to pay out as much as $12.5 billion for just one tranche of claims it faces over the chemicals, with several more remaining. 3M took a $10.3 billion pre-tax charge on the proposed resolution that was adjusted out of its results, as expected.
It’s also working resolve more than 200,000 lawsuits alleging faulty earplugs it supplied to US combat troops led to hearing damage. Analysts expect a resolution to cost several billions of dollars on its own.
3M this year has announced plans to cut roughly 8,500 jobs in response to slumping demand and to reduce layers of management in a bid make the company more nimble and streamlined. The latest initiative, announced in April, is expected to reduce expenses by as much $900 million a year.
--With assistance from Thomas Black.
