Industrial Giant 3M Sees Profit Soar on Strong Demand
Electronics and Adhesives Drive Growth
In a surprise move, 3M Co, a leading US industrial conglomerate, reported a significant jump in fourth-quarter adjusted profit, exceeding market estimates. The company’s shares surged over 5% in premarket trading, driven by robust demand for industrial adhesives, tapes, and electronics.
Holiday Quarter Boost
The uptick in demand for electronics used in vehicles and mobile phones during the holiday quarter was a key factor in 3M’s strong performance. This comes after months of sluggish demand due to inflation-hit consumers delaying big-ticket purchases. The company’s restructuring efforts, aimed at reducing costs and prioritizing higher-margin products, are also expected to yield benefits in the coming year.
Cost-Cutting Measures Pay Off
As part of its restructuring plan, 3M has made significant strides in reducing costs. Total operating expenses plummeted by 44% in 2024 compared to the previous year. The company has also cut over 8,500 jobs, reduced office spaces by 12%, and spun off its healthcare business into a separate listed company since announcing the restructuring in 2023.
New Focus on Product Development
Under the leadership of CEO Bill Brown, who took the reins in May, 3M is shifting its focus towards new product development. This area had lagged in recent years as the company prioritized mitigating legal liabilities and reducing supply-chain costs. The company has seen a 32% increase in product launches for the year, exceeding its own expectations.
Share Buyback and Forecast
3M plans to purchase around $1.5 billion worth of shares in 2025, demonstrating its confidence in its growth prospects. The company has forecast 2025 adjusted profit between $7.60 and $7.90 per share, largely in line with Wall Street estimates of $7.77.
Strong Performance Across Segments
All three of 3M’s business segments recorded adjusted organic growth in the fourth quarter, driven by strong demand for its products. The company reported fourth-quarter adjusted profit of $1.68 per share, beating analysts’ average expectations of $1.66. Adjusted revenue of $5.81 billion also came in above estimates of $5.78 billion.
Leave a Reply