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Profit Forecast For 3M Squeezed By Sluggish Electronics And China Demand

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Profit Forecast For 3M Squeezed By Sluggish Electronics And China Demand

(CTN News) – 3M (MMM.N) forecast full-year earnings below Wall Street estimates on Tuesday, saying the macroeconomic environment continued to be muted. Shares of 3M plummeted more than 12% as a result.

Due to higher interest rates and sticky inflation, the company’s electronics division has suffered from customers cutting back on discretionary purchases.

During a conference call with analysts, Chief Financial Officer Monish Patolawala stated that China and consumer retail end markets remain soft.

According to LSEG data, Post-it expects a profit of $9.35-9.75 per share in 2024, compared with analysts’ estimates of $9.81 per share.

According to the company, businesses were also pressured by a reduction in inventory, particularly in Greater China and Europe, Middle East, and Africa, as distribution partners were cautious about demand entering 2024.

An extensive restructuring has been implemented by the diversified manufacturer that includes the elimination of thousands of jobs and the spin-off of its healthcare business.

When the restructuring is completed, 3M anticipates savings of $700 million to 900 million.

According to UBS analyst Chris Snyder, the business’s margin outlook for 2024 disappoints on both restructuring savings and underlying operating margins.

In conjunction with the forecast, 3M is dealing with the fallout from lawsuits related to its Combat Arms earplugs as well as water pollution claims related to “forever chemicals”.

The company stated in a press release on Tuesday that the forecast does not take into account the potential impact of funding some settlements.

A $10.3 billion settlement was reached by 3M last year with a number of U.S. public water systems in connection with pollution claims related to “forever chemicals”.

According to adjusted earnings per share, 3M earned $2.42 per share in the fourth quarter, exceeding expectations of $2.31 per share.

Adjusted revenue for the company was $7.69 billion, compared with estimates of $7.70 billion.

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