3M lifts its annual adjusted earnings outlook after third-quarter growth
3M raised its full-year adjusted earnings outlook after reporting higher third-quarter sales, margins and earnings per share. Reported sales grew more slowly than the adjusted measure, which excludes manufactured PFAS products. The company also changed the presentation of intangible amortisation across comparison periods, while reporting cash flow and shareholder distributions separately from profit.
Economics & Markets··Evening
Quarterly earnings rise
3M, the US industrial-products group, reported adjusted earnings of 2.50 dollars per share for the third quarter. That was 12 per cent above the comparison-basis figure of 2.23 dollars a year earlier. The 2.50 dollar quarterly result exceeded the analyst consensus of 2.38 dollars.[1], [2]
Under generally accepted accounting principles, diluted earnings per share reached 2.63 dollars, compared with 1.55 dollars a year earlier, an increase of 70 per cent. The reported operating margin rose from 22.2 per cent to 23.7 per cent. The adjusted operating margin increased 110 basis points, from 25.1 per cent to 26.2 per cent.[1]
Sales comparisons cover different scopes
Reported sales were 6.6 billion dollars, up 1.0 per cent annually, with organic growth of 0.2 per cent. Adjusted sales were also 6.6 billion dollars after rounding, but their annual growth was 4.2 per cent and organic growth 3.3 per cent. The adjusted measure excludes manufactured PFAS products.[1]
PFAS means per- and polyfluoroalkyl substances, a group of chemicals. Excluding those sales changes the business scope used for comparison. The company presented reconciliations between reported and adjusted results. It also treated intangible amortisation as a special item across all the periods presented, changing the basis for its adjusted measures.[1]
Annual adjusted guidance increases
3M raised its full-year adjusted earnings-per-share outlook to 9.10–9.15 dollars. The new amortisation presentation adds 40 basis points to the comparison-basis operating margin and 0.04 dollars to earnings per share. The company said this change did not materially affect year-on-year growth comparisons.[1]
Cash from operating activities was 0.5 billion dollars, while adjusted free cash flow reached 1.2 billion dollars. During the quarter, the group returned 0.6 billion dollars to shareholders through dividends and share repurchases. Chairman and chief executive William Brown attributed the quarterly results to operational progress at the company.[1]
