3M raises full-year earnings forecast as cost measures pay off

July 25 (Reuters) – U.S. industrial conglomerate 3M Co ( MMM.N ) raised its full-year profit forecast on Tuesday and reported better-than-expected quarterly results helped by higher prices and cost-cutting measures, sending shares to a four-month high of nearly 6%.

3M, which makes electronic displays for smartphones and tablets, raised prices to compensate for high raw material and labor costs. It also reduced its total global workforce by 10% this year as demand for consumer electronics slowed.

The diversified manufacturer said in April it expects to save up to $900 million through restructuring by 2025 as it shifts focus to high-growth businesses, including car electrification and home improvement, and prioritizes new growth areas such as climate technology.

It reported adjusted revenue of $7.99 billion in the fourth quarter ended June 30, beating analysts’ average expectation of $7.87 billion, according to Refinitiv IBES.

“Improved supply chain dynamics as well as MMM’s earlier restructuring and productivity actions have started to gain some traction, which we believe is reflected in the company’s relatively better margin performance in the quarter,” Citi analysts said in a note.

However, the company flagged that it continues to see slow recovery in China as weakness in consumer electronics demand continues.

3M reported a fourth-quarter loss compared with a profit a year ago as it was hit by a $10.3 billion settlement related to water contamination claims linked to “forever chemicals.”

The company is facing thousands of lawsuits related to its use of “forever chemicals” that have been linked to cancer, hormonal dysfunction and environmental damage, and defective earplugs that caused hearing loss in US military members.

Still, the company expects full-year earnings between $8.60 and $9.10 per share, up from previous guidance of $8.50 to $9.

It reported fourth-quarter adjusted earnings of $2.17 per share, above Street estimates of $1.72.

Reporting by Kannaki Deka in Bengaluru; Editing by Shinjini Ganguli

Our standards: Thomson Reuters Trust Principles.

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