3M (MMM) reported lower fourth-quarter revenue year over year amid softer sales in three of its four business segments while the company’s 2024 earnings outlook fell short of analysts’ estimates at the midpoint of the guidance range.
The industrial conglomerate reported sales of $8.01 billion for the three months ended Dec. 31. That’s down from $8.08 billion a year ago but above the average analyst estimate of $7.72 billion on Capital IQ.
By segment, sales declined by 2.7% in safety and industrial, by 1.6% in consumer, and marginally in health care. They rose by 1.6% in transformation and electronics. The proposed spinoff of the healthcare business remains on track for the first half of this year, according to 3M.
3M’s shares slumped 11% in Tuesday trade.
Adjusted earnings per share rose to $2.42 in the December quarter from $2.18 the year earlier and beat the Street’s view of $2.31. The maker of Post-It notes and Scotch tape expanded its operating margin to 20.9% in the fourth quarter from 19.1% in the same period last year.
“3M delivered a strong fourth quarter as we continued to improve our operational performance with adjusted EPS growth of 11%, operating margin expansion of 180 basis points and robust cash flow,” Chief Executive Mike Roman told analysts on a conference call, according to a Capital IQ transcript.
“In 2023, we implemented the most significant restructuring in 3M history, to streamline the organization, reduce costs at the center and get us closer to our customers, which generated more than $400 million in savings during the year,” he said.
For 2024, 3M is guiding for adjusted EPS between $9.35 to $9.75, implying an increase from $9.24 in 2023 but sharply below the normalized EPS consensus of $9.73 at the $9.55 midpoint. It expects adjusted organic sales to be flat to up 2%, versus a 3.2% decline reported for 2023.
“As we look to 2024, we will continue to optimize our portfolio as we prioritize geographies, markets and products where we see the greatest opportunity,” Roman said. The company plans to invest in high-growth segments such as automotive electrification, climate technology and industrial automation, he said.