3M Co. (MMM) posted stronger-than-expected second quarter earnings Tuesday, while trimming its full-year profit forecast and unveiling plans to spin-off its healthcare business.
3M said adjusted profits for the three months ending in June were pegged at $2.48 per share, down 4.3% from the same period last year and 6 cents ahead of the Street consensus forecast. Group revenues, 3M said, fell just under 3% to $8.7 billion, topping analysts' forecasts of an $8.58 billion tally.
The group noted in early February that the expected decline in "Covid-related disposable respirator demand" would hit organic sales by 2 percentage points and take 45 cents from its overall bottom line.
3M said it now sees GAAP earnings in the region of $7.32to $7.82 share, down from the $9.89 to $10.39 per share range it forecast in April, citing the ongoing strength of the U.S. dollar. Organic sales growth was forecast at around 1.5% to 3.5%, down from its prior estimate of between 2% to 5%.
"In a challenging macroeconomic environment, 3M executed well and delivered solid earnings, while continuing to drive growth through investments in large, fast-growing areas," said CEO Mike Roman. "Looking ahead, we updated our adjusted full-year expectations largely due to the strength of the U.S. dollar and uncertain macroeconomic environment."
"We remain focused on innovating for customers, driving operational improvements and advancing our environmental stewardship – while positioning 3M for the future through our plan to spin off our Health Care business and resolve Combat Arms litigation in a manner that is efficient and equitable," he added.
3M shares were marked 6.1% higher in early afternoon trading following the earnings release to change hands at $149.30 each.
The group also announced plans to spin-off its healthcare division, which it plans to complete by the end of next year. The tax-free deal will follow its earlier plans to separate 3M's food safety business.
"Disciplined portfolio management is a hallmark of our growth strategy," said CEO Roman. "The decision to spin off our Health Care business will result in two well-capitalized, world-class companies, well positioned to pursue their respective priorities."
