3M beat Wall Street estimates for first-quarter (Q1) profit as cost-control measures helped offset inflationary and tariff-linked pressures, even as the industrial giant warned of a $125-million jump in annual costs due to soaring oil prices.
This cost increase could translate into a 50-basis-point rise in product prices, CEO Bill Brown said during an earnings call on Tuesday. Oil is trading nearly 35 percent higher compared with before the Middle East conflict.
Though 3M maintained its 2026 adjusted profit forecast of $8.50 per share to $8.70 per share, the range includes a contingency buffer of 5 cents to 15 cents to account for oil and other macroeconomic uncertainties.
The company, which has been cutting expenses, hiking prices and rolling out new products to defend margins amid rising costs, recorded a 30-basis-point increase in its adjusted operating margin in the first quarter.
This “more than offset approximately $145 million of tariff impact, cost and investments,” said CFO Anurag Maheshwari.
However, “given the contingencies in the second half ... we expect first-half earnings per share to be higher than the second half,” he added.
Meanwhile, sales in the safety and industrial segments improved during the quarter, partially offsetting ongoing weakness in 3M’s automotive aftermarket and roofing granules business. The segment recorded a 3.2-percent rise in quarterly sales from a year earlier.
Consumer segment sales fell 1.3 percent, with weak United States discretionary spending outweighing improving demand in international markets, while transportation and electronics sales were down 0.3 percent.
Adjusted profit for the first quarter came in at $2.14 per share, compared with $1.88 per share a year ago. Analysts were expecting a profit of $1.99 per share, according to data compiled by LSEG.
Quarterly net sales rose 1.3 percent from a year ago to $6 billion, compared with analysts’ estimates of $6.01 billion.
3M’s shares were down more than 1 percent in morning trade.
reuters
