Categories Industrials, Research Summary, Retail

Higher raw material costs likely to impact The 3M Company (MMM) Q4 earnings

The 3M Company (MMM) is scheduled to post its fourth-quarter 2018 earnings before trading hours on Tuesday, Jan. 29.

The Street expects earnings of $2.27 a share on revenue of $7.94 billion for the three-month period.

In the last three months, 3M shares have improved 4.1% despite the industry decline of 4% on many factors including the China-US trade stand-off.

While 3M has conservatively cut its forecasts when it reported its results last quarter, we are yet to see if the market conditions favored the industrial giant.

3M has a solid product range, and it rightfully invests in innovating it. this and the renewed focus on the company’s productivity might help it perform better than market estimated in the to-be-reported quarter.

Moreover, it also keeps its stakeholders happy with its dividend payouts and share repurchase options.

While higher cost of raw materials due to tariffs might hurt the performance a bit, the impact could be less than 15 cents a share for the entire year.

 

REVISITING THE PREVIOUS QUARTER

In the previosuly reported third quarter, 3M saw earnings grow 8% on stronger margins and lower income taxes provision. However, the bottom line then missed analysts’ expectations. Additionaly, the industrial mammoth lowered its earnings guidance for FY 2018, sending the stock down soon after. In the same period, sales are inched 0.2% higher.

 

3M Company third quarter 2018 Earnings Infographic
3M Q3 2018 Earnings Infographics

Total sales grew 1.6% in the Asia Pacific and 1.3% in the US, while it declined 3.9% in EMEA and 5.5% in Latin America/Canada.

Back then, 3M cut its GAAP earnings guidance to $8.78-8.93 per share from the prior estimate of $9.08-9.38 per share. Adjusted EPS was expected to range between $9.90 and $10.00 a share.

3M had expected its full-year organic local-currency sales to grow 3%, while its free cash flow conversion is forecast to be 90-95%.

 

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