3M Takes Big Sales Hit Amid Pandemic
Maplewood-based 3M Co. reported Tuesday that its second quarter sales dropped a steep 12.2 percent amid the ongoing and unpredictable Covid-19 pandemic economy. The company reported net income of $1.3 billion, which actually marked a 14.5 percent increase from the second quarter a year ago.
“While our results were significantly impacted by the global economic slowdown, we executed well, managed our costs, and delivered another quarter of robust cash flow,” said Mike Roman, 3M’s chairman and CEO, in a statement announcing the results. “We are taking actions to navigate near-term challenges, while relentlessly innovating for our customers and investing for the future to lead out of the slowdown and continue to deliver long-term value for our shareholders.”
The company touted its global production of nearly 800 million respirators in the first half of the year in response to the Covid-19 pandemic. The company indicated that approximately 50 percent of those respirators were distributed in the U.S., primarily to health care organizations and the Federal Emergency Management Agency (FEMA). By the end of the year, 3M projects that it will have globally produced 2 billion respirators.
3M now reports its results in four business segments. For the second quarter, its transportation and electronics group fared the worst with sales down 20.9 percent. The health care segment saw the best results with sales down just 0.4 percent.
The safety and industrial segment was down 9.2 percent while the consumer segment, which includes products like Scotch tape and Post-it Notes, was down 6.2 percent.
Within the consumer segment, the company noted: “Sales grew in home care, and home improvement; sales declined in consumer health care, and stationery and office supplies.”
Given the uncertainty of the economy, 3M is not currently providing guidance about its business outlook to Wall Street analysts.
Per its earnings release:
Due to the continued evolving and uncertain impact of the Covid-19 pandemic, 3M is not able to estimate the full duration, magnitude, and pace of recovery across its diverse end markets with reasonable accuracy. Therefore, 3M continues to believe it is prudent to not provide guidance. The company is seeing broad-based sales improvements across businesses and geographies to start the third quarter. With one week left in July, total company sales are currently up low-single digits year-on-year. 3M will maintain its monthly reporting of sales information during the third quarter to provide transparency on its ongoing business performance.
For the first six months of 2020, 3M’s numbers look a little better. Overall sales are down 4.9 percent to $15.25 billion.
3M has been a component of the Dow Jones Industrial Average market index since 1976. Only three companies currently on the index have been there longer. For 2019, the company reported $32.1 billion in sales. 3M currently ranks 103rd on the Fortune 500, which tracks the largest public companies in the U.S.