3M Co. increased the low end of its 2024 profit forecast and reported third-quarter earnings that topped analyst estimates as a push to boost productivity gained traction.

William Brown

The Maplewood-based maker of Post-it notes and Scotch tape said adjusted profit was $1.98 per share in the most recent period, better than the $1.91 average of analyst estimates compiled by Bloomberg. It now expects full-year adjusted earnings of at least $7.20 per share, up from the $7 floor in its previous forecast, the company said in a statement on Tuesday.

The more optimistic outlook marks the second time 3M has boosted its annual profit goal since Chief Executive Officer Bill Brown began the role in May. Still, the $7.25 midpoint of 3M’s new forecast fell short of the $7.30 expected by Wall Street.

3M’s shares pared earlier gains to close down 2.3%. The stock had gained roughly 48% this year through Monday’s close, outpacing the SP 500’s 23% advance.

In an interview, Brown attributed the bulk of the guidance increase to productivity improvements inside 3M’s factories, one of his top priorities. Spending cuts and the effect of share repurchases also helped, he said.

Third-quarter adjusted operating profit margin, a key metric for 3M investors was 23%, ahead of the 22.4% expected by analysts.

3M’s shares have soared since late July when Brown shared his initial view of how he intends to reinvigorate the conglomerate after a multi-year stretch in which it lost more than $60 billion in market value. He wants to boost 3M’s sluggish sales growth by speeding the development of new products while cutting waste built into 3M’s complex organization.

Product Pipeline

The company now expects new product introductions to grow 10% this year with further acceleration in 2025, a sign that the company’s decade long deterioration of its pipeline may be ending, Brown said Tuesday on a conference call with analysts. The company has shifted about 100 employees within its research and development organization to focus on launching new products and taken other steps to bolster its innovation machine, he said.

“I recognize these are only initial steps on a long journey toward bending the organic growth curve,” he said.

Brown called out 3M’s track record of delivering its products on time and in full, an area where he said the company has lost business due to poor performance that is also seeing improvement. 3M ended the third quarter at an 89% on-time, in-full delivery rate, up five percentage points since the beginning of the year, Brown said.

He’s also changing how many of 3M’s thousands of employees work. Starting next month, the company will expect but not require managers at the director level and above to work from an office Tuesday through Thursday. The policy is voluntary for those below the director rank.

For the past three years, desk-based workers at the 122-year-old company had the freedom to work remotely for the most part in consultation with their managers, under a policy dubbed “Work Your Way.” Brown said the change is part of his broader push to speed growth, boost innovation and solve problems for customers.

“All of those things I think are embedded in our discussions around pivoting people back a bit more to the office,” Brown said.

Related Articles

3M remote managers to return to office 3 days a week

Young scientists showcase problem-solving projects at 3M in Maplewood

Coolest Thing Made in Minnesota crowned after weeks of voting

Hastings well tied to 3M ‘forever chemical’ pollution qualifies for settlement cleanup money

3M spin-off Solventum clarifies location of proposed HQ on former Blue Cross campus in Eagan