3M financial results forecast: will tomorrow's earnings fall on deaf ears?

One of America’s biggest household names, 3M of Post-Its fame and a leading name in the protective equipment and safety space, has been in a precarious position as of late.

In mid-2023, courts ruled that 3M was to pay damages to the tune of $253.1 million to approximately 30,000 United States military veterans, whose hearing had been permanently damaged by defective 3M earplugs. The court proceedings are so extensive that they even have their own website: 3m-earplugsettlement.com

Payments due

To their credit, 3M has taken the business of paying penance extremely seriously. The company said on its website January 15th that it will expediate the payment of this $253 million to by the end of this month (January 31^st if not sooner).

The company then confirmed to its investors on January 16^th that it had submitted the relevant details for this to the SEC.

More is still to come

A settlement of this magnitude will certainly eat into 3M’s profits, the latest of which will be announced tomorrow before markets open in the States. However, it’s just the tip of a massive $6 billion iceberg for 3M, according to an earlier statement given by the company:

In spite of this, 3M has stood by its products in the face of some heated scrutiny. When first announcing the settlement, 3M stated that “this agreement is not an admission of liability. The products at issue in this litigation are safe and effective when used properly”.

At the time of this article going to press, the 3M share price was at around $107.76, representing a drop of more than 12 percent YoY.

During 2023, partially as a result of the combat arms earplugs settlement, 3M’s stock price trended downward significantly. From a share price of $129.51 on January 6^th 2023, it fell to a nadir of $86.55 in October 2023, before ending the year at around $109.30 on December 29^th.

In contrast, the company opened the 2022 year with a stock price of around $179.95, almost 60 percent higher than its current share price. In fact, 3M’s lowest share price day for the entire 2022 year (on October 7^th) was $107.52.

Results forecasts

Needless to say, analysts do not have enormously high hopes for tomorrow’s earnings announcement. Generally, the consensus is that 3M are likely to report a decrease in revenues, down almost five percent YoY.

However, 3M’s earnings per share are expected to trend upwards to $2.31 per share, where they were at around $2.20 this time last year.

There are few things Americans (including their shareholders and investors) take more seriously than honouring the country’s veterans. So, the company has had quite a bit of bad grace in recent months. However, if 3M can beat the rather pessimistic expectations of their revenues tomorrow, this could be the change needed to turn the tide of its share price back up to around $112.00 – a level not seen since July 2023.