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Demand for Personal Safety Products Boosts 3M's 1st-Quarter Results

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GuruFocus.com
·3 min read
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Shares of industrial products manufacturer 3M Co. (NYSE:MMM) gained 3.5% in premarket trading on Tuesday after it reported strong first-quarter results.

The Saint Paul, Minnesota-based company, which is known for products spanning from Scotch tape and Post-It Notes to personal protection equipment like respirator masks, posted adjusted earnings of $2.16 per share, topping Refinitiv's estimates of $2.03. Revenue grew 2.7% from the prior-year quarter to $8.1 billion, surpassing expectations of $7.91 billion.


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In a statement, Chairman and CEO Mike Roman said the financial impact of the Covid-19 pandemic has varied across its businesses.

"In the first quarter we saw strong growth in personal safety, as well as in other areas of our portfolio experiencing high demand due to the pandemic," he said. "At the same time, we experienced weak demand in several end markets that were more severely impacted by actions taken around the world to slow the pandemic."

3M noted that higher demand for face masks, N95 respirators and cleaning products due to the coronavirus outbreak boosted sales in its personal safety unit. As a result, the company said it has doubled global respirator output to 100 million per month since the beginning of the year and is planning to increase its investment to double the output again.

"We are attacking the pandemic from all angles, which includes mobilizing all of our resources and rapidly increasing output of critical supplies to healthcare workers and first responders," Roman said.

The company also recorded a 21% gain in sales in its health care segment and a 4.6% increase in its consumer division. In contrast, sales in its safety and industrial business declined 1% and revenue fell 5% in transportation and electronics.

Due to the uncertainty of how the pandemic will affect 3M's operations, the company withdrew its guidance for the year. However, it will begin providing monthly sales reports in May to give investors a look into its ongoing business performance.

"Looking ahead, 3M is taking action that will help us navigate near-term uncertainty, generate strong cash flow, and lead out of the slowdown by delivering for employees, customers and shareholders," Roman said.

With a market cap of $91.92 billion, shares of 3M were trading 4.05% higher at $159.87 on Tuesday. GuruFocus estimates the stock has declined 15% year to date.

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With 0.63% of outstanding shares, First Eagle Investment (Trades, Portfolio) is 3M's largest guru shareholder. Other top guru investors include Mairs and Power (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Tweedy Browne (Trades, Portfolio), Tom Gayner (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio) and Ken Fisher (Trades, Portfolio).

According to GuruFocus' Industry Overview, 3M is the second-largest company in the industrial products sector behind Honeywell International Inc. (NYSE:HON). Other top players in this space are General Electric Co. (NYSE:GE), Illinois Tool Works Inc. (NYSE:ITW), Roper Technologies Inc. (NYSE:ROP), Eaton Corp. (NYSE:ETN), Emerson Electric Co. (NYSE:EMR), Cummins Inc. (NYSE:CMI), Rockwell Automation Inc. (NYSE:ROK) and Trane Technologies PLC (NYSE:TT).

Disclosure: No positions.

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This article first appeared on GuruFocus.