Will 3M See A Sharp Decline In Q2 Earnings?

3M (NYSE: MMM) will report its Q2 2023 results on Tuesday, July 25. We expect the company’s revenues to come in at $7.9 billion, aligning with the consensus estimate. This would mark a year-over-year decline of about 9%. Earnings will likely come in at about $1.73 on a per-share and adjusted basis, in line with the $1.72 consensus estimate and 30% below its prior-year quarter figure of $2.48. See our interactive dashboard analysis on 3M Earnings Preview for more details on how the company’s revenues and earnings will likely trend for the quarter. So, what are some of the trends that are likely to drive 3M’s results?

Although the company will likely continue to benefit from the pricing actions, lower demand for respirators will probably be a drag on its top line. Looking at Q1 2023, 3M’s revenues were down 9%, with all segments seeing a y-o-y decline. Furthermore, the operating margin contracted about 400 bps to 17.9% on an adjusted basis and over 300 bps down on a reported basis due to elevated input costs. Our 3M Operating Income Comparison dashboard has more details. Lower revenues and a fall in operating margin resulted in a 25% decline in 3M’s earnings to $1.97 on a per-share and adjusted basis. 3M announced a restructuring plan earlier this year aimed at improving its margin profile, and it will record a charge of $175 to $250 million in Q2’23.