3M Issues Caution About Slow Growth in 2024, Shares Decline

3M Stock

U.S. industrial conglomerate 3M Co (NYSE:MMM) has sounded a warning about a “slow growth environment” expected in 2024. The company also projected weakness in its electronics and consumer segments for the current and upcoming quarters, causing its shares to drop by 5.7% in afternoon trading.

3M further revealed that it anticipates current-quarter sales to fall within the range of $7 billion to $8 billion, a downgrade from its previous guidance of $8 billion. This adjustment is attributed to a sluggish recovery in China, where consumer spending has shifted from discretionary items to essential goods and other experimental activities.

Monish Patolawala, 3M’s CFO, remarked, “Based on China and FX, we are a little down from where we said.” In July, 3M had raised its full-year profit forecast and surpassed second-quarter earnings estimates by increasing prices to offset high raw material and labor costs.

The company is currently grappling with several challenges, including a significant decline in U.S. retailer inventories due to reduced spending on consumer electronics driven by inflation and higher borrowing rates. Additionally, 3M faces the aftermath of lawsuits related to its Combat Arms earplugs and water pollution claims linked to “forever chemicals.”

In June, the St. Paul, Minnesota-based company reached a $10.3 billion settlement related to the water pollution claims. Last month, 3M also agreed to pay $6 billion to settle lawsuits filed by U.S. military veterans and service members who claimed hearing loss from using the company’s earplugs. As a result, the firm is expected to record a charge of $4.2 billion in the current quarter related to the settlement.

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