Industrial manufacturer 3M Company (MMM) is a Dividend King and Dividend Aristocrat, having raised its dividend for 64 years in a row. However, the company is currently facing a number of uncertainties, including litigation headwinds, global supply chain disruptions, and the lingering effects of the coronavirus pandemic on major industrial manufacturers.
Financials:
On January 24th, 2023, 3M reported earnings results for the fourth quarter and full year for the period ending December 31st, 2022. For the quarter, revenue declined 5.9% to $8.1 billion, but was $10 million more than expected. Adjusted earnings-per-share of $2.28 compared to $2.31 in the prior year and was $0.11 less than projected. For 2022, revenue decreased 3% to $34.2 billion. Adjusted earnings-per-share for the period totaled $10.10, which compared unfavorably to $10.12 in the previous year and was at the low end of the company’s guidance. Organic growth for the quarter was 1.2%. Health Care, Transportation & Electronics, and Safety & Industrial grew 1.9%, 1.4%, and 1.3%, respectively. Consumer fell 5.7%. The company will cut 2,500 manufacturing jobs.
Despite these challenges, 3M remains committed to paying and increasing its dividend over the long-term. As of the latest earnings report, the company provided guidance for 2023 with an expected adjusted earnings-per-share in a range of $8.50 to $9.00. We believe that while 3M faces uncertainties in the short term, its strong competitive advantages and history of dividend growth make it an attractive long-term investment opportunity for income investors.
Conclusion:
3M is a well-established, diversified conglomerate that has a long history of innovation and a strong global presence. The company has performed well over the past year, driven by strong demand for its PPE and healthcare products, but faces challenges in its industrial and transportation segments. With its strong balance sheet and diversified business model, 3M is well positioned to weather economic downturns and continue to innovate and grow in the future.
