U.S. industrial conglomerate 3M Co. exceeded Wall Street expectations for its first-quarter profit on Tuesday, attributed to cost-cutting measures. This led to a 7% increase in its shares, although the company cautioned about a potential impact on 2025 earnings due to escalating trade tensions.
Bill Brown, who took over as CEO from Mike Roman in May, initiated a restructuring strategy in July aimed at curbing spending and reallocating resources from addressing legal liabilities. In February, 3M set a target operating margin of approximately 25% by 2025. The company’s adjusted operating income margin for the first quarter rose to 23.5%, an increase of 220 basis points.
The Minnesota-based company now projects a potential reduction of 20 to 40 cents per share from its 2025 adjusted profit forecast, ranging between $7.60 and $7.90, due to the intensifying global trade tensions involving tariffs.
U.S. President Donald Trump’s tariffs have sparked concerns about a potential economic slowdown and declining consumer sentiment, which may affect sales of 3M’s consumer products such as Scotch tape and Post-it notes. As of March, China represented approximately 10% of the company’s worldwide revenue.
3M’s Chief Financial Officer Anurag Maheshwari stated on a post-earnings call that the company anticipates a possible annualized tariff-related impact of $850 million before exemptions, with U.S. and China tariffs accounting for $675 million of that amount.
To address these challenges, 3M expressed plans to utilize its global network to alleviate the tariff costs. CEO Bill Brown mentioned the possibility of redirecting products from the U.S. to China via Europe and subsequently managing the volumes between the U.S. and European factories.
The company reported a first-quarter adjusted profit of $1.88 per share, surpassing the average analyst forecast of $1.77, according to data from LSEG. 3M experienced a 2.5% increase in its safety and industrial segment sales, with total net sales reaching $5.78 billion, exceeding the expected $5.75 billion.
