Today 3M’s CFO presented at the Morgan Stanley conference and provided some outlook comments for 2018 that were slightly more negative than the previous guidance:
· FX now neutral (vs. 10c positive impact previously announced)
· The rising raw material prices will impact earnings by 10 cents/share (vs. 5-10c prior guidance). To offset this, in 1Q 3M increased their prices by 70bps, and in 2Q by 110bps. This price increase remains robust so far, but we shouldn’t expect an uptick from there. This should just offset the costs inflation starting in 2H
· There are signs that the auto production units will be lower than expected
· Healthcare unit growth is now at the bottom of the 4-6% growth previously announced: US oral care has been slower than anticipated, and their drug delivery business is seeing negative growth following a strong 2017
· China: growth now closer to 10% rather than 10-15%: manufacturing and exports out of China have seen less robust growth recently
· Expected 2H18 organic growth of 2-4% (50-100bps of the growth was pulled forward in 2Q from 2H due to their ERP system deployment)
$MMM.US
[tag MMM]
Julie S. Praline
Director, Equity Analyst
Direct: 617.226.0025
Fax: 617.523.8118
Crestwood Advisors
One Liberty Square
Suite 500
Boston, MA 02109