3M raises full-year profit forecast amid easing trade tensions
Co cuts 2025 tariff net impact estimate to 10 cents per share
Tariff to hit 3M's profits mainly in second half
Adds comments from the earnings conference call in paragraphs 9 and 10; updates share movement
By Aishwarya Jain
July 18 (Reuters) - 3M MMM.N raised its full-year profit forecast and projected a smaller tariff-related hit to its 2025 earnings on Friday, weeks after the U.S. and China arrived at a trade truce.
As trade tensions show signs of easing, following agreements between the U.S. and other countries including the UK and Vietnam, companies have begun to reevaluate the potential financial fallout.
Pharmaceutical major Johnson & Johnson JNJ.N on Wednesday halved its tariff-related cost projection to $200 million this year.
3M cut its estimates of a net hit to 2025 profit to 10 cents per share from 20 cents to 40 cents, and raised its full-year adjusted profit forecast to $7.75 to $8 per share from $7.60 to $7.90 it had forecast earlier.
In April, the company had estimated an $850 million potential annualized impact from tariffs before exemptions, with $675 million tied to U.S. and China tariffs.
3M's profit forecast raise comes after China, which accounts for roughly 10% of the company's global revenue, signed a comprehensive trade deal with the U.S. in June.
Evelyn Chow, senior research analyst at investment management firm Neuberger Berman, expects a slew of bottom line beats from industrial companies in the second quarter after 3M's results.
"Tariffs have been better than expected," she said. "I think what's a lot less clear is whether companies are going to outperform on the top line."
The impact of tariffs will mostly be felt in the second half of the year, 3M CFO Anurag Maheshwari said.
About 90% of the total tariff-related hit to annual profit is expected in the second half of the year, he added. Shares of 3M were down about 2%.
The Scotch tape maker reported a second-quarter adjusted profit of $2.16 per share compared with Wall Street estimates of $2.01, according to data compiled by LSEG.
Total quarterly revenue came in at $6.16 billion. Analysts had expected $6.11 billion in revenue.
(Reporting by Aishwarya Jain in Bengaluru; Editing by Shinjini Ganguli)
((Aishwarya.Jain@thomsonreuters.com;))
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