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The company reported Q3 adjusted EPS of $2.68, beating estimates of $2.34, and Q3 revenue of $8.31 billion, also topping the expected $7.98 billion. As a result, the company's shares jumped 4% pre-market and are up 5% on the session.
Despite the positive results, 3M Co's management stated on a conference call that consumer electronics and markets continue to underperform. Additionally, Europe remains weak, and China was down year-over -year organically due to continued market softness.
3M Co raised its full-year adjusted profit forecast, with management looking to benefit from cost-cutting measures and price hikes. The company now expects adjusted EPS for the year to be in the range of $8.95-$9.15, compared with its prior forecast of $8.60-$9.10 per share.
The company's FY2023 adjusted operating cash flow is estimated to be in the range of $6.5 to $6.9 billion, contributing to 100 to 110 percent adjusted free cash flow conversion. This compares to the prior expected range of $5.9 to $6.3 billion, contributing to an adjusted free cash flow conversion range of 90 to 100 percent.
Adjusted full-year total sales growth is forecasted to decline by approximately -5% versus a decline of -5 to -1% prior, reflecting a drop in adjusted organic sales of approximately -3% versus the prior range of -3% to flat.
The company is continuing with its restructuring actions announced earlier this year, with favorable marginal impact seen in the Q3 2023 results. The health care spin program is progressing, with leadership appointments being announced. The company expects to complete the spin during the first half of 2024.
3M Co is also addressing legal matters with the announced Combat Arms settlement, having received preliminary court approval for the PFAS Public Water Systems agreement. Despite pre-tax charges of $4.2 billion in the Q3 of 2023, the company's restructuring program is on track, including the forecasted full-year pre-tax restructuring charges and associated benefits.
Despite the softness in the market, 3M Co's CEO, Mike Roman, expressed optimism about the future, saying, We are building momentum through strong operational execution. In the third quarter, 3M again delivered to our customers in an uncertain environment, positioning us for a solid close to 2023. Our actions led to underlying earnings ahead of our expectations, as well as better than expected margins and cash flow.
Shares of 3M are up 5% following the release. The stock rallied above its 20-sma ($89.47) and was able to hold ground above this key level in the early part of the session. Shares were in a firm downward trend ahead of the report, haven fallen from $108 on September 12 to the $85 area ahead of the Q3 report. The stock is cheap as it trades at 9.3x forward earnings but the company does continue to deal with a soft environment as well as legal issues, which of course was the reason behind its decline.
