3M stock was inching higher in premarket trading after the company reported a better-than-expected fourth quarter financial performance.
A solid end to 2021 is great, but investors want to hear about 2022. They’ll have to wait a little longer to hear what 3M thinks about the coming year.
3M (ticker: MMM) stock was rising 0.6% to $173.76 in premarket trading. S&P 500 and Dow Jones Industrial Average futures fell 0.8% and 0.3%, respectively.
3M reported fourth-quarter earnings on Tuesday of $2.31 a share and free cash flow of $1.5 billion from $8.6 billion in sales. Wall Street was looking for $2.01 a share and $1.3 billion in free cash flow from $8.6 billion in sales.
The results looked solid. “3M delivered a solid fourth-quarter performance — with notable strength in December — as we maintained our relentless focus on serving customers in a challenging external environment,” said CEO Mike Roman in the company’s news release. “Our team effectively managed supply-chain disruptions, made good progress on pricing actions and controlled costs.”
The difficult environment showed up in profit margins. Operating profit margins in the fourth quarter of 2021 came in at 18.8%, down from 21.5% in the fourth quarter of 2020. Supply-chain challenges and lower manufacturing volumes were the biggest reason for the decline, costing the company about 2.4 percentage points of margins.
3M did, however, manage to slow the negative impact from pricing and raw material changes. Price/cost mix issues cost the company only about 0.3 percentage point of margin in the fourth quarter. The price/cost impact was a hit to margins of about 1.3 percentage points in the third quarter of 2021. Better pricing performance is another small positive embedded in the fourth-quarter report.
The company didn’t give a full year 2022 outlook. That’s coming on Feb. 14, in a separate event. Today, analysts are projecting $10.34 in per share earnings from $36.5 billion in sales. For the full year 2021, 3M earned $10.12 a share from $35.4 billion in sales.
Given solid earnings, it should be a relatively quiet day for the stock, depending, of course, on what the overall market does. 3M shares have only moved an average of about 1.5%, up or down, the day following the past four quarterly earnings reports.
Coming into Tuesday trading, 3M shares have fallen about 2.7% so far in 2022. The S&P has fallen about 7.5%.
Management hosts a conference call at 9 a.m. eastern time to discuss results.
