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nd so we are going to continue to focus on productivity. That’s a big part of the self-help for us, leveraging some of the capabilities Monish talked about to drive that as supply chains improve and recover, we expect to be able to drive more self-help. And we will continue to stay close to the end markets and the macro and take actions as is needed. We don’t have a big plan to announce today, but we -- our model is to adjust to markets as we go.
productivigty is the key to imprpving marginds
Transcript
2022 Q3
27 Oct 22
think 3M as a whole has been at that sort of 21%, 22% range for four years or five years now. It’s been a couple of years since the last big kind of restructuring announcement in December 2020.
Just wondering what the appetite was for maybe another round of that kind of big fixed cost out, particularly as the macro is a little bit softer or are you feeling pretty confident about operating leverage next year?
marfinds stuck at 21%-22% range for 4-5 years
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2022 Q3
27 Oct 22
So put all that together, we did see 50 basis points of margin expansion. When you think about Q4, if you know that in Q3 we did $8.6 billion in Q4, we are saying $7.9 million to $8.2 million, which is the volume basically gives us the best leverage.
50bp margin expansion
Transcript
2022 Q3
27 Oct 22
f you look at where the macro is going to be GDP and IPI is in that 2%-ish range for the fourth quarter, auto is going to be up 2% sequentially or nearly 2.5% depending on IHS forecast, approximately 2% up on a year-over-year basis. Elective procedures, which were at 90% in July and moved itself up a little bit in August and September, we believe, will move up a little bit to 90% to 95%, so you will see that uplift. I would say consumer spending continues to be weak. Even in the month of October, we have seen lower consumer spending. I called that out as those trends where the inflation is impacting the consumer, I think, remains through the holiday season, as well as how inventory levels are adjusted by retailers is something that we will have to watch. Consumer electronics continues to be down on a year-over-year basis, a little moderation on improvement on a sequential basis. But again, there, we will have to see where that plays itself out between consumer electronics, as well as then you talk about semiconductor growth continues to be strong.
q4 growth colour
Transcript
2022 Q3
27 Oct 22
would tell you, we are seeing some moderation, as we saw inflation was $225 million in Q3, we are accounting for $100 million to $150 million in Q4. The total at $750 to $850 million has not changed.
We are seeing -- inflation, I would say, is still generally broad-based.
We are seeing higher inflation in specialty materials, as well as intermediate finished goods.
We are seeing a little bit of moderation in logistics.
So that’s where we are on inflation. And then on supply chain, I would say, we are also seeing some signs of stabilization, Joe.
We are seeing raw material flowing a little better than it has flown in the prior quarters and you can see that’s why the team was also able to deliver decent productivity in Q3.
inf;ation still broadbased
Transcript
2022 Q3
27 Oct 22
To answer your question on pricing, as Mike mentioned in his remarks and mine and even the prior question, we take a very thoughtful approach to pricing. Nearly 70% of our pricing is -- our products are pretty much spec in products.
So we take a very thoughtful approach. We look at it region by region. We look at it product by product. And I would say we will have to follow. We follow a very thoughtful approach.
We will follow a very thoughtful approach in 2023 also, because no one has seen this historic level of inflation in the recent past.
pricing power?
Transcript
2022 Q3
27 Oct 22
We are seeing inflation is pretty much still broad-based. In areas that we are seeing is logistics has seen some slowdown in the pace of inflation.
However, if you look at intermediate finished goods, they are still pretty high and so specialty raw materials.
So I would say if you just look at what inflation we had in the third quarter, it was $225 million. In the fourth quarter, we are seeing somewhere between $100 million to $150 million.
So there’s a little moderation.
inflation still broad based
Transcript
2022 Q3
27 Oct 22
And specifically, you guys no longer disclose pricing, but just trying to understand how are you thinking about the pricing mechanism at 3M? And how are you adapting to what’s happening and do you think we are going to get into a less inflationary environment or from what you are seeing inflation is pretty sticky into next year?
pricing/ ost inflation?
Transcript
2022 Q3
27 Oct 22
First, from an end market perspective, GDP and IPI continue to moderate with current Q4 estimates of 1.4% and 2.2%, respectively
gdp/ipi estimates -- similar to mmm org growtg rate !
Transcript
2022 Q3
27 Oct 22
Auto build rates are currently estimated to be up 2% year-on-year, while consumer electronics demand is expected to remain soft. Healthcare elective procedure and oral care volumes are expected to be in the range of 90% to 95% of pre-COVID levels. And lastly, we anticipate continued inflationary impacts on consumer spending, along with the inventory reduction actions at retailers. Therefore, looking at the fourth quarter, we expect total sales to be in the range of $7.9 billion to $8.2 billion. This includes organic growth in the range of 1% to 3%, which includes a 2% headwind or $150 million to $200 million from the continued decline in disposable respirator demand, and the exit of Russia, which will create a year-on-year headwind of approximately 80 basis points or approximately $70 million.
guidance factor details, auto/cons soft
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2022 Q3
27 Oct 22
Consumer
consumer
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2022 Q3
27 Oct 22
Third quarter elective medical procedure volumes were approximately 90% of pre-COVID levels as we saw activity dip in July and ramp back up as we went through the quarter. Fourth quarter procedure volumes are currently projected to be 90% to 95% of pre-COVID levels as labor shortages continue to impact the pace of recovery. Oral care was down mid-single digits against low double-digit growth from a year ago.
We are also seeing softening due to the ongoing inflationary pressures impacting consumer spending on discretionary oral care and orthodontic procedures. Healthcare’s third quarter operating income was $452 million, down 11% year-on-yea
oralcare weakness, ekective medicsal prodceduresw still only at 90%
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2022 Q3
27 Oct 22
Healthcare business,
heakthcare
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2022 Q3
27 Oct 22
Overall growth was benefited by COVID-related backlog recovery in the Greater China region, which was partially offset by increased weakness in consumer electronics demand, along with the continued constraints in the semiconductor supply chain.
semiC colour
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2022 Q3
27 Oct 22
ransportation and Electronic
t & e
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2022 Q3
27 Oct 22
Safety and Industrial business,
s & I
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2022 Q3
27 Oct 22
Our full year raw materials and logistics inflation estimate of $750 million to $850 million remains unchanged. And as we have said before, we continue to expect to offset this through pricing actions.
raw materials and logistics costs
Transcript
2022 Q3
27 Oct 22
hese actions helped to more than offset a number of headwinds in the quarter, including the decline in disposable respirator sales, which negatively impacted Q3 operating margins by 30 basis points and earnings by $0.07 a share; incremental end market softness particularly in consumer electronics, along with oral care and consumer retail in the U.S. as persistent inflationary pressures are slowing consumer spending; ongoing global supply chain challenges and raw material constraints; and finally, geopolitical impacts, particularly Russia, which was a year-on-year headwind of $50 million to revenue and $0.03 to earnings per share.
headwinds
Transcript
2022 Q3
27 Oct 22
With some puts and takes, as consumer and consumer electronics demand declined as the quarter progressed, while industrial end markets demand remained steady.
consumer weakened, industrial steady
Transcript
2022 Q3
27 Oct 22
For organic growth, we are lowering the high end of our range to 1.5% to 2%, against the prior range of 1.5% to 3.5%. We anticipate adjusted EPS of $10.10 to $10.35, against the previous expectation of $10.30 to $10.80.
We are also updating our range for adjusted free cash flow conversion to 85% to 95% from 90% to 100% previously.
updared guidance
Transcript
2022 Q3
27 Oct 22