Industrial giant 3M Co (MMM.N) lowered its full-year earnings outlook on Tuesday and said it would increase product prices to combat inflationary and supply chain pressures plaguing U.S. manufacturers.
The company, which makes everything from Post-It notes to industrial sandpaper, said it was facing higher costs related to polypropylene, ethylene, resins and labor. It added that the global semiconductor crunch would continue to weigh on its automotive and electronics end-markets.
While demand for goods has rebounded with massive stimulus and the reopening of economies, a tight labor market and soaring raw material prices have left most U.S. companies in the lurch.
“Inflation has come in faster than anybody thought,” Chief Financial Officer Monish Patolawala said on a call with analysts. “We don’t see the raw material or the inflation environment slowing down in any way.”
To offset these constraints, 3M said it would also turn to dual sourcing of raw materials and improving factory yields.
3M forecast a hit of 80 cents to 90 cents to full-year earnings from raw material and logistics costs.
The Dow Industrial Average (.DJI) component, however, reported a better-than-expected quarterly profit and revenue on the back of sales growth across its business units.
Annual sales are now expected to grow between 9% and 10%, compared to a prior forecast of 7% to 10%, 3M said, while 2021 earnings per share are forecast to come in between $9.70 and $9.90, versus its earlier range of $9.70 to $10.10.
The biggest maker of N95 masks said third-quarter disposable respirator sales fell 7% and forecast waning demand for the rest of the year and into 2022.
Net income attributable to 3M in the third quarter rose marginally to $1.434 billion, or $2.45 per share, above analysts’ average estimate of $2.20 per share.
Net sales rose 7.1% to $8.94 billion, beating expectations of $8.67 billion.