3M’s announcement of its first-quarter financial results included the company’s strategy to address the decline in sales from first-quarter 2022. This includes restructuring the corporate center of the company, the reduction of approximately 6,000 manufacturing jobs, and continued investment in markets where 3M’s size and advanced scientific technologies give them a competitive advantage.   

"In the first-quarter we continued our relentless focus on serving customers and aggressively managed costs," said 3M Chairman and CEO Mike Roman. "Market trends were as we expected, and we made changes to improve our operations and position us for success as supply chains improve."

"To strengthen 3M for the future, today we announced actions that will reduce costs at the corporate center, further simplify and strengthen our supply chain structure, and streamline our go-to-market business models, which will improve margins and cash flow," Roman continued. "We will continue to prioritize investments in high-growth end markets where 3M science gives us a clear competitive advantage."

3M reported first-quarter sales of $8 billion, down 9% year-on-year. The company reported earnings per share of $1.76 – down from $2.26. 

Restructuring actions are intended to make 3M more efficient by reducing the size of the corporate center, simplifying the supply chain, streamlining 3M's geographic footprint, reducing layers of management, and further aligning business go-to-market models to customers. These actions will affect all aspects of the business and lead to the reduction of the manufacturing workforce by approximately 6,000 positions globally. This is in addition to the reduction of 2,500 manufacturing roles announced in January 2023. 3M anticipates annual pre-tax savings of $700 million to $900 million upon completion of these actions.

The senior management team will be restructured to reduce costs and drive long-term growth. Michael Vale, former group president and chief business and country officer, will take on a newly created role in the corporate operations committee. He will be responsible for three of the company's four business groups (safety and industrial, transportation and electronics, and consumer), customer operations, country governance, and emerging markets. Katrina Chavez, former senior vice president and chief strategy officer, will be made group president of consumer business, and Chris Goralski, former president of industrial tapes and adhesives division, will be made group president of safety and industrial business. Two executive vice presidents, Monish Patolawala and John Banovetz, will also have expanded roles.     

3M announced it will continue to focus its commercial efforts in high-growth markets including automotive electrification, home improvement, personal safety, electronics, and health care. In addition, the company will prioritize emerging growth areas such as climate technology, sustainable packaging, industrial automation, semiconductors, and next-generation consumer electronics.

The company expects total pre-tax charges of $700 million to $900 million inclusive of previous actions announced in January 2023. 3M expects to incur approximately half of the pre-tax charges in 2023, with $175 million to $250 million expected in the second quarter. The charges will be offset by pre-tax savings and are included in the company's full-year 2023 outlook.

Expectations for full-year 2023 include a -6 to -2% total sales growth, reflecting adjusted organic sales growth of -3% to flat, adjusted earnings per share growing from $8.50 to $9.00, and an adjusted operating cash flow of $5.8 to $6.3 billion contributing to 90% to 100% adjust free cash flow conversion.

To learn more, www.3m.com.