3M MMM-N lifted its full-year profit forecast on Tuesday on the back of cost-control measures, price hikes and continuing strength in its safety & industrial business, sending shares of the industrial giant up 6 per cent in premarket trading.
However, the company said it expects higher pricing to “fully offset” a hit to its profit from oil-led inflation forecast in a range of US$150-million to US$175-million. 3M previously forecast a US$125-million annual cost impact from it.
Companies are grappling with rising costs as oil prices have risen to their highest levels in more than a month in July amid escalating U.S.-Iran tensions and concerns over disruptions to energy supplies through the Strait of Hormuz.
3M’s cost cuts, price hikes and the introduction of new products and customer service initiatives under CEO William Brown have helped the company cushion margins from weak demand against the backdrop of prolonged inflation.
The company’s largest segment by sales, safety and industrial segment, saw an over 8-per-cent rise in quarterly sales from a year ago, helped by strong demand across electrical markets, adhesives, abrasives and industrial specialties, as roofing granules returned to growth.
The transportation and electronics segment’s ongoing weakness in autos was offset by strength in data centers and semiconductor business, which recorded nearly 6-per-cent sales growth.
“As a result of our strong first-half performance and continued momentum, we are increasing our full-year guidance,” Brown said.
The company now expects full-year adjusted profit per share between US$8.80 and US$8.95, compared with its earlier forecast of US$8.50 to US$8.70.