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Rising supply costs dull upbeat quarterly show by industrial giant 3M

3M raises annual forecasts on pandemic recovery, warns of higher costs
3M raises annual forecasts on pandemic recovery, warns of higher costs   -   Copyright  Thomson Reuters 2021
By Reuters

(Corrects typo in headline)

By Ankit Ajmera

-3M, the biggest U.S. producer of N95 masks, warned on Tuesday that surging raw material and freight costs would impact its annual profit, dampening upbeat quarterly results and sending its shares down as much as 3.3%.

A fresh wave of coronavirus infections, natural disasters in China and Germany and a cyber attack that disrupted container operations at South African ports have pressured global supply chains and disrupted flow of goods to several companies.

“There were more inefficiencies that we have had to deal with just as raw material (supply) was not as fluid as we would have thought,” Chief Financial Officer Monish Patolawala said.

3M had raised its product prices in the second quarter as well, but that failed to offset rising costs and exerted pressure on profit margin in some businesses.

The company lifted its full-year raw materials and logistics charge to between 65 cents and 80 cents per share from its prior forecast of 30 cents to 50 cents.

Overall, the maker of everything from Post-It notes and adhesives to industrial sandpaper, reported a rebound in several of its markets, but said demand for its face masks was waning.

The company raised its 2021 earnings per share outlook to between $9.70 and $10.10, from a prior range of $9.20 to $9.70.

3M’s net income rose 16.7% to $1.52 billion, or $2.59 per share, in the quarter, beating analysts average estimate of $2.28 per share.

Net sales rose about 25% to $8.95 billion, topping market expectation of $8.56 billion.