Manufacturing conglomerate 3M reported its 2020 second quarter financial results on Tuesday, showing that continued strong demand for its personal protective equipment products wasn't nearly enough to offset considerable demand weakness in the company's other areas.
3M reported Q2 total sales of $7.2 billion, down 12.2 percent year-over-year (YoY), with organic local currency sales down 13.1 percent. That compares with Q1 sales of $8.1 billion that were up 2.7 percent, with organic sales up 0.3 percent.
Q2 operating profit of $1.74 billion was down from $1.70 billion a year earlier but more than doubled Q1's $726 million, while Q2 adjusted operating profit of $1.4 billion was down 17.3 percent YoY.
3M's Q2 total profit of $1.29 billion was down from $1.13 billion a year earlier and was identical to Q1, while adjusted net profit of $1.0 billion was down 17.2 percent YoY.
3M's biggest business segment, Safety and Industrial, had Q2 sales of $2.7 billion, down 9.2 percent YoY, with organic sales down 6.1 percent. Q1 sales were $2.9 billion. The company said that while sales increased in personal safety, the organic decline was driven by declines in closure and masking, electrical markets, roofing granules, industrial adhesives and tapes, abrasives and automotive aftermarket. Operating profit of $636 million fell 1.6 percent YoY on operating margins of 23.8 percent (24.7 percent in Q1).
In 3M's other business segments in Q2:
- Transportation and Electronics sales of $1.9 billion were down 20.9 percent YoY, with organic sales down 18.9 percent. The organic decline was driven by decreased sales in electronics, transportation safety, advanced materials, commercial solutions and automotive and aerospace. Operating profit of $382 million was down 35.4 percent YoY on operating margins of 19.7 percent (21.6 percent in Q1).
- Health Care sales of $1.8 billion were down 0.4 percent YoY, with organic sales down 2.4 percent. Sales grew in separation and purification, while sales declined in medical solutions, food safety, health information systems and oral care. Operating profit of $306 million was down 36.7 percent YoY on operating margins of 16.8 percent (21.7 percent in Q1).
- Consumer sales of $1.2 billion were down 6.2 percent YoY, with organic sales down 5.0 percent. Organic sales grew in home care and home improvement, while sales declined in consumer health care and stationery and office supplies. Operating profit of $287 million was up 4.8 percent YoY on operating margins of 23.2 percent (21.4 percent in Q1).
Geographically, 3M's total Q2 sales declined 8.5 percent in Asia Pacific, 12.7 percent in the Americas and 16.4 percent in EMEA. Organic local-currency sales decreased 8.1 percent in Asia Pacific, 14.5 percent in EMEA and 15.6 percent in the Americas.
"The COVID-19 pandemic continues to evolve and affect 3M’s businesses in a number of ways," the company said Tuesday. "During the second quarter, end-market demand remained strong in personal safety, home improvement, general cleaning, semiconductor, data center and biopharma filtration. At the same time, several other end markets continued to experience significant weakness including healthcare elective procedures, automotive OEM and aftermarket, general industrial, commercial solutions and office supplies."
Other Q2 notes 3M shared:
- Globally, it produced nearly 800 million respirators in the first half of 2020, with approximately 50 percent distributed in U.S. primarily to healthcare and FEMA. 3M is on-track to produce approximately 2 billion respirators globally, including 1 billion in the U.S. for full-year 2020.
- 3M filed 18 lawsuits including in 10 U.S. states and Canada to fight fraud and price gouging. It secured the removal of more than 7,000 counterfeit websites and more than 10,000 false or deceptive social media posts to date.
- Ended Q2 with an operating cash flow of $1.9 billion, up 15 percent YoY
- 3M reduced operating costs by approximately $400 million in Q2 YoY
- 3M undertook restructuring actions as a result of the COVID-19 pandemic and related economic impact, resulting in a $58 million charge
- 3M reduced its net debt by $1.7 billion since March 31 of this year