3M (MMM) announced it will stop manufacturing and work to eliminate its use of so-called “forever chemicals” by the end of 2025.
Per- and polyfluoroalkyl substances, or PFAS, are used in a variety of products and coatings because of their ability to resist heat, oil, stains, grease, and water. However, they are known as “forever chemicals” because they take a long time to break down in the environment.
PFAS can also leach into water systems, and the Environmental Protection Agency (EPA) has warned some are linked to cancer and reproductive, developmental, cardiovascular, liver, and immunological effects.
CEO Mike Roman noted that while PFAS can be safely made and used, the company sees “an opportunity to lead in a rapidly evolving external regulatory and business landscape.”
Costs of Exit
3M explained that its current annual net sales of manufactured PFAS are approximately $1.3 billion, with estimated earnings before interest, taxes, depreciation and amortization (EBITDA) of about 16%. It added that discontinuing their use across its portfolio will impact only a small portion of its revenue.
3M anticipates the decision to exit the business will result in total pre-tax charges of between $1.3 billion and $2.3 billion, including $700 million to $1 billion in the current quarter.
Shares of 3M fell 1% on Tuesday following the announcement, and have lost close to one-third of their value year-to-date.