3M Co. (MMM) is a diversified global company that manufactures a wide range of products, such as adhesives, building materials, insulation, lubricants, tools, medical supplies, electronics components, cleaning supplies, and office supplies. It products are sold under a number of brand names including Scotch, Post-it, Nexcare, ACE, Command, and many more. The company distributes its products directly as well as through wholesalers, retailers, and online.

3M faces global competition from companies in a broad range of industries, including transportation, healthcare, electronics, and consumer goods. Its main competitors include General Electric Co. (GE), Emerson Electric Co. (EMR), Honeywell International Inc. (HON), Owens Corning Inc. (OC), Avery Dennison Corp. (AVY), and Danaher Corp. (DHR).

Key Takeaways

  • 3M manufactures and distributes a broad range of products, from building materials and adhesives to medical and home cleaning supplies.
  • The company's Safety and Industrial segment generates the most sales and profits.
  • 3M plans to invest $1 billion in order to achieve carbon neutrality by 2050 and to execute other environmental initiatives.
  • The company recently announced plans to invest in the TPG Rise Climate Fund.

3M's Financials

3M announced in late July financial results for Q2 of its 2021 fiscal year (FY), the three-month period ended June 30, 2021. Net income attributable to the company's shareholders rose 16.7% year over year (YOY) to $1.5 billion. Net sales, the company's revenue metric, were $9.0 billion, growing 24.7% compared to the year-ago quarter. Total operating income, which 3M uses to measure profit in its individual business segments, increased 13.3% YOY to $2.0 billion.

The company said that its strong performance during the quarter was driven by broad-based growth across its business segments and geographic regions. Based on its results through the first half of the year, 3M revised upward its outlook for its full 2021 fiscal year. Due to this improving outlook, 3M said that it planned to invest in opportunities for growth as the economy emerges from the COVID-19 pandemic.

3M's Business Segments

3M's operations are organized into four separate business segments: Safety and Industrial; Transportation and Electronics; Health Care; and Consumer. The company provides a breakdown of net sales and operating income for each of its four segments. Sometimes more than one business segment will receive credit for the sale of certain items. 3M provides an elimination of this "dual credit" in order to reconcile individual segment financial results with its companywide financial results. The company also reports certain special items not allocated to its business segments in a separate corporate and unallocated costs category.

Safety and Industrial

3M's Safety and Industrial segment generates revenue through the sale of products related to workplace safety and industrial work settings. Some of those products include industrial abrasives, autobody repair solutions, electrical products and materials for construction and maintenance, structural adhesives and tapes, various personal protective equipment, and more. The segment's net sales in Q2 FY 2021 rose 22.5% YOY to $3.3 billion, comprising about 34% of 3M's total net sales. Operating income increased to $718 million, rising 15.2% compared to the year-ago quarter. The segment accounts for approximately 33% of total companywide operating income.

Transportation and Electronics

3M's Transportation and Electronics segment offers products related to the transportation industry and for certain electronics applications. Those products include attachment tapes, films, sound and temperature management for transportation vehicles, and large format graphic films for advertising. The segment generated net sales of $2.5 billion in Q2 FY 2021, up 28.1% compared to the year-ago quarter. It accounts for about 26% of total net sales. Operating income for the Transportation and Electronics segment grew 51.7% YOY to $546 million, accounting for more than 25% of the total across all segments.

Health Care

3M's Health Care segment makes and sells various health-related products and solutions, including food safety indicator solutions, healthcare procedure coding and reimbursement software, dentistry solutions, filtration and purification systems, and skin care. Net sales for the segment grew 25.0% YOY to $2.3 billion in Q2 FY 2021, accounting for approximately 24% of companywide net sales. The Health Care segment's operating income rose 91.4% YOY to $576 million. It accounts for about 27% of 3M's total operating income.

Consumer

3M's Consumer segment offers consumer products related to home maintenance and do-it-yourself (DIY) home improvement projects, as well as office supplies. These include home cleaning products, retail abrasives, paint accessories, braces, supports, and consumer respirators. The segment generated net sales of $1.5 billion in Q2 FY 2021, up 20.4% compared to the year-ago quarter. It accounts for less than 16% of 3M's total net sales. The Consumer segment's operating income grew 11.9% YOY to $311 million, comprising about 14% of companywide operating income.

3M's Recent Developments

3M announced in July that it is investing in the multi-billion dollar TPG Rise Climate Fund, which is focused on deploying capital to promote clean energy, decarbonized transport, and other climate-related investments. Earlier this year, the company also announced plans to invest about $1 billion over the next two decades to achieve carbon neutrality by 2050. 3M also plans to significantly reduce water use at its facilities, and improve the quality of the water it returns to the environment after using it in manufacturing operations.