3M, a household name almost everywhere in the world

3M, a household name around the globe, began operations more than a century ago, starting off as a small-scale mining operation in Northern Minnesota, then called Minnesota Mining and Manufacturing Company. Today, this Fortune 500 company has offices in the United States, Germany and Belgium, and produces products that can be found in homes all across the world. This includes global favourites like Scotch Brite, Post-it, Scotch paper tape, Scotch painter’s tape, Scotchgard, ACE, and Command.

Founded in 1902, 3M’s five original founders sought to mine for corundum, a mineral utilised in the production of sandpaper and for grinding wheels. Over time, scientific, technical and marketing innovations saw the company’s offering evolve into what is now 60k 3M products used in homes, businesses, schools, hospitals, and a host of other industries.

The corporate operations of this materials science and manufacturing company are carried out in 70 countries, and it sells its products in almost every country in the world. William ‘Bill’ Brown was appointed CEO of 3M in May 2024, succeeding Michael Roman who was appointed Executive Chairman of 3M’s Board of Directors, effective 1 May 2024. Brown previously held the positions of Chair of the Board and Chief Executive Officer at L3Harris Technologies, a leading company in aerospace and defence technology solutions. He served as CEO and Chair, and subsequently Executive Chair, from June 2019 to June 2022.

Market capitalisation and share value

3M has a market capitalisation of US$57.2 billion. According to Yahoo Finance as at 12 July 2024, “shares of the maker of Post-it notes, industrial coatings and ceramics have appreciated by 0.45% over the course of the past month, outperforming the Conglomerates sector’s loss of 6.42% and lagging the S&P 500’s gain of 5.11%.”

3M first quarter 2024 results and highlights

Q1 2024 results, including the Health Care segment as per 3M’s first-quarter guidance, reported GAAP earnings per share of $1.67 with an operating margin of 18.8%, and an adjusted EPS of $2.39, up 21% year-on-year. The adjusted operating income margin increased by 4.0 percentage points to 21.9% year-on-year. Sales were $8.0 billion, down 0.3% year-on-year with flat organic sales, while adjusted sales were $7.7 billion, up 0.5% year-on-year with an adjusted organic sales increase of 0.8% year-on-year. Operating cash flow and adjusted free cash flow were both $0.8 billion, and 3M returned $835 million to shareholders via dividends.

Completed on April 1, 3M carried out the planned spin-off of its health care business, officially establishing Solventum Corporation as an independent entity. Solventum is now publicly listed on the New York Stock Exchange under the ticker symbol SOLV. Following the spin-off, 3M retained 19.9% of the outstanding shares of Solventum common stock, which will be monetised within 5 years.

3M Earplug lawsuit

From 2003 to 2015, Aearo Technologies Inc. and its parent company 3M Company manufactured and supplied the US military with Combat Arms earplugs to safeguard service members’ ears from loud noises during military activities. These earplugs were standard equipment for soldiers deployed in Iraq and Afghanistan during that period. In 2015, production of the earplugs was stopped but without recall. In 2016, Moldex-Metric, Inc., a competitor based in California, brought a whistleblower lawsuit against 3M, alleging that the company had knowingly sold defective earplugs that did not meet the protection standards required by the government.

The defective earplugs were the subject of a lawsuit alleging that they may have caused significant hearing loss and tinnitus for many soldiers. As a result, in 2018, 3M settled with the Department of Justice for $9.1 million to address the claims. The company did not however admit any fault.

Following the federal settlement, individual service members began to bring legal action against 3M, claiming that they suffered hearing damage and/or tinnitus as a result of using the faulty earplugs. The number of military service members and veterans said to have filed lawsuits against 3M reached 230,000. On 26 March, 3M announced that as of the final registration date, more than 99% of claimants are participating in the Combat Arms Earplug settlement. Under the terms of the agreement, the company will pay out approximately $6 billion between 2023-2029 to resolve the litigation. This amount has a total pre-tax present value of $5.3 billion, for which the company has previously set aside reserves.

ESG and sustainability initiatives

In 2021, 3M announced its intention to invest some $1 billion over the next two decades to expedite new environmental objectives. These include achieving carbon neutrality by 2050, reducing water consumption by 25% at its facilities, and to return better quality water to the environment after use in manufacturing operations.

More specifically, by leveraging science and technological know-how, the company is aiming to reduce carbon emissions in 3 stages, i.e., 50% reduction by 2030, 80% reduction by 2040, and 100% carbon neutrality by 2050. 3M intends to achieve emission reductions beyond its operations through collaborations with customers, governments and global partners, and its continued development of cutting-edge products and solutions.

As far as water wastage is concerned, 3M has committed to reducing water usage at its global manufacturing facilities in the next decade. This included a targeted 10% reduction by 2022, a 20% reduction by 2025, and by 2030 a further 25% reduction. Furthermore, the company aims to have installed advanced water purification technology at all its major water-consuming sites, with full operational capability, by 2024.

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