American multinational manufacturing conglomerate 3M recently reported its first-quarter earnings and revenues, which are much higher than expectations. It seems that the increased demand for safety equipment and cleaning products, amid the COVID091 pandemic has caused the surge, Moreover, 3M’s shares have also jumped by 4.52% on an average.
Despite a considerable increase in demand across all its product segments, 3M attributed the Q1 revenue increase to its N95 respirator masks, of which there has been astronomical demand over the last three months since COVID-19 peaked. 3M has doubled global respirator output to 100 million per month since January 2020 and plans to do so again as the pandemic keeps swiping across the world.
Based on the above, 3M has reported per-share earnings of $2.16 on revenues of $8.08 billion in Q1 2020. This reflects a 2.7% growth on a year-over-year basis. Interestingly, Wall Street previously estimated per-share earnings of $2.03 and revenue worth $7.91 billion.
So, quite clearly, 3M has surpassed Wall Street estimations by a great deal, and it is expected to grow further if the COVID pandemic keeps up the demand for safety products. Considering the importance of N95 masks, especially for healthcare workers amid the current scenario, US President Donald Trump recently ordered 3M to accelerate the production of N95 masks.
3M CEO Mike Roman commented, “Given the breadth and diversity of our businesses, the financial impact of COVID-19 is varying across 3M. Total sales grew 21% in its health-care segment and 4.6% in consumers. In the first quarter we saw strong growth in personal safety, as well as in other areas of our portfolio experiencing high demand due to the pandemic,” he added. “At the same time, we experienced weak demand in several end markets that were more severely impacted by actions taken around the world to slow the pandemic.”
In relevance to the current global health crisis, the company plans to adjust its cash-spending trend, by driving aggressive cost-reductions, while having a minimal effect on employees.