3M beats quarterly profit estimates, warns of $125 million annual cost impact from soaring oil

By Aatreyee Dasgupta

April 21 (Reuters) – 3M beat Wall Street estimates for first-quarter profit as cost-control measures ‌helped offset inflationary and tariff-linked pressures, even as the industrial giant warned of a $125 million jump in annual costs due to soaring oil prices.

This cost increase could translate into a 50-basis-point rise in product prices, CEO Bill Brown said during an earnings call on Tuesday. Oil is trading nearly 35% higher compared with before the Middle East conflict.

Though 3M maintained its 2026 adjusted profit forecast of $8.50 per share to $8.70 per share, the range includes a contingency buffer of 5 cents to 15 cents to account for oil and other macroeconomic uncertainties.

The company, which has been cutting expenses, hiking prices and rolling out new products to defend margins amid rising costs, recorded a 30-basis-point increase in its adjusted operating margin in the first quarter.

This “more than offset approximately $145 million of tariff impact, cost, and investments,” said CFO Anurag Maheshwari.

However, “given the contingencies in the second half… we expect first-half earnings per share to be higher than the second half,” he added.

Meanwhile, sales in the safety and industrial segments improved during the quarter, partially offsetting ongoing weakness in 3M’s automotive aftermarket and roofing granules business. The segment recorded a 3.2% rise in quarterly sales from a year earlier.

Consumer segment sales fell 1.3%, with weak U.S. discretionary spending outweighing improving demand in international markets, while transportation and electronics sales were down 0.3%.

Adjusted profit for the first quarter came in at $2.14 per share, compared with $1.88 per share a year ago. Analysts were expecting a profit of $1.99 per share, according to data compiled by LSEG.

Quarterly net sales rose 1.3% from a year ago to $6 billion, compared with analysts’ estimates of $6.01 billion.

3M’s shares were down more than 1% in morning trade.

(Reporting by Aatreyee Dasgupta in Bengaluru; Editing by Jonathan Ananda)