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Analysts Expect 3M’s Revenues to Decline



3M’s first-quarter revenue expectations

3M (MMM), a diversified technology company, is expected to report revenues of $8.02 billion in the first quarter—a decrease of 3.0% YoY (year-over-year). In the first quarter of 2018, 3M reported revenues of ~$8.28 billion. 3M’s first-quarter revenues had been on an upward trend for the past few years. However, the upward trend will likely be broken and could cause a trend reversal.

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Why is 3M expected to post lower revenues?

In the fourth quarter of 2018, among 3M’s five reporting segments, two of the segments reported a decline in their revenues. A similar trend is expected to continue in the upcoming quarter. The other major challenge for 3M is the strong US dollar. The US Dollar Index, which measures the performance of the dollar against the basket of currencies, has gained ~1.4% in the past six months.

In contrast, 3M’s acquisition of M*Modal will likely boost its revenues. 3M completed the acquisition of M*Modal on February 1. 3M has entered several collaborations that could improve its revenues. Launching new products and the price increase could boost 3M’s revenues. We’ll have to see if 3M can overcome the challenges and keep its upward trend moving for its first-quarter revenues.

Investors could hold 3M indirectly by investing in the SPDR Dow Jones Industrial Average ETF (DIA), which has invested 5.8% of its portfolio in 3M. DIA also provides exposure to Boeing (BA), Goldman Sachs (GS), and Apple (AAPL) with weights of 9.6%, 5.2%, and 5.2%, respectively, as of April 23.


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