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consumer business posted fourth quarter sales of $1.2 billion. Organic sales declined 5.7% year-on-year with particular weakness in the US, which was down high single digits. All businesses declined organically as consumers pull back on discretionary spending and retailers aggressively took actions to reduce their inventories, particularly in the US.
Consumer very weak
Transcript
2022 Q4
25 Jan 23
Healthcare business, Q4 sales were $2 billion, with organic growth of 1.9% versus last year. Sales in our medical solutions business declined low single digits organically. Fourth quarter elective health care procedure volumes were approximately 90% of pre-COVID levels as nurse labor shortages and strained hospital budgets continue to impact the pace of recovery.
healthcare -- not good
Transcript
2022 Q4
25 Jan 23
Our electronics business declined 10% organically as it continued to be impacted by the significant end market weakness particularly for smartphones, tablets and TVs.
Turning to the rest of Transportation and Electronics. Advanced materials grew organically low double digits, while both commercial solutions and transportation safety increased low single digits.
autos/cons E
Transcript
2022 Q4
25 Jan 23
Transportation and Electronics
T & E, OEM auto good, but CE v weak
Transcript
2022 Q4
25 Jan 23
Safety and Industrial business
S & I. overcame decline from respirator sales, good income growth
Transcript
2022 Q4
25 Jan 23
Looking to 2023, we expect capital expenditures in the range of $1.5 billion to $1.8 billion, which includes approximately $200 million of investment in water stewardship related to our exit of PFAS manufacturing.
2023 capex 1.5-1.8bn
Transcript
2022 Q4
25 Jan 23
Inflation continues to impact raw material, logistics and energy costs. These pressures remain persistent and are broad-based. In Q4, raw material cost increased approximately in or a negative impact of 1.4 percentage points to operating margins and $0.16 to earnings.
inflation impact on raw
Transcript
2022 Q4
25 Jan 23
We also experienced significant slowing in China as COVID-related impacts resulted in a 17% decline in organic sales in December and down 8% for the quarter. Health Care continued to be challenged in its recovery to pre-pandemic levels, given labor shortages and hospital budgets being under pressure
colour on slowing
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2022 Q4
25 Jan 23
we are focused on improving manufacturing operations and driving working capital.
impr manu operations and WC
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2022 Q4
25 Jan 23
as we expect the demand trends that we saw in December to extend through the first half of 2023. I will discuss this more later in the call.
demand trends to extend through h1 2023
Transcript
2022 Q4
25 Jan 23
The slower-than-expected growth was due to rapid declines in consumer-facing markets, such as consumer electronics and retail, a dynamic that accelerated in December, as consumers sharply cut discretionary spending and retailers adjusted inventory levels.
We also saw a significant slowing in China due to COVID-related disruptions, along with moderating demand across industrial markets.
As demand weakened, we took actions to adjust manufacturing output and control costs, which enabled us to deliver a $250 million inventory improvement.
blamed cons demand weakening and china
Transcript
2022 Q4
25 Jan 23
Raw material, logistics and labor inflation are starting to show some signs of moderation, and we are starting to see some evidence of global supply chain stabilization.
As Mike mentioned, we believe manufacturing and supply chain operations are our greatest opportunity to reduce costs and increase productivity to drive improvement in operating margin performance.
While significant uncertainty is expected to remain, we are focused on serving customers and executing our operating framework and operating principles.
opportunity to cut costs (again)
Transcript
2022 Q3
9 Dec 22
Going forward, we see a significant opportunity to reduce cost of goods sold and working capital as global supply chains improve, which includes leveraging data and data analytics to drive productivity in our plant
cosy cutting opportunity
Transcript
2022 Q3
9 Dec 22
nd so we are going to continue to focus on productivity. That’s a big part of the self-help for us, leveraging some of the capabilities Monish talked about to drive that as supply chains improve and recover, we expect to be able to drive more self-help. And we will continue to stay close to the end markets and the macro and take actions as is needed. We don’t have a big plan to announce today, but we -- our model is to adjust to markets as we go.
productivigty is the key to imprpving marginds
Transcript
2022 Q3
27 Oct 22
think 3M as a whole has been at that sort of 21%, 22% range for four years or five years now. It’s been a couple of years since the last big kind of restructuring announcement in December 2020.
Just wondering what the appetite was for maybe another round of that kind of big fixed cost out, particularly as the macro is a little bit softer or are you feeling pretty confident about operating leverage next year?
marfinds stuck at 21%-22% range for 4-5 years
Transcript
2022 Q3
27 Oct 22
So put all that together, we did see 50 basis points of margin expansion. When you think about Q4, if you know that in Q3 we did $8.6 billion in Q4, we are saying $7.9 million to $8.2 million, which is the volume basically gives us the best leverage.
50bp margin expansion
Transcript
2022 Q3
27 Oct 22
f you look at where the macro is going to be GDP and IPI is in that 2%-ish range for the fourth quarter, auto is going to be up 2% sequentially or nearly 2.5% depending on IHS forecast, approximately 2% up on a year-over-year basis. Elective procedures, which were at 90% in July and moved itself up a little bit in August and September, we believe, will move up a little bit to 90% to 95%, so you will see that uplift. I would say consumer spending continues to be weak. Even in the month of October, we have seen lower consumer spending. I called that out as those trends where the inflation is impacting the consumer, I think, remains through the holiday season, as well as how inventory levels are adjusted by retailers is something that we will have to watch. Consumer electronics continues to be down on a year-over-year basis, a little moderation on improvement on a sequential basis. But again, there, we will have to see where that plays itself out between consumer electronics, as well as then you talk about semiconductor growth continues to be strong.
q4 growth colour
Transcript
2022 Q3
27 Oct 22
would tell you, we are seeing some moderation, as we saw inflation was $225 million in Q3, we are accounting for $100 million to $150 million in Q4. The total at $750 to $850 million has not changed.
We are seeing -- inflation, I would say, is still generally broad-based.
We are seeing higher inflation in specialty materials, as well as intermediate finished goods.
We are seeing a little bit of moderation in logistics.
So that’s where we are on inflation. And then on supply chain, I would say, we are also seeing some signs of stabilization, Joe.
We are seeing raw material flowing a little better than it has flown in the prior quarters and you can see that’s why the team was also able to deliver decent productivity in Q3.
inf;ation still broadbased
Transcript
2022 Q3
27 Oct 22
To answer your question on pricing, as Mike mentioned in his remarks and mine and even the prior question, we take a very thoughtful approach to pricing. Nearly 70% of our pricing is -- our products are pretty much spec in products.
So we take a very thoughtful approach. We look at it region by region. We look at it product by product. And I would say we will have to follow. We follow a very thoughtful approach.
We will follow a very thoughtful approach in 2023 also, because no one has seen this historic level of inflation in the recent past.
pricing power?
Transcript
2022 Q3
27 Oct 22
We are seeing inflation is pretty much still broad-based. In areas that we are seeing is logistics has seen some slowdown in the pace of inflation.
However, if you look at intermediate finished goods, they are still pretty high and so specialty raw materials.
So I would say if you just look at what inflation we had in the third quarter, it was $225 million. In the fourth quarter, we are seeing somewhere between $100 million to $150 million.
So there’s a little moderation.
inflation still broad based
Transcript
2022 Q3
27 Oct 22