3M Co (NYSE:MMM) has swung to a second-quarter loss after the company agreed to pay up to $10.3 billion over the next 13 years to settle legal disputes over toxic water contamination in the US.
The company, known for products like Post-It notes and Scotch Tape, delivered sales of $8.3 billion for the three months to June 30, 2023, down 4.3% year-over-year. It reported a loss of $12.35 per share compared with a $0.14 profit a year earlier.
However, adjusted earnings per share (EPS) of $2.17, down from $2.45, were ahead of the $1.65 consensus forecast of analysts, according to Zacks Investment Research.
The suits against 3M alleged that its use of polyfluoroalkyl and perfluoroalkyl substances (PFAS) - known as 'forever chemicals' - in its products led to the contamination of drinking water systems and caused a myriad of health issues, including cancer and developmental defects.
"In the second quarter, the actions we took to strengthen our supply chain and restructure the company led to improved service for customers, reduced costs across 3M, and better than expected margins and cash flow," chairman and CEO Mike Roman said in a statement.
"As we execute our strategy, we are positioning 3M for long-term performance, including progressing the planned spin of our Health Care business and addressing a significant portion of PFAS litigation."
The company has raised its full-year guidance for adjusted EPS to between $8.60 and $9.10, up from $8.50 to $9 previously, citing strong operational execution and cost discipline. Adjusted total sales are expected to decline by 1% to 5%.
Its shares were up 2% at $106.35 in pre-market trading.
Contact the author at stephen.gunnion@proactiveinvestors.com