![]() In our opinion these elevated levels are likely to keep negatively impacting the firm in the near future. While the prices of raw materials, including gasoline prices, have come down substantially from their peaks, reached earlier this year, they remain elevated compared to pre-pandemic levels. ![]() Compared to the second quarter of 2021, productivity decreased 2.4 percent, the largest decline since the first quarter of 1948.īased on this indicator, we do not expect a meaningful improvement of the margins in the near term. Output decreased 1.4 percent and hours worked 2.7 percent. Non-farm labor productivity in the US fell an annualized 4.1 percent in the second quarter of 2022, slightly less than initial estimates of a 4.6 percent drop. Since our last writing, we have seen further deterioration of the labour productivity. Labor productivity is calculated by dividing an index of real output by an index of hours worked of all persons, including employees, proprietors, and unpaid family workers.Įarlier this year, the firm has highlighted the decreasing labour productivity as a cause for the contracting margins. In the United States, the productivity of nonfarm workers is measured as the output of goods and services per hour worked. Operating cash flow of $6.6 to $7.2 billion contributing to 90% to 100% adjusted free cash flow conversionĪdditionally, the economic indicators that we have presented in our previous article, also have not been showing any meaningful improvement that could signal any positive impact on the financial performance for the rest of the year.Adjusted earnings per share: $10.30 to $10.80 vs.GAAP earnings per share: $7.32 to $7.82 vs.Foreign currency translation: -4 percent vs.Organic sales growth: 1.5 to 3.5 percent vs.Total sales growth: -2.5 to -0.5 percent vs.These headwinds are now also taken into account for the firm’s full year 2022 guidance, which has been adjusted downwards, significantly: This is summarized in the following tables: The firm has also provided a detailed commentary on the tailwinds and headwinds for the individual business segments. Raw material and logistics cost inflation. ![]() Manufacturing headwinds from global supply chain challenges, including geopolitical impacts.Headwinds from the combined impact of China COVID-related lockdowns and decline in disposable respirator demand.A larger than expected negative impact on sales from foreign currency translation due to strength of U.S.In the latest earnings release, the firm has highlighted some of these challenges: The challenging macroeconomic environment still keeps creating headwinds for 3M and is negatively influencing the firm’s financial performance. In this article, we are going to take a look at these risk factors once again and provide an updated view, based on the latest news, events and economic indicator readings. While the stock price has fallen substantially since our last article, we have to understand how these risks have developed since then, to decide whether 3M could be a better investment now than it appeared to be in May. These reasons included, but were not limited to the macroeconomic environment (primarily related to increasing raw material prices and decreasing manufacturing productivity), potential costs associated with pending legal claims and the downward trending margins. In that article, we have presented several reasons that made our outlook bearish for the near- and mid-term. In May 2022, we have published an article on 3M ( NYSE: MMM), titled ” 3M: Not as safe as you first think”.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |