AI is a major force shaping this year’s list—but it’s far from the only story.

World's Most Admired Companies

The region's best workplaces put integrity, inclusion, and respect at the center of their workplace culture.

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3M ranks No. 71 on the 2025 Best Companies to Work For Southeast Asia.

Fortune 100 Best Companies To Work For – Southeast Asia

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Fortune 500

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

America's Most Innovative Companies

The corporations on our annual list posted aggregate revenues of $41 trillion for the second year in a row.

Fortune Global 500

Industries included in the sector are diversified and specialty chemical manufacturers.

Fortune Sector Leaders: Chemicals

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 200 companies on this list are transforming industries from the inside out.

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

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The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

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The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

The 300 companies on this list are transforming industries from the inside out.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

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Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

Fortune collaborated with the Diligent Institute to rank the most innovative boards of directors among S&P 500.

Modern Boards 2022 3M

The company founded as the Minnesota Mining and Manufacturing Company makes the list with an impressive and diverse group of directors. 3M’s board scored highly in gender equality, senior independent nonexecutive director representation, and board expertise. While recent results for the company have been impacted by supply-chain constraints and rising inflation, long-term prospects look good.  
 
Patricia A. Woertz, former chairman and CEO of Archer Daniels Midland, is one of six 3M board members (out of 13 total) to have held a CEO post. The others include Gregory R. Page (Cargill), Muhtar Kent (Coca-Cola), Herbert L. Henkel (Ingersoll-Rand), Michael L. Eskew (UPS), and David B. Dillon (Kroger). 3M CEO Michael Roman also serves as the board’s chairman. Dow CEO James R. Fitterling is the other currently active CEO on the board.  
 
Roman has <a href="https://fortune.com/2021/03/09/the-pandemic-was-an-awakening-for-3m-ceo-daily/">called the pandemic</a> an “awakening” for 3M. In the aftermath of George Floyd’s murder, Roman told Fortune in 2021, the Minneapolis-based company increased its focus on the well-being of employees and the economic health of the Twin Cities area. He said that business leaders can “use the same lessons and abilities you have built in business success and apply them more broadly to whatever is most important to your stakeholders—and that includes your employees.” 
 
The former CFOs of Microsoft and Accenture are 3M directors, as is Dambisa Moyo, former global economist at Goldman Sachs and director at Chevron and Condé Nast. 3M’s board also includes Susan Kereere, the head of global business solutions at Fiserv, and Thomas K. Brown, the former group vice president of global purchasing at Ford. These two offer the perspective of the company’s customers, an increasingly important voice to have on any corporate board.

Fortune Modern Board 25

This year’s Fortune 500 marks the 68th running of the list.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

WMAC 2021-24-3M

Total revenue for the world’s biggest companies fell 4.8% to $31.7 trillion this year—the first decline in half a decade.

<span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;Conglomerate 3M weathered 2020 thanks to its diverse slate of businesses. While sales in many segments tumbled because of the pandemic, they rose in others. In the positive column were home improvement products (credit all those renovations during lockdown); personal safety items (production of N95 respirators tripled); and filters for biotech labs (as pharma companies pushed to create COVID-19 vaccines). But some of 3M’s other big businesses suffered, including industrial products and office supplies. That’s partly because corporate customers slowed their manufacturing and consumers switched to remote work and therefore didn’t need as many Post-it notes. The result: flat revenue of $32.2 billion in 2020 and profits of $5.38 billion, up nearly 18%.&quot;}" data-sheets-userformat="{&quot;2&quot;:12673,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:2,&quot;11&quot;:4,&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:12}">Conglomerate 3M weathered 2020 thanks to its diverse slate of businesses. While sales in many segments tumbled because of the pandemic, they rose in others. In the positive column were home improvement products (credit all those renovations during lockdown); personal safety items (production of N95 respirators tripled); and filters for biotech labs (as pharma companies pushed to create COVID-19 vaccines). But some of 3M’s other big businesses suffered, including industrial products and office supplies. That’s partly because corporate customers slowed their manufacturing and consumers switched to remote work and therefore didn’t need as many Post-it notes. The result: flat revenue of $32.2 billion in 2020 and profits of $5.38 billion, up nearly 18%.

Companies on this year's list earned recognition based on surveys of 19.8 million employees worldwide.

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World’s 25 Best Workplaces

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-96-3M

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-389-3M

Based in St. Paul, Minn, and with corporate operations in 70 countries, 3M makes a wide range of products covering areas from health care to office supplies. The company has been in spotlight throughout the coronavirus pandemic, ramping up its production of N95 respirator masks and partnering with MIT in an attempt to develop a rapid COVID-19 test.

This year's Fortune 500 marks the 66th running of the list.

The St. Paul, Minn.-based company, with corporate operations in 70 countries, makes a wide range of products covering areas from health care to office supplies.

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.7 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 65th running of the list.

Here are the World's Most Admired Companies for 2018 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 64th running of the list.

Here are the World's Most Admired Companies for 2017 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 63rd running of the list.

Here are the World's Most Admired Companies for 2016 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.6 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 62nd running of the list.

Business insiders have spoken: Asked which companies they most admire, more than 4,100 executives, directors, and analysts chose these top 50 All-Stars.

The world's 500 largest companies generated $31.2 trillion in revenues and $1.7 trillion in profits in 2014. Together, this year's Fortune Global 500 employ 65 million people worldwide and are represented by 36 countries.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Best Companies To Work For Southeast Asia

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3M is a multinational conglomerate that manufactures industrial, safety, and consumer products. The company sells its merchandise through e-commerce and traditional wholesalers, retailers, and distributors. Founded in 1902 as the Minnesota Mining and Manufacturing Co., 3M is best known for its iconic Scotch tape and Post-it brands.

Q4 2025

Q2 2025

Q1 2025

Q4 2024

3M (MMM): Company Profile, Stock Price, News, Rankings

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Ladies and gentlemen, thank you for standing by. The conference will be starting in just a few minutes. It is recommended that you use a landline phone if you are going to register for a question. We thank you for your patience and ask that you please remain on the line. Ladies and gentlemen, thank you for standing by. Welcome to the 3M Q4 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, if you do have a question, please press star one on your telephone keypad. As a reminder, this call is being recorded Tuesday, January 20th, 2026. I would now like to turn the call over to Chinmay Trivedi, Senior Vice President of Investor Relations and Financial Planning and Analysis at 3M.

Thank you. Good morning, everyone, and welcome to our quarterly earnings conference call. With me today are Bill Brown, 3M's Chairman and Chief Executive Officer, and Anurag Maheshwari, our Chief Financial Officer. Bill and Anurag will make some formal comments, then we will take your questions. Please note that today's earnings release and slide presentation accompanying this call are posted on the homepage of our investor relations website at 3M.com. Please turn to slide two and take a moment to read the forward-looking statements. During today's conference call, we'll be making certain predictive statements that reflect our current views about 3M's future performance and financial results. These statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties.

Item 1A of our most recent Form 10-Q lists some of the most important risk factors that could cause actual results to differ from our predictions. Please note that today's presentation will be making references to certain non-GAAP financial measures. Reconciliations of the non-GAAP measures can be found in the attachments to today's press release. With that, please turn to slide three, and I will hand the call off to Bill. Bill.

Thank you, Chinmay. Good morning, everyone. We delivered solid results in Q4, including organic growth of 2.2%, operating margin of 21.1%, earnings per share of $1.83, and free cash flow conversion of over 130%. These results capped a strong year with organic sales growth exceeding 2%, outperforming the macro environment and accelerating from 1.2% organic growth in 2024 and negative growth in 2023. This growth was underpinned by the strong commercial excellence foundation we've established and our focus on reinvigorating innovation. We delivered significant margin expansion with a full-year adjusted operating margin of 23.4%, up 200 basis points year on year at the high end of our guidance range and on top of over 200 basis points expansion in 2024. Adjusted EPS grew double digits to $8.06, and free cash flow conversion was slightly above 100% for the year.

Our 2025 financial results reflect the progress we're making, and we're tracking ahead of the medium-term commitments we made at the Investor Day last year. 2025 was an important year for 3M, where we implemented fundamental changes in the company, building a foundation for our future growth through commercial excellence and innovation. We previously described the three pillars of commercial excellence: improved sales effectiveness and pricing governance, stronger collaboration with channel partners, including joint business planning and cross-selling, and increased customer loyalty. And we're making progress across all of them. We've implemented greater rigor across our sales force and sales management, tightened pricing controls, and developed over 600 joint business plans and closed on nearly $50 million of annualized cross-selling wins with a robust pipeline of opportunities.

Innovation is the lifeblood of the company, and we successfully launched 284 new products in 2025, up 68% versus 2024, exceeding our initial target and more than double the launches in 2023. We expect its growth to continue with 350 launches in 2026. These new products are vital for our long-term growth and are already contributing to our top line. Sales from products launched in the last five years were up 23% in the full year, exceeding our high teens target, and exited Q4 at 44%, giving us momentum into 2026. Our new product vitality index, or NPVI, a measure of the freshness of our portfolio, ended at 13%, about two points above where we started the year.

It was also a year where we saw operational excellence become embedded across the enterprise as we drove better service levels for our customers and stronger operating rigor in our factories and across our enterprise functions. And I've been describing our performance across three important metrics: OTIF, OEE, and cost of poor quality. OTIF ended the year above 90%, 300 basis points above the prior year and the best we've achieved in decades, and we sustained that rate for seven months in a row. This improvement is translating into a better customer experience that's helping us win shelf space and reduce churn. OEE, our asset utilization metric, ended the year at about 63%, up over 300 basis points across assets covering 70% of production volume. Cost of poor quality also improved considerably last year and is now at 6% of cost of goods, down 100 basis points year on year.

We're focused on key areas of inefficiency like frequent or ineffective changeovers and late detection of material defects, leading to raw material yield loss, scrap, and quality credits issued to customers. We're leveraging Kaizen events, visual inspection systems, automation solutions, and AI-enabled models to optimize changeovers to improve quality, with a target of 5.4% cost of quality in 2026 and less than 4% over time. Meanwhile, we continue to deploy capital effectively for our shareholders, returning $4.8 billion through dividends and buybacks in the year, progressing well in our commitment to return $10 billion to shareholders as part of our multi-year capital allocation strategy. The key to making this all work in the long run is our relentless focus on building a performance culture and delivering excellence everywhere, every day.

This means greater speed and urgency, a deeper sense of accountability, challenging the status quo, and finding ways to get better every day in the spirit of continuous improvement. Our performance is a direct result of the cultural and operational changes we're driving across the enterprise that improve how we develop, produce, and deliver products and build a strong foundation for the future. Slide four is a chart we've used for the past few quarters connecting macro trends to our organic growth. The macro remains soft and largely unchanged from Q3, but due to our strong execution, we've outperformed. General Industrial, Safety, and Electronics, collectively about 65% of our business, came in better than expected with exceptional year-on-year strength in the second half in Electrical Markets, aerospace, and self-contained breathing apparatus, all of which were up low double digits.

Abrasives, Industrial Adhesives and Tapes, and Electronics were all up mid-single digits, Abrasives accelerating from low single digits in the first half, IATD holding steady through the year, and Electronics not softening as previously anticipated. Auto and auto aftermarket remained soft as expected, while our Consumer segment and roofing granules business were weaker than expected. Despite the macro headwind, organic sales growth accelerated to 2.7% in the second half from 1.5% in the first due to the breadth of our portfolio and our strong execution. Turning to our outlook on slide five, our team's constancy of purpose and execution rigor allowed us to finish 2025 strong, and we're carrying that momentum forward into 2026. This year, we expect organic sales growth of approximately 3%, adjusted operating margin expansion of 70-80 basis points, and earnings per share of $8.50-$8.70, and free cash flow conversion greater than 100%.

We're planning for the macro to be similar to 2025, but it's still early to put too much weight on market forecasts. We expect most of our industrial businesses to continue to perform well in 2026, with watch items including the pace and timing of a U.S. Consumer recovery, auto build rates, especially in geographies where we have higher content, and Consumer Electronics. While we will closely monitor macro trends, we're going to continue to execute our game plan and control the controllables. Lastly, I want to turn your attention to slide six, which is the framework by which we'll create value for shareholders over time. The three phases aren't meant to be sequential but evolve together with shifting emphasis. They build on what we outlined at Investor Day and reflect how we view these elements as interconnected and essential to building a stronger company operationally and financially.

It started with a back-to-basics, focus on fundamentals approach, which is all about building a sustainable foundation. I've been talking to you about these initiatives and how we track them since I joined 3M 21 months ago and did so again today. These core elements are focused on commercial and innovation excellence, operational excellence, and reinvigorating our culture with accountability and agility, creating a solid platform from which to grow. As we've gained confidence in our execution in this foundational stage, we're beginning to shift our emphasis to the next phase of value creation, which is more transformational in nature. Like we previewed at Investor Day, this phase includes reengineering the structural cost base that underpins our supply chain network and business processes, simplifying and standardizing core activities, and embedding an AI-first mentality as we shift from a holding company model to an integrated operating company.

We described this program at a high level last quarter as a thoughtful, strategic, long-term effort paced at the ability of the team to execute well. Transformation also includes proactive steps on risk reduction and effectively managing the litigation docket. Anytime we can take care of risk at an appropriate price and with suitable protections, we'll be prepared to act like we did last year with the State of New Jersey. And as our organic machine begins to turn faster and our risk profile comes down, we'll be prepared to execute on our portfolio management strategy to pivot the company towards higher growth and margin potential priority verticals that help us accelerate value creation for the company. This is a multi-year journey, and progress won't be linear. But with a successful 2025 behind us, we're accelerating the transformation of 3M and building the runway for performance beyond 2027.

The 3M team is energized and motivated, and I want to thank them for the dedication and focus on delivering improvement day after day. And with that, I'll turn it over to Anurag to share the details of the quarter. Anurag.

Thank you, Bill. Turning to slide seven, we had a strong finish to the year across all financial metrics. We delivered another quarter of sales growth above macro, continued margin expansion, strong earnings growth, and robust cash flow generation. Starting with top line, in a continued muted environment, we delivered organic sales growth of 2.2% driven by our commercial excellence initiatives and new product launches. The growth was driven by strength in Safety, Electronics, and general industrial, which more than offset the softness in Consumer, roofing granules, and auto markets. All three of our business segments delivered sustained auto momentum, which contributed to a higher ending backlog compared to last year, giving us confidence as we go into 2026. Q4 adjusted operating margins were 21.1%, up 140 basis points, and operating profit increased double digits or $125 million, driven by continued disciplined operational performance.

This included a $275 million benefit from volume growth, broad-based productivity, and lower restructuring cost, partially offset by approximately $50 million of growth investments and headwind of $100 million from gross tariff impact and stranded cost. Collectively, this contributed $0.17 to earnings, which was partially offset by $0.02 from non-operational below-the-line items. Our strong operating performance resulted in adjusted EPS of $1.83, an increase of nine%, and exceeded the top end of our guidance range. I also want to mention that we took a $55 million charge in the quarter as we continue to make transformation investments to redesign our manufacturing, distribution, and business process services and locations. Similar to last quarter, these charges will be excluded from our adjusted results. Adjusted free cash flow in the quarter was $1.3 billion, with a conversion of approximately 130%, as we benefited from strong earnings growth and working capital efficiency.

Turning to slide eight, I will provide an overview of our business group performance for both the Q4 and full year 2025. First, in Safety and Industrial, we delivered another quarter of strong organic growth as we continue to gain traction on commercial excellence initiatives and realized benefits from new product launches. Q4 organic sales increased 3.8%, driven by strong performance in Safety, which grew high single digits through enhanced channel engagement and new product launches. Industrial Adhesives and Tapes growth accelerated to high single digits as we continue to win share globally in Electronics and general industrial from new product introductions and improved manufacturing throughput. Abrasives continued to improve, delivering another quarter of mid-single digit growth, benefiting from sustained focus on sales force effectiveness.

Collectively, this strong growth more than offset known weakness in Automotive Aftermarket and incremental weakness in roofing granules due to the slow housing market and weak Consumer sentiment. For the full year, SIBG grew 3.2%, with growth accelerating from 2.5% in the first half to 3.9% in the second half on the back of strong execution. Turning to Transportation and Electronics, Q4 organic sales increased 2.4%, driven by continued momentum in Electronics and aerospace. These gains more than offset weakness in auto, which in our organizational structure includes commercial vehicles, which was down high teens in the quarter. Electronics continued to gain share, supported by commercial excellence initiatives and strong demand for our film technologies and optically clear adhesives. We also expanded our presence in the mainstream market by partnering with leading Consumer electronic brands to deliver solutions aligned with their portfolio needs.

Aerospace delivered another strong quarter, given by growing demand for space materials and continued strength in defense-related markets. We have seen sustained growth in this portfolio, where sales have doubled over the last four years. For 2025, Transportation and Electronics grew 2%, with second-half growth of 3% versus the first-half growth of 1%, driven by continued focus on commercial excellence and the ramp-up of new product launches. Finally, Consumer Q4 organic sales were down 2.2%. For the first nine months of the year, the business was up 0.3%, and we had expected the Q4 to be similar. But weaker Consumer sentiment and sluggish retail traffic in the U.S. resulted in lower point of sale trends on discretionary categories where we compete. This market weakness was partially offset by new product introductions, increased advertising and promotional investments in the U.S., and overall business growth in Asia and Latin America.

As a result of the Q4 weakness, CBG revenue declined by 0.3% for the full year. On slide nine is a summary of the full year 2025 performance. Overall, a strong Q4 capped a successful 2025 with organic sales growth of 2.1%, margin expansion of 200 basis points, an EPS increase of 10%, and free cash flow slightly above 100%. Sales growth strengthened from 1.5% in the first half to 2.7% in the second, exceeding the 2.5% we mentioned in our July earnings call. This momentum underscores the impact of our commercial excellence initiatives, enhanced service levels, and successful new product launches, positioning us well to accelerate our performance going forward. By geography, all areas delivered growth in the year. China grew mid-single digit from strength in general industrials and Electronics bonding solutions, supported by a strong focus on key accounts.

This momentum more than offset the Q4 shift in smartphone manufacturing from China to other parts of Asia. In the rest of Asia, we grew low single digit, led by strong performance in India, which grew mid-teens on account of progress in commercial excellence across all businesses. After a couple of years of decline, Europe grew low single digits due to strength in general industrial and Safety, which more than offset the weakness in Consumer and auto aftermarket. Despite soft Consumer and auto aftermarket, the U.S. grew low single digit for the year on the back of commercial excellence initiatives in the general industrial and Safety businesses. Productivity initiatives drove strong margin expansion every quarter in 2025, resulting in full year operating margins of 23.4%.

Operating profit growth of approximately $650 million at constant currency was driven by $200 million from volume growth and $550 million of net productivity across supply chain and GNA. This was partially offset by $100 million in headwinds, driven by $185 million in growth and productivity investments, in addition to ongoing stranded cost and tariff impacts with year-on-year lower restructuring cost. The strong operational performance contributed $0.96 of earnings, which was offset by approximately $0.20 of non-operational items for a total EPS of $8.06. This 10% EPS growth was better than our expectations and above the initial guidance at the start of the year, and we returned $4.8 billion to shareholders in 2025, including $1.6 billion in dividends and $3.2 billion through gross share repurchases.

Overall, 2025 laid the foundation for a strong operating culture, grounded in excellence, accountability, and a faster operating tempo, enabling us to overcome external factors to drive profitable growth. We have momentum as we enter 2026, and I will walk you through the guidance on slide 10. We expect organic sales growth to be approximately 3%, earnings per share ranging from $8.50-$8.70, and free cash flow conversion of greater than 100%. We expect sales to accelerate for all business groups. SIBG and TBG grew 2.7% combined in 2025, and we expect this growth rate will accelerate in 2026, supported by ongoing commercial excellence initiatives, strong service levels, and continued new product introductions. And we expect Consumer to return to growth in 2026.

The business groups combined will expand margins over $450 million or 100 basis points, including $875 million from volume growth and net productivity across supply chain and SG&A. This will be partially offset by headwinds from PFAS stranded costs and tariff impacts, as well as an increase in growth and productivity investments to $225 million. This is on top of the incremental investment over the past two years, bringing the total investment from 2024 to over $500 million. Corporate and other income will be lower by $50-$75 million or 20-30 basis points, largely from wind down of transition services agreements related to Solventum. Overall, we expect total company income to grow by $400 million at the midpoint of our 70-80 basis points margin expansion guide.

Adjusted free cash flow conversion is expected to be greater than 100%, driven by strong operating income growth and a focus on working capital management. And we plan to deploy capital effectively, including a gross share repurchase of approximately $2.5 billion in 2026. Slide 11 provides a look at earnings growth drivers, which is primarily driven by strong operations consistent with our 2025 performance. Regarding cadence, we expect the rate of sales growth to increase through the year, with margin and EPS equal between the two halves. In the Q1, the sales growth in SIBG and TBG combined is expected to be higher than 3%, and we will continue to monitor the recovery in our Consumer business. Volume, productivity, and slight favorability in FX will more than offset the stranded costs, gross tariff impact, and increase in investments, resulting in high single-digit year-on-year earnings growth.

Before we open the call for questions, turning to slide 12, I want to take a minute to highlight the progress we have made so far. We are trending ahead of our Investor Day targets we laid out a year ago. Our organic sales growth is accelerating due to our investment in growth and commitment to commercial excellence and innovation. Our relentless focus on operational excellence is resulting in strong operating margin expansion and sustained earnings growth despite pressures such as soft macro, tariffs, and stranded costs. We continue to be a consistent generator of cash that allows us to effectively return capital to shareholders while maintaining a healthy balance sheet. Not too long ago, our growth rates were trailing the macro, and now we are progressing ahead of our medium-term commitments of $1 billion growth over macro and a 25% operating margin by 2027.

While we are focused on executing these commitments, we are also broadening our horizons to the out years, ensuring our transformation efforts position the company not only for the short term but for sustained profitable growth well past 2027. This strong performance is a credit to the expertise and the commitment of the 3M team, and I thank them for the hard work and dedication. With that, let's open the call for questions.

Ladies and gentlemen, if you would like to register a question, please press Star 1 on your telephone keypad. If your question has been answered and you would like to withdraw, please press Star 2. If you are using a speakerphone, please lift up on your handset before entering your request. Please limit your participation to one question and one follow-up. Our first question comes from the line of Jeff Sprague with Vertical Research. Please proceed with your question.

Hey, thank you. Good morning, everyone. I guess two for me, one longer term and one shorter term. Hey, Bill, just back to your slide six. As you said, all these things are going on to varying degrees simultaneously. But the pivot to priority verticals sort of jumps out to me, obviously not the first time we've heard that. But I just wonder if you could put into context how much of that pivot is sort of addition by subtraction versus sort of investment focus growing and bulking up sort of the areas that you view as the priority, and maybe sort of what percent of your current revenue base or business base would you say is in that priority bucket?

So, good morning, Jeff. Great question. So we've been talking about our priority verticals going back a year, actually to February of last year. It's a little bit north of 60%. It's growing, frankly, because of the investments we're making. And I put it in two pieces. One, we spent the last year and a half focusing a lot of our internal investment dollars on the priority verticals. And now probably 80% of what we spend on R&D is aligned to NPI in the priority verticals. And of course, they are defined as ones that are growing faster, where we have good margin potential as well in the business, where technology brings differentiation or right to win. And that's been the pivot in the organization.

Over time, as we think about what the portfolio is going to look like for us to get to a much better sustainable organic growth rate for the overall company, we've got to structurally adjust the portfolio, which means some pieces coming out. We've been talking about some of those pieces. We've said before about 10% of our company would be in places that are more commodity-like. And we'll think about what we want to do with those businesses over time. But as we do that, we'll be pivoting both organically as well as inorganically towards those priority verticals, which is the nature of that chart. It shows that that's an evolution over time. And again, it's not necessarily sequential, but that's kind of the overall flow of how we think about creating value here at 3M.

Yeah. And then just thank you for that. Just on the very near term, the flat view on U.S. IPI, it's kind of a tough slog out there, right? But your industrial businesses do seem to be performing well, right? Abrasives and some of the adhesives, electrical businesses. So I guess there's some outgrowth there. But I guess just the nature of my question is just a little more color on how you see the year kind of starting out. Anurag gave a little bit of color, but did we start soft here in January and do you see things sort of kind of picking up off a low base here as we exited the year?

Yeah. So last year, the exit rate was pretty solid, actually, across the industrial businesses. And Anurag and his comments talked about the acceleration from about 2%-3.6% across TBG and SIBG as we went first half into the second half. Yes, IPI is softening both in the U.S. as well as in China. Those are important markets for us, certainly. But we do expect our overall industrial businesses to remain pretty solid. I pointed out a couple of watch areas. One is in auto builds.

Auto builds were around 3.8% last year, a little weaker in Q4. A lot of it was China. But overall, it'll be, says right now, down 0.3%, as much as you can believe the numbers, and not so good across all of the regions, so that auto is a little bit softer. We have to watch that. Consumer Electronics look a little bit more flattish in terms of the overall macro forecast. Of course, we believe in our business, Electronics will continue to grow. We still see that to be overall Electronics up mid-single digits for the year. And of course, we were watching very carefully what happens in the U.S. Consumer market. Right now, it feels subdued. We had a very good December, although Q4 came in down 2.2%, so it dropped the year to being negative for Consumer.

But December, we typically see the third month pretty good, but it was up double digits over the prior year in December. And early in January, again, it's early this year, we're looking okay. So that's sort of the landscape. But I do see that even though IPI is coming down, our commercial excellence initiatives, our NPI initiatives, it's going to allow us to continue to outperform that macro. And we expect that to accelerate in 2026 from what we experienced in 2025.

Our next question comes from the line of Scott Davis with Melius Research. Please proceed with your question.

Thanks for the detail. Guys, I don't think you mentioned inventory levels, customer inventory levels in the prepared remarks. Just as we exited 2023, what's your sense of where your customer inventory levels were or are, I guess, now kind of point of reference, kind of pre-COVID, post, kind of the new normal versus kind of pre-COVID? Just a little color around that, I think, would be helpful.

Sure. Good question. So on the industrial channels, it's pretty normalized. It's in the sort of 60-day range, a little bit more than that. But as we would expect it to be, as we were selling out in Q4, we do watch POS out of our channel partners, and they were selling through. So even though we had good sales into the channel, we also saw good sales out of the channel. So pretty good, actually, on the industrial side. That's good.

On the Consumer side, on the CBG side, it was a little bit elevated early in the quarter, but we had very strong growth in December, and inventory started to come down and normalize. Still a little bit elevated as we exited the year, but not as concerning as we were sort of at the beginning of the quarter. So overall, industrial pretty good, Consumer getting normalized as we speak.

Okay. Fair enough. And then, guys, what is the pricing strategy right now? I mean, kind of just listening to the prepared remarks, it sounds like new products is where you lean in on price or at least try to get a positive mix shift there. But is there also a pricing strategy around getting an annual bump up, perhaps, that maybe you didn't get historically, but going out with price increases on January 1, particularly where you're going through distribution?

So yeah, good question. So for the year, we had expected to be about 70 basis points last year, stepping up first half, second half, as we were covering some of the tariff headwind. We saw that in the Q3. In the Q4, it was a little bit lighter because of the Consumer market and the promos and discounts that we provided there to stimulate that business. So overall, we were a little lighter on pricing last year than we had expected, but still very solid. The place where you get pricing, generally speaking, is in SIBG, and that was solid. That remains strong.

We continue to see good pricing movement here going into 2026. We expect it'll be about 80 basis points, more or less, in 2026. A lot of it is SIBG. There's a couple of threads here. One is we do continue to cover material cost inflation. Two, we continue to tighten down our pricing governance, making sure across all of the industrial businesses that when we give pricing discounts, we get the volume we expect in giving those discounts. And then third, as you pointed out, Scott, is the pricing we should expect to get when we're launching new products.

This is an area of opportunity for us over the medium-longer term. I think we're okay on this, but we could be a lot better. There's pockets where we are very thoughtful in pricing to value, but I would not say that today that that's overall of the NPI we're launching. And I think it's a long-term opportunity for the company.

Our next question comes from the line of Julian Mitchell with Barclays. Please proceed with your question.

Hi. Good morning. Maybe first off, I just wanted to understand the degree to which, if any, there was a back-end loading in the guide. It seems like you're expecting about 6% EPS growth year on year in the first half, so not that different from the full year. Just wanted to check that and how you're starting out in the Q1. Should we expect the Consumer business to still be down, for example, and then that picks up steam through the year?

Right. Thanks, Julie. Anurag here. So I would say in terms of EPS growth, we expect the first half and second half to be equal. So as I said in my prepared comments, the EPS will be equal between the first and second half, which implies a similar growth rate as well. And if you look at what I said is in the SIBG-TBG, given the exit rates, we do expect revenue to be over 3% in the Q1. CBG is an area we'll watch out, and we'll probably see that part of the revenue go through the course of the year. But materially, do not expect the rate of growth to be significantly different between the first half and the second half.

If I look at productivity as well, it's pretty even loaded across the four quarters. I think as we sit here today, we feel that it's a fairly even loaded quarterly cadence for both revenue as well as EPS.

That's very helpful. Thank you. Then just my follow-up would be around that sort of interplay. It's been touched on a couple of times, but between the macro and the self-help initiatives. When we're thinking about the guidance for a deceleration in IPI in the U.S. this year, but an acceleration somewhat in 3M's own organic growth rate, is our impression that that's really all self-help initiatives that you mentioned and the outgrowth or the acceleration in the second half of 2025? Is your impression that that was all self-help driven as well with nothing from the macro? Just to understand how much you're sort of putting on your own shoulders versus relying on the external environment for this year.

So Julian, thanks for the question. Let me maybe frame it by just talking about a little more granularity, the billion dollars over macro. We talked about over at the investor day over the next three years, and Anurag mentioned in 2025, our growth came in at 2.1%. We look at the overall macro to be around a point and a half. That's IPI, GDP, with some sectors that were a bit weaker is where we see it. So we saw ourselves with about 60 basis points of outperformance versus the macro. If you just run the math, that gives you about $150 million. So a little bit better than we had expected to be $100 million over macro last year.

And the majority of that, probably 75% of it or more, was commercial excellence. Less of that was new product introductions. But we did say that that would start to even out, and then NPI or innovation would take over in that third year. And that's, in fact, what we're seeing in 2026. So we're guiding here at 3%. We expect the macro in 2026 to be a little bit better, 1.5%-1.7% range, something like that. So our outperformance this year versus the macro is more like $300 million or more. And that's roughly half and half between NPI and commercial excellence. So that's how we see this playing out. And yeah, the back half last year did show that. We did outperform the macro. A lot of it was, your phrase, Julian, was carrying it on our shoulders.

We expect to see more of that coming into 2026. We're launching more projects, which is very good. We're getting a lot more granular tracking the incremental revenue coming from the class threes, fours, and fives. As we look out into next year, we're pretty confident that those are going to start to move the needle for the company, which is why we feel good about outgrowing the macro here in 2026.

Our next question comes from the line of Joseph O'Dea with Wells Fargo. Please proceed with your question.

Hi. Good morning. Thanks for taking my questions.

Wanted to start on footprint optimization. If you can give a little color between factories and distribution centers, how you're thinking about targets for footprint reduction or consolidation in 2026, both in terms of kind of number of facilities and as well as outprofit impact, and then any color around segments and regions where we would see the biggest impact there.

So look, it's all part of our broader transformation agenda. We're just starting on that as we speak. We did see some announcements at the back end of last year. We announced one small facility last week in our network. We ended the year around about 108 factories. We have several, about seven, coming out with the sale of Precision Grinding and Finishing. So call it about 100 factories. That will come down over time. I can't size that for you today. We will be making some investments in 2026 to restructure that network.

But keep in mind, these things are three, four, five-year payback. So we'll start on it, accelerate into 2026, accelerate into 2027. But this is really about building that margin runway to grow beyond 25% in 2027 in terms of operating margin. So we will consolidate this network. It'll be factories and distribution centers. We're making some progress on DCs as well. But I won't be able to size it for you today in terms of the specific numbers. But that's the trajectory where we're on here.

And then just wanted to touch a little bit more on Consumer. If you could elaborate on kind of what you tracked over the course of the quarter, kind of early into this year, sort of a step down in demand trends versus what maybe was a little bit more transitory and just kind of how that's pacing? And then separately, just with the focus on memory chips out there, I think you said Consumer Electronics for you expected to be at mid-single digits, but any impact you're seeing in the markets tied to that?

So on the Consumer market, as I mentioned earlier, as we entered, first of all, for the first nine months of the year, we were at about 30 basis points of growth in each quarter, which was pretty consistent. And that was above what we saw the macro. It was a good time to return to growth. We felt very positive about that. And we had expected that we would see the similar trajectory going into the Q4. That didn't happen. We saw October and November being a little bit light. Sell-through the channel was a bit light. POS was light. So inventory started to come up a little bit.

We started to see that reverse a little bit in December, so December, orders were okay. Growth was double-digit over the prior year, December. The holiday season was a little bit muted, I would say, so overall, for Q4, we came in at down 2.2%, and as I said, as we turn the corner into January, it's very, very early. We're only a couple of weeks in. We're trending as we would expect it to be, so I can't really comment too much about that. We'll say more over time, but that's a Consumer. Again, I would just characterize it as being relatively soft, bumping around, flattish as we entered the Q4, so on Electronics, overall, we have so it's a Consumer Electronics business. We provide adhesives. We provide films into that area for foldable devices, for debondable devices. A lot of NPI going into that space.

We are focusing on growing our position in the mainstream market. 3M as a whole in Consumer Electronics is more like 80/20 or 70/30 premium to mainstream, and the market's the opposite of that. We do see an opportunity to grow and penetrate mainstream. Some of that is in China, and we're making good progress, so a lot of the NPI that we're launching, we are penetrating into a lot of China OEMs and Asia OEMs in that mainstream market, and I think we're starting to gain some share there, so that's why we see that business for us when we add in semiconductors, data center, all Electronics to be up mid-single digits here coming into 2026, similar to what we saw last year.

Our next question comes from the line of Stephen Tusa with J.P. Morgan. Please proceed with your question.

Just on that Electronics point, so the reported revenues were down sequentially and also year over year. Do we just adjust that back to get to that mid-single digit for the fQ4? I mean, you said it was strong, but what was kind of the organic rate of growth? It's tough to tell from the subsegment disclosure.

Yeah. It was in the mid-single digits. What we're looking at in the tables is with PFAS. And we exclude the PFAS out of the results. So when you exclude that, it's mid-single digits.

Okay. And then when you're expanding into this mainstream area, is there any kind of dilutive impact to margins at all? Or you kind of make up for it on the other end by being more efficient with some of the initiatives you're working on?

No. We're not seeing it being margin-dilutive. As we innovate here, develop products designed to cost, it's an important push that the team is making is designing more cost-effective product. Now, we're not seeing any margin degradation, and so far, it's been good. It's early, but it's the push we're making, and again, a lot of NPI in that space.

Okay. Sorry, one more. Just for this year, the $500 million in, I guess, litigation costs in 2025, how do you expect that to trend in that adjustment to trend in 2026?

It's probably going to be in line with that. I can't really tell you if it's going to be up or down. I mean, it depends on what happens in the overall docket, but I would expect it to be pretty similar to that.

Our next question comes from the line of Andrew Obin with Bank of America. Please proceed with your question.

So on SIBG growth in 2026, I think last quarter you had the slide five that showed SIBG growth correlation to improving OTIF, new product introduction. And you sort of can see in the Q4 on a two-year stack, clearly, there's more momentum. So given that comps in the first half are going to be easier than in the second half, but at the same time, we have seemingly good momentum with self-help, should we see first half stronger growth than second half, or should the growth be fairly steady year over year throughout the year?

So, Andrew, that's a very, very good question. We do see really good momentum in SIBG as it went from the first half to the second half. And I could see where you're going, and I'll pass that message along to Chris, who I'm sure he's listening as well. The reality is there's good momentum, really good progress on commercial excellence. We're launching more projects there. The only caveat is, as I talked about earlier, we do see U.S. IPI a little bit softer. We know the roofing business experienced a trough really in Q4. It was weaker than we'd expect, quite a bit weaker than we'd expected.

And that's a piece of the SIBG business. I'd expect that weakness will drag into the front half of this year. So there's going to be some offsets. But yeah, I mean, largely, I think you're heading in the right direction. I think SIBG is performing really well. We'd expect to continue that trend here in 2026. Thank you.

And just to follow up on Electronics, you sort of talk about expanding into mainstream and this sort of echoes strategy from the days of George Buckley, the pyramid strategy. Is this just the focus on Consumer Electronics, or are you thinking of sort of tweaking it and implementing it beyond Consumer Electronics, the sort of mainstream strategy?

No. I'm speaking today basically on Consumer Electronics. And I think you've commented before that this strategy was embarked upon in the past. Look, this has to be a very thoughtful way of going at this. We have to make sure that all of our infrastructure, our designs, our sourcing, how we manufacture, how we ship, how we price, all is geared towards going after that segment, which is quite big, but making sure we do it profitably. So it's a bit of a business model shift as well.

So I draw you back to what we're trying to do on our transformation agenda. A lot of this business model shift is shifting our cost structure, both G&A as well as on the factory side. And if we do that and we bring that cost out, that does allow us to lower the water level of our cost and attack these interesting and growing segments at profit rates that we have today. So that's where we're going. We're pushing ahead in Consumer Electronics. Could it go beyond that? We'll see. But right now, the comments are specific to Consumer Electronics.

No. Thank you very much. Nothing wrong with that strategy. Your stock outperformed under George Buckley. Thanks a lot.

Our next question comes from the line of Amit Mehrotra with UBS. Please proceed with your question.

Anurag, I guess I wanted to ask about incremental margins for this year. The implied is sort of in the low 40%, which is not that much above the 30%-40% kind of core organics on the growth. So I'm just kind of curious what the productivity assumption is, what the offsets are from stranded costs. Maybe I'm double counting. Maybe some of that's already included in the 30%-40%. But if you can unpack that for us, I think that'd be helpful. And then on the Q1 specifically, I know you said high single digits, not to be nitpicky, but are we kind of above $2 per share in Q1? Any finer point would be helpful.

Okay. Hey. Great. Thanks for the question, Amit. Just firstly, if you look at both volume and productivity in 2026, it's going to be higher than what it was in 2025. Yeah. So in 2025, between volume and productivity, we had about $750 million of operating income increase. And that was a 2.1% organic revenue growth. With 3% growth, the $200 million of volume will now become closer to $250 million. And productivity actually goes up from $550 million to about $600 million. So overall, we're going to see about a $125 to $150 million increase between volume and productivity in 2026. And the productivity is going up on three real buckets around there.

First is on supply chain. We expect half of that to come out of supply chain, which is continued cost of poor quality, bringing it down, procurement, managing a four- wall spend in the factory and logistics. There's about $150 million of indirect expenses.

We did a good job in 2025. We'll continue to do that in 2026, and another $150 million in G&A efficiency as we look at our processes, AI optimization, and so on. Overall, I would say that the incrementals between productivity and the volume growth is going to be higher. What's offsetting it in 2026 is the $500 million which is being offset in 2026. One is a pickup in investments. Last year, we did $185 million. We're going to do an incremental $225 million this year. The stranded cost goes up from $100 million last year to $150 million this year. I would say those are probably the two biggest buckets, which would then obviously we have half a year of tariff as well, which is $140 million. You put these three together, that's $500 million of it.

Obviously, as we go into 2027, a couple of them will not recur. But the incrementals overall are pretty good for 2026. Now, on your Q1, it is a very specific question that you're asking me. What I would say is that as I spoke about volume and productivity, I said about $875 million for the year. The Q1 is almost 25% of that, right? So if you kind of run the numbers through, and there'll be a little bit of FX favorability in the Q1 given where we were last year, we run all of that through, it will be high single-digit EPS growth.

Okay. Thanks. And then just maybe a longer-term question for Bill. You've obviously given us a lot of metrics, whether it's OTIF or OEE. And I'm kind of intrigued by this move to this Design-to-Cost approach in the R&D function. NPI is helpful, but it doesn't really capture kind of how the addressable market is changing based on the incremental NPI. So I'd be curious, one, how do you hold the R&D function kind of accountable to this cultural shift? And what can you kind of share with us in terms of the NPI coming out, how effective that is in going after the 80% of the market that you're kind of not there at the moment?

3M (MMM) Q4 2025 Earnings Call Transcript

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