The diversified industrial conglomerate 3M has reported its financial performance for the fourth quarter and full year 2025, highlighting moderate revenue gains, enhanced profitability, and its first formal guidance for the coming year. The market’s assessment of the forecast was shaped by this dual narrative of operational progress and significant strides in resolving major legal liabilities.
Financial Performance Highlights
For the full 2025 fiscal year, 3M’s GAAP revenue reached $24.9 billion, marking a 1.5% increase. On an adjusted basis, earnings per share (EPS) saw a 10% rise to $8.06. The company’s adjusted operating margin expanded substantially by 200 basis points to 23.4%, while adjusted free cash flow was reported at $4.4 billion.
The final quarter of the year continued this trend. Fourth-quarter GAAP sales grew 2.1% to $6.1 billion. Adjusted sales came in at $6.0 billion, with organic growth on an adjusted basis measured at 2.2%. Adjusted EPS climbed 9% year-over-year to $1.83, supported by a 140-basis-point improvement in the adjusted operating margin, which rose to 21.1%. Quarterly operational cash generation was strong, with operating cash flow of $1.6 billion and adjusted free cash flow of $1.3 billion.
Strategic Moves and Legal Resolution Advances
Management is advancing strategic initiatives, including the planned spin-off of its healthcare business, Solventum. This effort is coupled with ongoing cost management, pricing actions, and new product introductions designed to support margin strength. The company anticipates a slightly improved macroeconomic climate for 2026.
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Concurrently, 3M has made considerable progress in mitigating major legal overhangs. The multidistrict litigation (MDL) concerning Combat Arms earplugs, which encompassed 391,221 claims, has been fully settled. No open cases remain in this MDL. The settlement agreement from August 2023 involves total payments of $6 billion, to be paid out through 2029, with participation from over 99% of claimants.
Regarding PFAS (per- and polyfluoroalkyl substances), a settlement with public water providers received final court approval in April 2024, and disbursements commenced in Q3 2024. 3M intends to cease all PFAS manufacturing by the end of 2025. For individual personal injury lawsuits related to PFAS, no new settlements have been reached; 15,213 such cases remain within the relevant MDL.
Guidance for the Year Ahead
Looking to 2026, 3M issued its initial forecast. The company projects adjusted total sales growth of approximately 4%, with organic growth estimated at around 3%. It expects further adjusted operating margin expansion of 70 to 80 basis points. Adjusted EPS is forecast to be in the range of $8.50 to $8.70. Adjusted operating cash flow is anticipated to land between $5.6 billion and $5.8 billion.
Key timelines include the aforementioned cessation of PFAS production by end-2025 and the continued Combat Arms settlement payments through 2029. The company notes that achieving its guidance is contingent upon the continued execution of its restructuring plans, the resolution of remaining legal matters, and the broader economic environment. Following the release of this outlook, the company’s share price experienced a decline.
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