3M Company, renowned for its adhesive products including Post-it Notes, reported its fourth-quarter earnings for 2025, showing slight yet steady gains in sales alongside improved profitability metrics. Despite exceeding consensus revenue and earnings per share estimates, the company’s stock experienced a decrease during premarket trading, reflecting market reactions to broader expectations and outlook.
For the final quarter of 2025, 3M disclosed adjusted sales amounting to $6.023 billion, narrowly surpassing the predicted $6.012 billion figure. This outcome represents an increase of 3.7% compared to the same period last year, driven by a 2.2% uptick in adjusted organic sales. The firm also achieved an adjusted operating margin of 21.1%, marking an expansion of 140 basis points over the previous year’s quarter.
Adjusted earnings per share climbed 9% year-over-year, reaching $1.83 and outpacing the forecasted $1.80. Free cash flow remained robust, with the company reporting adjusted free cash flow of $1.3 billion and returning approximately $900 million to shareholders within the quarter, underscoring strong cash generation and capital allocation discipline.
Segment Results
The Safety & Industrial division experienced a 6.0% increase in adjusted sales attaining $2.87 billion. Its operating margin improved significantly to 24.1% from 21.0% recorded in the prior year’s quarter. Meanwhile, the Transportation & Electronics segment’s revenue expanded by 3.3% to $1.85 billion, accompanied by margin growth to 20.3% from 19.4% year-over-year.
Conversely, the Consumer segment faced challenges, with a modest revenue increase of 1.2% to $1.21 billion but a contraction in adjusted operating margin to 17.9% from the previous 19.0%, indicating margin pressure in this area of the business.
Outlook for 2026
Looking ahead, 3M projects adjusted earnings per share in a range of $8.50 to $8.70 for 2026, closely in line with the consensus estimate of $8.61. The company anticipates adjusted sales to approximate $25.25 billion, slightly higher than the street’s $25.04 billion forecast.
Organic sales growth is forecasted at approximately 3%, paired with an expected adjusted operating profit margin between 24.1% and 24.2%. Additionally, 3M estimates adjusted operating cash flow to fall within the $5.6 billion to $5.8 billion band, supporting an adjusted free cash flow conversion rate exceeding 100%.
Chairman and CEO William Brown emphasized the company’s confidence in sustaining operational excellence and innovation momentum to navigate the external environment. "Our accelerated pace of innovation and commercial execution positions us to outperform the macro environment again in 2026," Brown stated. He cited ongoing operational discipline as a key driver for further margin expansion and earnings growth, reaffirming a trajectory aligned with or exceeding the financial commitments announced during the prior Investor Day.
Market Reaction and Current Valuation
Following the earnings release, shares of 3M declined by approximately 4.65% in premarket trading to $160.00. Market participants appeared to weigh the results against expectations for margin improvement and growth, reflecting the nuanced balance of encouraging earnings performance against cautious forward guidance.
3M’s diverse portfolio continues underpinning its steady financial performance amid varying growth rates across business segments. While Safety & Industrial and Transportation & Electronics segments demonstrated solid growth and margin enhancement, the Consumer segment's margin contraction signals areas requiring attention. The company's strong free cash flow generation remains a pivotal aspect of its ability to return capital to shareholders and fund strategic initiatives moving forward.
Overall, 3M’s fourth-quarter report and the 2026 outlook elucidate the firm’s priorities focused on margin expansion, consistent top-line growth, and disciplined cash flow management within a complex industrial landscape.