By Kannaki Deka
(Reuters) - 3M Co on Tuesday raised its full-year adjusted profit forecast and reported upbeat quarterly earnings, as the diversified manufacturer was able to offset slow demand with price hikes and cost savings, sending its shares up over 5%.
3M hiked prices to offset high raw material and labor costs, and undertook a workforce reduction amid waning demand for consumer electronics.
"In the short run, the company has been able to manage inflation through price. And if needed, we'll continue doing that," 3M Chief Financial Officer Monish Patolawala said on a call with analysts.
More price hikes in the face of rising cost of living could prove challenging, as U.S. households are delaying big-ticket purchases and cutting back on discretionary spending amid an uncertain economic outlook.
The company's cost-cutting push helped it beat estimates but 3M is still faced with weak demand for consumer electronics, especially in China and Europe.
3M on Tuesday also flagged a soft back-to-school season and a continued impact from rising interest rates.
The company took a pretax charge of $4.2 billion in the quarter to settle lawsuits by U.S. military veterans and service members who say they suffered hearing loss from using 3M's earplugs.
Analysts at J.P. Morgan and Barclays said litigation liabilities still remain the important driver of the company's shares.
In June, 3M reached a $10.3 billion settlement with a host of U.S. public water systems to resolve water pollution claims tied to "forever chemicals", which are linked to cancer, hormonal dysfunction and environmental damage.
3M now expects full-year adjusted earnings per share to be in the range of $8.95 to $9.15 per share, versus prior forecast of $8.60 to $9.10.
The company's adjusted profit for the third quarter came in at $2.68 per share, above analysts' estimates of $2.34. Adjusted revenue of $8.02 billion also beat Street estimates of $7.98 billion.