3M Co.

Despite the revenue headwinds, we believe 3M did well in aggressively managing its costs in the second quarter. The company was able to reduce it costs by $400 million in the quarter, which led its operating margin to decline by just 120 basis points (bps; including a negative 80 bps impact from the acquisition of Acelity). So far this year, the company's reduced litigation and restructuring charges have also benefited its S&P-adjusted EBITDA margins. Positively, the company recently announced its sales increased by 6% year over year in July (3% on an organic, local currency basis). In the second half of the year, we expect 3M to report an improvement in its automotive OEM and aftermarket sales because the OEMs

...COVID-19 related end-market softness continues to be a headwind for the company's revenue growth in 2020, though this is tempered, in part, by management's cost actions. We expect 3M's revenue to decline by the low- to mid-single digit percent range in fiscal year 2020 as signs of recovery emerge across its key segments. The company's second-quarter 2020 revenue declined by 12.2% on a year-over-year basis because several of its end markets continued to experience significant weakness, including elective health care procedure, automotive original equipment manufacturer (OEM) and aftermarket, general industrial, commercial solutions, and office supplies. This was offset by relatively strong demand in its personal safety, home improvement, general cleaning, semiconductor, data center, and biopharma filtration end markets. Despite the revenue headwinds, we believe 3M did well in aggressively managing its costs in the second quarter. The company was able to reduce it costs by $400 million in...

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