Asset Structure Analysis
3M Company ‘s total assets were $50.6 billion at December 31, 2023, up from $46.46 billion at December 31, 2022. The company’s key asset structure at December 31, 2023 is as follows:
Property, plant and equipment, net were $26.87 billion, accounting for 53.1% of total assets.
Goodwill was $13 billion, making up 25.7% of total assets.
Intangible assets, net were $4.2 billion, consisting of 8.3% of total assets.
Other assets were $7.1 billion, comprising 14% of total assets.
Total current assets were $16.38 billion, representing 32.4% of total assets.
Among total current assets, cash and cash equivalents were $5.9 billion, accounts receivable were $4.8 billion, and total inventories were $4.8 billion.
Liquidity and Solvency
Total current liabilities were $15.3 billion at December 31, 2023.
The current ratio was 1.07 for 2023.
Total liabilities were $45.7 billion at December 31, 2023.
The debt ratio was 90% for fiscal 2023.
We does not worry 3M Company’s liquidity and solvency, because the company has generated a lot of cash flow.
Net cash provided by operating activities were $6.68 billion, $5.6 billion and $7.4 billion, respectively.
Profitability Analysis
3M Company’s net sales were $32.7 billion, $34.2 billion and $35.4 billion in 2023, 2022 and 2021, respectively.
Net sales in 2023 were down 4.4% year on year.
Net sales in 2022 were down 3.4% year on year.
Operating income was -$9.1 billion, $6.5 billion and $7.37 billion in 2023, 2022 and 2021, respectively.
There is a huge loss about operating income, because SG&A in 2023 was primarily impacted by pre-tax charges of $10.3 billion and $4.2 billion in the second and third quarters related to the PWS Settlement and the CAE Settlement, respectively.
The amount of selling, general and administrative expenses were $21.5 billion, $9 billion and $7.2 billion in 2023, 2022 and 2021, respectively.
Net income was -$7 billion, $5.8 billion and $5.9 billion in 2023, 2022 and 2021, respectively.
The net profit margin was -21.4%, 17% and 16.7% for 2023, 2022 and 2021, respectively.
Cash Flow Analysis
Net cash provided by operating activities were $6.68 billion, $5.6 billion and $7.4 billion, respectively.
Purchases of property, plant and equipment were $1.6 billion, $1.75 billion and $1.6 billion in 2023, 2022 and 2021, respectively.
3M Company’s free cash flow was $5.08 billion, $3.85 billion and $5.8 billion in 2023, 2022 and 2021, respectively.
Purchases of treasury stock were $33 million, $1.46 billion and $2.2 billion in 2023, 2022 and 2021, respectively.
Dividends paid to shareholders were $3.3 billion, $3.37 billion and $3.4 billion in 2023, 2022 and 2021, respectively.
As you can see, the free cash flow is returned to shareholders by purchasing stock and paying dividends, basely.
3M Company’s operating performance for Q1 2024
Net sales were $8 billion and $8.03 billion in the three months ended March 31, 2024 and the three months ended March 31, 2023, respectively.
The net sales in Q1 2024 was flat year on year.
Net income including noncontrolling interest was $933 million and $981 million in Q1 2024 and Q1 2023, respectively.
Conclusion
3M Company’s business involves a lot of legal proceedings, which reduce shareholders’ benefits.
We think that 3M Company is a good one, apart from unpleasant proceedings.
We estimated that 3M Company’s reasonable valuation is about $50 billion, while the company ‘s market capitalization is $56.73 billion, which is equivalent to $102.94 per share.
Disclaimer: The content is for reference only and does not constitute investment advice.
Introduction
3M is a diversified technology company with a global presence in the following businesses: Safety and Industrial; Transportation and Electronics; Health Care; and Consumer. In July 2022, 3M announced its intention to spin off the Health Care business as a separate public company . 3M is among the leading manufacturers of products for many of the markets it serves. Most 3M products involve expertise in product development, manufacturing and marketing, and are subject to competition from products manufactured and sold by other technologically oriented companies.
