3M Q3 Adjusted EPS Rises 12% as Industrial and Safety Growth Lifts Margins

3M (NYSE: MMM) reported higher third-quarter adjusted earnings and wider margins as growth in its Safety & Industrial business offset weakness in consumer electronics and automotive markets. The company maintained its full-year organic sales growth expectation while setting adjusted earnings guidance at $9.10 to $9.15 per share.

Adjusted net sales totaled $6.58 billion in the third quarter of 2026, up 4.2% from a year earlier, including organic growth of 3.3% and a 0.9% contribution from acquisitions. Adjusted earnings per share rose 12% to $2.50, while adjusted operating margin expanded 110 basis points to 26.2%.

3M generated $1.20 billion of adjusted free cash flow during the quarter and returned $600 million to shareholders. For the first nine months of 2026, adjusted free cash flow was $3.09 billion, while shareholder returns totaled $4.4 billion, comprising $1.2 billion of dividends and $3.2 billion of gross share repurchases.

The company attributed the quarterly earnings increase primarily to growth and productivity, which added $0.39 per share. Stranded costs and investments reduced earnings by $0.17 per share, while a lower share count and tax timing provided a net benefit of $0.05.

Industrial and safety markets lead growth

Safety & Industrial, 3M’s largest business group, recorded third-quarter sales of $3.18 billion, with organic growth of 7.0%. Adjusted operating income increased 21.2% to $960 million, and the segment’s adjusted operating margin rose to 30.1% from 27.1%.

Electrical markets delivered double-digit growth, while safety products, adhesives, abrasives and industrial specialties collectively grew at a high-single-digit rate. Automotive aftermarket sales increased at a mid-single-digit pace, partly offset by a low-single-digit decline in roofing granules.

Transportation & Electronics sales were $2.00 billion, with organic growth of 0.5%. Double-digit gains in semiconductors, data centers, aerospace and ceramics were largely offset by weaker consumer electronics and automotive demand. Adjusted operating income declined 3.4% to $468 million, and margin contracted to 23.4% from 24.3%.

Consumer sales fell 0.4% on a reported adjusted basis to $1.31 billion, with organic sales down 0.2%. Mid-single-digit growth in international markets and improving point-of-sale trends were offset by continued inventory reductions among retailers in the U.S. and Canada. Consumer safety and home care posted modest growth, while home improvement and packaging and expression remained soft. The segment’s adjusted operating margin nevertheless increased to 23.0% from 22.2%.

Geographically, organic sales grew at a high-single-digit rate in the U.S. and Canada and in Latin America, and at a low-single-digit rate in Asia and Europe, the Middle East and Africa. China declined at a high-single-digit rate because of weakness in consumer electronics.

Innovation and productivity support performance

3M launched 87 products during the quarter, 24% more than a year earlier, and said it was tracking toward more than 350 launches for the full year. Year-to-date sales from products introduced over the past five years were approximately $3 billion, up 34%.

The company also reported supply-chain productivity gains, including a 40-basis-point reduction in the cost of poor quality and a 20-basis-point improvement in overall equipment effectiveness. Gross margin increased 230 basis points year over year, while price realization offset inflationary pressure.

As part of efforts to simplify operations and reshape its portfolio, 3M has closed or exited 16 sites year to date and plans actions affecting another 10 sites over the next 12 months. The company said its Madison acquisition was executing to plan and highlighted investments in optical connectors and materials for commercial and government space applications.

Full-year outlook

3M continues to expect full-year organic sales growth of more than 3.5%. It now projects adjusted EPS of $9.10 to $9.15 under its new reporting basis, compared with the July range of $8.95 to $9.10 on the same basis. Adjusted free cash flow is expected to be approximately $4.8 billion, within the previous range of $4.7 billion to $4.9 billion.

The outlook assumes continued momentum in general industrial, safety and data centers, alongside soft consumer and consumer-electronics markets. Management expects volume, productivity, lower share count and reduced interest expense to support results. The forecast incorporates approximately $185 million of inflation, which the company expects to offset fully through pricing.

Beginning in the third quarter, 3M excluded acquisition-related amortization from its non-GAAP results and retrospectively restated prior periods. The company said the change, introduced alongside the Madison acquisition, is intended to better reflect underlying operating performance.

Risks identified by 3M include global economic and trade conditions, tariffs, currency fluctuations, supply-chain and raw-material costs, operational execution, technology-system implementation and legal liabilities. The company also cited uncertainties involving PFAS-related claims and settlements, Combat Arms Earplugs matters and issues connected with the Solventum spin-off.