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3M Stock Slides As CFO Cautions On Inflation Impact To Q3 Outlook

3M CFO Monish Patolawala told a Morgan Stanley investment conference that input costs have been outpacing price increases over the current quarter.

3M Co.  (MMM) - Get 3M Company Report shares were active Monday after the industrial group cautioned that input costs are rising at a faster-than-expected clip over the current quarter as supply chain disruptions and semiconductor shortages continue to pressure profit margins. 

Speaking to Morgan Stanley's virtual Laguna Conference, an industry benchmark, 3M CFO Monish Patolawala said input costs, particularly in resins, polypropylene and wood pulp, as well as labor costs, were outstripping price increases over the current quarter. 

Patolawala added that the global semiconductor shortage, which has clipped production targets for carmakers such as Toyota and Volkswagen, will likely result in a bigger-than-expected decline in the group's auto division over the second half of the year. 

3M shares were marked 1.5% higher in trading Monday, reversing earlier pre-market declines, to change hands at $187.30 each. 

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Commodity prices have been extending gains of late, thanks in part to disruptions linked to oil production in the Gulf of Mexico from Hurricane Ida, restrictions on output from China and expected demand from the global economic recovery.

Aluminum prices rose to $3,000 a ton for the first time since 2008 this week, while oil prices have risen more than 45% so far this year, taking WTI futures for October delivery firmly past $70 a barrel.

3m had forecast 2021 earnings in the region of $9.70 to $10.10 per share following its second quarter earnings in July -- a 40 cents per share improvement over the higher end of its prior forecast -- and sales growth of between 7% and 10%.

Inflationary pressures, however, are continuing to build as supply chain disruptions linked to the COVID pandemic add costs in creases to everything from labor to metals and crude oil.

In the U.S., data from the Labor Department Friday showed that August factory gate inflation surged 8.3% from last year, the biggest increase since the data series was tweaked in November of 2010.