Manufacturer 3M increased its fiscal Q1 sales year over year as executives discussed “pockets of macro pressure” on the company’s quarterly earnings call.
3M grew its fiscal Q1 sales to $6.0 billion, a 1.3% increase year over year. The manufacturer also completed the sale of subsidiary Precision Grinding and Finishing earlier in April. That reduced its footprint by seven factories. 3M also closed one other factory and announced the closing of an additional three, which brings its total projected manufacturing site count to below 100.
In the earnings call, chairman and CEO William Brown called Q1 “a light start to the year on the top line with organic growth of 1.2%, driven by pockets of macro pressure.”
Brown did not go into detail, but his reference to macro pressure refers to geopolitical events and economic shifts, such as the U.S. and Israel’s war against Iran, which began Feb. 28. The war has impacted fuel prices globally. Because of supply chain disruptions resulting from the war, the price of a barrel of crude oil reached $112 in April. On Feb. 3, it was about $60, according to historical data from Trading Economics. As of April 21, it has gone down to about $90.
Brown added that 3M anticipates it will achieve its full-year 2026 guidance “despite the volatile environment.” He said 3M sales growth in Q1 reflected improvements in productivity and cost discipline.
“We continue to see soft U.S. consumer discretionary spending with a few pockets of strength in categories with recent new product introductions,” Brown said.
How macro conditions affected 3M sales in Q1 2026
Brown noted that 3M launched 84 new products in Q1 2026. That was 35% more than it did in the prior year’s first quarter. 3M is on pace to launch 350 new products in 2026, he said.
At the same time, its on-time in-full (OTIF) service levels — a supply chain metric measuring delivery times — remained above 90%, according to Brown. Meanwhile, 3M reduced delivery lead time by 25%, he added.
“What matters is that these are not isolated wins,” Brown said. “They collectively reflect greater execution discipline and constancy of purpose. And that consistency and momentum gives us confidence that we can meet or exceed the medium-term goals we outlined at our Investor Day last year, even in an uncertain macro environment.”
Brown said 40% of 3M’s portfolio experienced softness amid macro and industry-driven headwinds. That 40% includes business in the electronics, automotive and consumer segments, according to 3M’s earnings call presentation.
Chief financial officer Anurag Maheshwari reiterated that the macro environment remains uncertain. 3M maintained its full-year guidance, but it has still factored in a “contingency” tied to oil prices.
“Given that we are early in the year and we are operating in a volatile macro environment, we think it is prudent to keep a contingency until we have more clarity about the rest of the year,” Maheshwari said.
Oil prices will have “a little bit of an impact on the volume” of 3M orders, according to Maheshwari.
He said 3M’s objective is “to continue driving what we control” to outperform the macroeconomic environment and “drive more productivity so that we don’t have to use the contingency in the second half.”
How do oil prices tie into 3M production?
Brown noted that oil impacts both the supply and demand side of 3M’s business.
“On the supply side, we have about 45% of our cost of goods is raw materials, and about a third of that — so it’s about $6 billion of raw material spend,” Brown said. “And about a third of that is its basis in polychem. So it’s ethylene, it’s propylene, esters, acrylates, all those various things. And we are seeing some upward cost pressure on that.”
Brown said what 3M has seen so far and expects is about $125 million in cost increases tied to oil. That factors into 3M’s forecast for 2026. 3M is offsetting that increase with pricing changes, he said.
“It’s hard to avoid the fact that we’re pushing pricing a little bit more aggressively,” Brown said. “We know there’s an inflationary environment. We know [the price of] oil is going to go up; we know the impact on our company.”
He also noted that 3M is enforcing price changes based on shipment dates. If a shipment goes out beyond a certain date, he said, that shipment could have a price increase associated with it. That gives 3M “a sense that perhaps there’s some advanced buying from these price increases.”
Brown avoided further speculating on the impacts of oil’s pricing.
“How that affects the overall macro economy?” he asked, rhetorically. “What’s going to happen with consumer spending, auto? I mean that’s still all unfolding as we speak and depending upon what happens in the Middle East, but that’s our current assumption.”
Where 3M is using AI in manufacturing
Brown also credited AI tools for part of 3M sales growth in Q1.
“We’ve introduced AI tools to drive growth, reduce churn and automate manual work, including an agent that analyzes our sales and opportunity pipeline data to develop customized coaching plans for sales managers to help reps meet their targets,” Brown said. “And we believe digital tools like Ask 3M, a new AI-powered digital assistant that helps customers find solutions to design challenges using 3M products, will allow us to reach a broader population of customers.”
Brown also highlighted what he referred to as 3M’s “growing data center and associated power utility business.” It currently has revenue of about $600 million. Of that, $100 million comes from within the data center and $500 million is from bringing power to the facility.
In that facility, Brown said, 3M is introducing new products such as expanded beam optics, or EBO. He described EBO as “a high-performance optical connector engineered to improve installation speed, reliability and operational efficiency within data centers.”
EBO builds on an existing copper connector for high-speed data transmission, Brown said. He added that it also positions 3M well for a copper-to-fiber transition.
“With hyperscaler validation, a significant order in hand and $1 billion-plus addressable market, we’re investing to more than double our capacity to support growing AI demand,” Brown said.
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