Record rally for 3M shares as profits soar under new CEO

As 3M’s chief executive continues acclimating to his new digs, Bill Brown’s eyes still light up at the sight of the 122-year-old manufacturer turning out miles of tapes, films and sandpaper.

“There’s so much opportunity here,” he said. “Visiting the labs and the factories, I’m amazed at the products we produce and the scale we produce them at.”

Brown also sees all the ways the Maplewood-based company can keep improving.

“Reducing complexity, lean manufacturing, supply-chain management, lowering yield loss,” he said.

The list goes on. But Brown has some time, if the latest results hold. 3M beat Wall Street estimates for its spring performance as comparable profits rose significantly to an adjusted $1.93 per share.

The company’s stock jumped 23% on Friday to $127.16, its highest close in more than two years. It was the stock’s biggest single-day rise on record.

Sales of $6.3 billion were down slightly from last year’s second quarter, when accounting for the health care spinoff, but also topped expectations. The quarter’s profit came in at $1.1 billion.

“We’re starting to see the benefits of restructuring coming through,” Brown said, referring to layoffs and a geographic pullback that began more than a year ago.

Now he wants to see more new product launches and a return to sales growth. The company expects sales to dip slightly or rise up to 2% this year. 3M upgraded the low end of its profit outlook Friday, however, and expects to bring in $7 to $7.30 per share.

Brown told analysts he’s taking “a fresh look” at the company’s strategy now that he’s been on the job for three months.

“I’m encouraging people to challenge the way we’ve done things in the past every single day,” he said. “That’s what continuous improvement is really all about.”

Chief Financial Officer Monish Patolawala, who is leaving at the end of the month, said he’s “very, very proud of what this team has done over the last few years to get our priorities right.”

“There’s a lot more this machine can do,” he said.