ST. PAULO, Mind.,December 20, 2022/PRNewswire/ -- 3M (NYSE: MMM) announced today that it will cease manufacturing per- and polyfluoroalkyl substances (PFAS) and will work to phase out the use of PFAS in its product portfolio by the end of 2025. 3M's decision is based on careful consideration and a thorough assessment of the evolving external landscape, including various factors such as:
"This is a time that calls for the kind of innovation that 3M is known for," said Mike Roman, 3M President and CEO. “While PFAS can be safely manufactured and used, we also see an opportunity to provide leadership in a rapidly evolving external regulatory and commercial environment to make the greatest impact on those we serve. This move is another example of how we continue to align 3M with sustainability to grow by optimizing our portfolio, innovating for our customers, and delivering long-term value to our shareholders."
- End all PFAS manufacturing by the end of 2025:3M will discontinue all PFAS-based fluoropolymers, fluorinated fluids and ancillary products. We help clients facilitate an orderly transition. 3M intends to comply with existing contractual obligations during the transition period.
- Work to phase out the use of PFAS across our product portfolio by the end of 2025:We have already reduced our use of PFAS over the last three years through continuous research and development and will continue to develop new solutions for customers.
With these two actions, 3M is committed to innovating for a world that is less dependent on PFAS. 3M products are safe for their intended use. 3M will continue to resolve PFAS and manage litigation, defending us in court or through negotiated resolutions, as appropriate.
As mentioned above, 3M will phase out all PFAS manufacturing by the end of 2025. Current annual net sales of manufactured PFAS are approximately $1.3 billion, with estimated EBITDA margins of approximately 16%. Additionally, as noted above, 3M will be working to phase out the use of PFAS across our product portfolio by the end of 2025, which represents a small portion of 3M's overall sales. As a result of the PFAS manufacturing exit, 3M expects associated pre-tax charges to total approximately $1.3 billion to $2.3 billion, including the figures for Q4 2022 below. Expected to be approximately 70-80% the total amount are cashless.
The Company expects to receive an estimated pre-tax charge of $0.7 billion to $1.0 billion in the fourth quarter of 2022, primarily non-cash related to asset impairments.
3M intends to account for the fourth quarter 2022 expense as an earnings adjustment adjusted for special items. Beginning in 2023, 3M also expects to adjust the results for manufactured PFAS when the results are available, adjusted for special items.
PFAS are essential to the manufacture of many products essential to modern life, including medical technologies, semiconductors, batteries, phones, cars and airplanes. 3M products are safe and effective for their intended uses. More details can be found on the 3M website,www.3M.com/PFAS.
3M (NYSE:MMM) believes science can help create a better world for everyone. By unleashing the power of people, ideas and science to reinvent what is possible, our global team uniquely addresses the opportunities and challenges of our customers, communities and our planet. Find out how we're working to improve lives and what to do next3M.com/newsor on Twitter at@3Mor@3MNews.
Please note that the company releases important financial, business and operational information through the 3M Investor Relations website, SEC filings, press releases, public conference calls and webcasts. The Company also uses the 3M News Center and social media to communicate with our customers and the public about the Company, products and services, and other topics. Information 3M posts to the News Center and social media may be considered material information. Therefore, the Company encourages investors, the media and others interested in 3M to review information posted on the 3M News Center and social media channels such as Twitter at @3M or @3MNews.
This press release contains forward-looking information about 3M's financial results and estimates and business prospects that involve significant risks and uncertainties. You can identify these statements by words such as "anticipate", "estimate", "expect", "aim", "project", "intend", "plan", "believe", "will", "should". ". ,", "could", "goal", "forecast" and other words and terms of similar import relating to discussions of future operational or financial performance, future costs, or business plans or prospects actual results may differ materially are the following: (1) global economy, politics, regulation, capital markets and other external conditions and other factors beyond the Company's control, including natural and other disasters or weather changes affecting the Company's operations or its affecting customers and suppliers; (2) risks related to public health crises, such as the global pandemic related to the coronavirus (COVID-19); (3) foreign exchange rates and fluctuations in those rates; (4) liabilities related to certain fluorinated chemicals, including litigation related to various any products and PFAS-related chemicals and claims s and governmental regulatory processes and inquiries related to PFAS in various jurisdictions; (5) Legal Proceedings, including significant developments that may occur in the legal and regulatory processes described in the Company's Annual Report on Form 10-K for the year ended December 31, 2021, as amended by the Company's most recent Report on Form 8-K updated April 26, 2022 and any subsequent quarterly reports on Form 10-Q (the “Reports”); (6) competitive conditions and customer preferences; (7) timing and market acceptance of new product offerings; (8) the availability and cost of purchased components, connections, raw materials and energy (including oil and natural gas and their derivatives) due to shortages, increased demand or supply disruptions (including those caused by natural disasters and other and other events); (9) unanticipated problems or delays in the phased implementation of a global enterprise resource planning (ERP) system or security breaches and other disruptions to the Company's IT infrastructure; (10) the impact of acquisitions, strategic alliances, divestitures and other unusual events resulting from portfolio management actions and other evolving business strategies and potential organizational restructuring; (11) operational execution, including scenarios in which the company achieves fewer than estimated productivity improvements; (12) financial market risks that may affect the Company's funding obligations under defined benefit pension and postretirement plans; (13) the company's credit ratings and cost of capital; (14) external tax-related conditions, including changes in tax rates, laws or regulations; (15) matters relating to the proposed carve-out of the Company's healthcare business, including whether the transaction will close or, if completed, will proceed on the terms anticipated; the risk that anticipated benefits will not be realized; the risk that costs or dissynergies will exceed projected levels; the ability to meet various closure conditions; possible business interruption; the deviation of the management time; the impact of the transaction (or its imminent date) on the Company's ability to retain talent; potential impact on the company's relationships with its customers, suppliers, employees, regulators and other counterparties; the ability to obtain the desired tax treatment (including whether to request or obtain a private letter ruling from the IRS); the risk that required consents or approvals are not obtained; risks related to financing that may be obtained and debt that may arise in connection with the transaction; (16) matters relating to voluntary Chapter 11 proceedings of the Company's subsidiary, Aearo Technologies, and certain of its affiliates (the “Aearo Entities”), including legal risks relating to Chapter 11 proceedings; potential impact on the Company's reputation and its relationships with customers, suppliers, employees, regulators and other counterparties and community members; potential impact on the Company's liquidity or results of operations, including risks related to the amount required to fully and definitively settle all of the Company's payment obligations to settle such claims under its financing and indemnification agreement with Aearo Entidades; and the ability of the Aearo entities to navigate Chapter 11 procedures to obtain approval and completion of a reorganization plan; (17) Matters related to the Company's plans to cease manufacturing and using PFAS in its product portfolio (the "Phase-Out"), including the actual timing, cost and financial impact of any such phase-out; the Company's ability to complete such an exit in a timely manner or by any means; potential government or regulatory actions related to the manufacture and production of PFAS or the Company's phase-out plans; the Company's ability to identify and manufacture acceptable substitute products for discontinued products and the possibility that such substitute products may not achieve anticipated or desired business or operating results; potential litigation related to the Company's exit plans; and the possibility that the proposed exit will result in higher than anticipated costs or otherwise adversely affect the Company's relationships with its customers and other counterparties. Changes in such assumptions or factors could produce materially different results. A more detailed description of these factors is included in the reports under “Cautionary Statement Regarding Factors That May Affect Future Results” and “Risk Factors” in Part I, Items 1 and 1A (Annual Report) and in Part I, Item 2 and Part II, Item 1A (quarterly reports). The Company undertakes no obligation to update any forward-looking statements discussed herein as a result of new information or future events or developments.
Bruce Jermeland, 651-733-1807
Diane Farrow, 612-202-2449
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