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MMM is reshaping operations and deploying AI to lift margins, but rising tariffs, oil prices and PFAS exit costs pose challenges.
3M $MMM Company MMM is taking structural measures to improve operating efficiency and strengthen margins. The company has been reducing the size of its corporate center, streamlining its geographic footprint, simplifying its supply chain, aligning go-to-market models with customers and optimizing manufacturing roles based on production volumes. These initiatives are expected to lower operating costs while supporting margins and cash flow over the long term.MMM completed most of the restructuring actions by the end of 2025. The company is now shifting its focus toward longer-term transformation, including redesigning its supply-chain network and deploying AI-driven tools across its operations. In the second quarter of 2026, these efforts, combined with strong organic volume and productivity gains, helped lift 3M’s adjusted operating margin by 40 basis points year over year to 24.9%. For 2026, 3M expects adjusted operating margins to expand 70-80 basis points year over year.However, rising costs could challenge the company’s ability to sustain this margin momentum. In the second quarter of 2026, cost of sales increased 4.7% year over year, while cost of sales as a percentage of total revenues rose 120 basis points to 58.7%. Higher tariff-related costs, rising oil prices and cost dis-synergies associated with the PFAS manufacturing exit contributed to the increase.Overall, 3M’s restructuring and productivity initiatives are supporting margins, although persistent cost pressures remain a concern. Going forward, continued productivity improvements and cost-control measures are expected to help the company maintain healthy profitability.
