New 3M (NYSE:MMM) CEO Mike Roman tells Reuters that the company is looking at buying companies and selling underperforming units while investing in developing the next blockbuster product in a bid to drive faster growth.
“We’re looking at acquisitions in attractive parts of our portfolio... and how they can leverage our fundamental strengths," Roman says. "In some cases that might also lead to divestitures."
3M’s sales totaled $31.7B in 2017 and business is growing, but investors are not satisfied with the rate of growth, and the company’s shares fell 7% in April after 3M cut its 2018 organic sales growth forecast to 3%-4% from an earlier outlook of 4%-5%.
Roman notes that 3M has raised R&D spending to 6% of revenue from 5.5%, and Morningstar analyst Joshua Aguilar says the company needs a significant new product it can sell across different groups in its portfolio; one promising product is Novec, a non-flammable, non-conductive liquid fluorochemical that could be used to cool servers at data centers and potentially could be used in electric vehicles.
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