3M Planning PFAS Manufacturing Exit
Global manufacturing giant 3M (St. Paul, Minnesota) recently announced plans to exit per- and polyfluoroalkyl substance (PFAS) manufacturing.
PFAS are noted to be critical in the manufacture of many products that are important for modern life, including medical technologies, semiconductors, batteries, phones, automobiles and airplanes.
According to the company’s late-December press release, not only is the company planning to stop the use of PFAS in its manufacturing, but it is also aiming to discontinue the use of PFAS across its product portfolio.
After careful consideration and a thorough evaluation of the evolving external landscape, the company shares that it is aiming to achieve the entire exit plan by the end of 2025.
“This is a moment that demands the kind of innovation 3M is known for,” said 3M Chairman and Chief Executive Officer Mike Roman. “While PFAS can be safely made and used, we also see an opportunity to lead in a rapidly evolving external regulatory and business landscape to make the greatest impact for those we serve.
“This action is another example of how we are positioning 3M for continued sustainable growth by optimizing our portfolio, innovating for our customers, and delivering long-term value for our shareholders.”
?? #PFAS NEWS: PFAS ‘Forever Chemical’ to be Discontinued by 3M by End of 2025 https://t.co/3o27fMEPLy— Wastebits (@Wastebits) January 11, 2023
- Initial cost will be up to $1 billion this quarter, more later
- Longer-term legal liabilities could reach $30 billion or more pic.twitter.com/p6E5xu3x2P
Specifically, 3M shares that it will:
Through these actions, the company commits to innovating toward a world less dependent upon PFAS. In making this announcement, 3M also shared that it was planning to continue remediating PFAS and addressing litigation by defending itself in court or through negotiated resolution, all as appropriate.
As a result of this decision, 3M is expecting the changes in manufacturing to have an effect on its finances. The current annual net sales of manufactured PFAS are approximately $1.3 billion with estimated EBITDA margins of approximately 16%.
Because PFAS within the company’s product portfolio represent a small portion of its overall revenue, 3M expects to incur related total pre-tax charges of approximately $1.3 billion to $2.3 billion. Approximately 70-80% of the total is expected to be non-cash.
3M is also expecting to take an estimated fourth quarter 2022 pre-tax charge in a range of $0.7 billion to $1.0 billion, primarily non-cash and related to asset impairments.
Beginning this year, 3M is planning to adjust for the results of manufactured PFAS in arriving at results, adjusted for special items.