3M(MMM) - 2023 Q2 - Quarterly Report

Currency Impact and Financial Performance - The stronger U.S. dollar negatively impacted sales in Q2 and the first six months of 2023, with foreign currency effects reducing earnings despite hedging strategies[314] - Safety and Industrial segment sales decreased by 5.5% in Q2 2023, with organic sales declining by 4.6% and translation effects contributing to a 0.9% decrease[332] Stock Repurchase and Financial Position - In the first six months of 2023, the company repurchased $29 million of its own stock, compared to$773 million in the same period in 2022, with $4.2 billion remaining under the repurchase authorization[315] Cost Management and Profitability - Cost of sales decreased to 55.3$534 million in Q2 2023, a significant improvement from a loss of $707 million in Q2 2022[333] - Adjusted operating income for the Safety and Industrial segment decreased by 2.4$10.3 billion pre-tax charge related to a PFAS settlement agreement with U.S. public water systems[321] - R&D expenses increased slightly to 5.7% of net sales in Q2 2023 from 5.5% in Q2 2022, reflecting continued investment in innovation and product development[322] Pension and Tax Considerations - The company expects a $160 million pre-tax decrease in global defined benefit pension and postretirement service cost expense in 2023 compared to 2022[317] - The company's effective tax rate was 24.2% in Q2 2023, compared to -38.3% in Q2 2022, influenced by litigation-related charges and settlement agreements[323] Risks and Contingencies - Forward-looking statements include risks related to worldwide economic, political, regulatory, and external conditions such as interest rates, inflation, and trade restrictions[387] - Risks related to the COVID-19 pandemic and its impact on public health and operations[387] - Liabilities and contingencies related to PFAS chemicals and the company's plan to discontinue their use[387] - Risks associated with the proposed class-action settlement regarding PFAS, including court approval and potential opt-outs[387] - The company's strategy for growth, future revenues, earnings, cash flow, and market position[387] Market Risks and Risk Management - Exposure to market risks from foreign currency exchange rates, interest rates, and commodity prices[391] - No material changes in market risk information from the end of the preceding year until June 30, 2023[391] - Risk management discussions are provided in the Derivatives note within the Quarterly Report[391]