Industrials conglomerate 3M (NYSE:MMM) presented at the J.P. Morgan Industrials Conference on March 10, and there were expectedly a lot of questions around the COVID-19 coronavirus outbreak, specifically about how much sales N95 masks could bring in for the company. 3M has ramped up production of N95 masks and contracted with the government, with Vice President Mike Pence even visiting 3M headquarters last week to discuss higher production -- supposedly of the N95 masks.
While 3M's CEO Mike Roman refrained from giving out individual product numbers at the conference, he pegged potential revenue from coronavirus-related respiratory products to be similar to that from the H1N1 outbreak, around $250 million.
How much does $250 million mean to 3M's total revenues?
During the conference, Roman affirmed how 3M's priority remains the safety of the public, something it aims to achieve "through its products and services." Accordingly, 3M has increased production at manufacturing facilities around the world, including a plant in China that produces respirators. 3M kept the plant fully operational through the Lunar New Year break as well as the extended coronavirus shutdown to maximize production of respiratory products.
To support its customers, Roman also revealed that 3M hasn't raised product prices despite high demand in the wake of coronavirus. Therefore, any incremental revenue related to COVID-19 should come from volumes, not pricing. For now, 3M says it's best to expect potential revenue from coronavirus respiratory-related products to be around $250 million.
Respiratory products aren't part of 3M's healthcare business as one might think, but part of its personal safety business, which is included in its safety and industrials business segment. For perspective, 3M generated $3.5 billion in revenue from personal safety in 2019, or roughly 11% of its total revenues. Furthermore, personal safety generated $939 million in net sales in the first quarter of 2019.
No change in 3M's 2020 outlook
3M expects COVID-19 related demand to add a percentage point to its organic sales growth in the first quarter of 2020. However, the company is keeping its 2020 outlook unchanged for now, expecting organic local-currency growth to be flat to up 2%.