Hubbell adopted a unified FIFO-based inventory accounting standard, replacing the previous mixed LIFO and FIFO approach.
The transition resulted in a $29 million decrease in COGS in Q2 and a $20 million decrease in COGS for the first half of 2025.
The change improves cost matching during inflationary periods, enhances reporting consistency, and aligns Hubbell with peer companies.
The transition accelerates tax payments but is offset by expected benefits from recent tax legislation, contributing to more accurate margin recognition.
3M reported adjusted earnings per share of $2.16 for Q2, up 12% year-over-year and above expectations.
Consumer business grew 0.3% organically despite soft consumer sentiment.
First half operating margin expanded 250 basis points to 24%, with earnings growth of 11%.
Free cash flow was $1.3 billion for the quarter with 110% conversion rate.
Margins expanded across all business groups: SIBG up 320 bps, TEBG up 230 bps, and CBG up 370 bps.
Operating margins increased by 290 basis points year-over-year driven by productivity and cost controls.
Organic sales growth was 1.5% with all three business groups showing positive growth for the third consecutive quarter.
Safety and Industrial business grew 2.6% organically, led by industrial adhesives, tapes, and electrical markets.
Strong operational performance included $300 million benefit from volume growth, productivity, and lower restructuring costs, partially offset by tariff and stranded cost headwinds.
Transportation and Electronics grew 1% organically, with strength in commercial graphics and aerospace & defense.
Transformation and Margin Expansion in Industrial Segment
The Industrial segment achieved a record adjusted operating margin of 25.1%, up 90 basis points from the previous year, driven by The Win Strategy.
The company expects a 700 basis point margin expansion from FY '19 through FY '26, demonstrating significant margin resilience even during negative organic growth periods.
The portfolio's shift towards longer cycle, secular trend, and aftermarket revenues is a key factor, with 67% now in these categories.
International and diversified industrial businesses are using cost reduction and efficiency tools to sustain margin growth amid market challenges.
The transformation includes acquisitions and international distribution growth, with an aim for 85% of the portfolio to be longer cycle, secular, and aftermarket by FY '29.
Dafinchi