And Monish talked about AR, VR now emerging as one of those opportunities. Automotive electrification, of course, is the largest of those right now. There’s other areas like factory automation, and even into electronic, into semiconductor manufacturing kinds of processes. So we are innovating in those spaces and at the same time, looking ahead and managing through the next display technologies and the next mobile device technologies and consumer electronics.
Joe Ritchie: Thank you.
Operator: Our next question comes from Julian Mitchell with Barclays. You may proceed with your question.
Julian Mitchell: Hi. Good morning.
Mike Roman: Good morning, Julian.
Julian Mitchell: Good morning. Maybe just wanted to start on the operating margins. So, sort of, backing into what you’ve talked about, are we right in assuming that the guide embeds sort of 19% operating margin for the year and sort of mid-teens in Q1? And then, on that Q1 aspect, very heavy decremental margins sequentially, even without the restructuring charge. Is there a lot of sort of under production going on at 3M to clear out inventory, for example? Just trying to understand why that Q1 margin is so light. I think, it’s like a 50% decremental or something excluding the restructuring.
Monish Patolawala: Yes. So as I’ve always said, Julian, first is, volume gives us the best leverage. And what you have seen in Q4 continues into Q1. As we have said in Q4, we took some aggressive actions on making sure we rightsized our manufacturing facilities to help control inventory. Our plan is we will continue to aggressively manage production as a way to — manage production as a way to manage cash at the same time. So we’re not building unnecessary inventory. So that’s number one. I think number two is, as I mentioned, there’s continued pressure on a year-over-year basis on foreign currency between 3% to 4%. If you look at it versus fourth quarter exit rate, it’s pretty much, I would say, flat to what fourth quarter exit rate was.
And then the other item, you mentioned the restructuring, but we also have other normal 1Q items that we have from an accounting basis that we take, which is normal in every quarter. And that’s why the start to 1Q is slower. But as you accelerate or move through the year, volume and the supply chain healing are the two factors that will continue to drive us to get these margins better. And if we’re looking at it on a year-over-year basis, it’s all driven by the comps that we had last year, which impact us heavily. So its lower volume in Q1, that’s a big driver and volume will be the big determinant on what we think Q1 is going to be.
Julian Mitchell: And, Monish, is that roughly right on that sort of mid-teens operating margin Q1 and 19-ish for the year in your guide?
Monish Patolawala: Yes. Yes, it’s actually close there. It’s close enough, Julian.
Julian Mitchell: Okay. Thanks a lot. And then one quick follow-up on that for Mike. Mike, you’ve announced a restructuring program today. I think it’s the first kind of formal discrete one since fourth quarter of 2020. And you had the business transformation savings program prior to that. Just wondered, sort of, when you think about the scope of the current restructuring plan, what kind of savings run rate we should expect annually when do you get to that? And how do you assess the scope of this being enough to get margins back on track as you had those prior restructuring programs, but margins have stayed under pressure? Thank you.
