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(Bloomberg) – 3M Co. recorded the biggest drop in almost nine years after lowering its profit expectations again and said it would cut 2,000 jobs to counter recent poor performance.
Operating profit declined in all five business units in the first quarter, according to 3M, which posted a profit lower than Wall Street estimates. The manufacturer of Post-it and touch screens has drawn attention to the weaknesses of the automotive and electronics markets and warned against headwinds in China.
"We continue to face a slowdown in key end markets," said Chief Executive Officer Mike Roman on Thursday. "Our operational execution has also failed."
The poor results continue the recent pain of 3M, a diversified manufacturer that has had to contend with high commodity prices, challenges in the health care sector and unfavorable exchange rates. Roman, who took the reins last year, is trying to restore the company's consistent performance for which it was known under its predecessor, Inge Thulin.
3M fell 11% to $ 195.58 at 9:34 am in New York after a dip of $ 195, recording the largest intraday decline since May 2010. The stock had risen 15% this year until Wednesday, according to the Dow Jones Industrial Average.
"3M has strongly disappointed investors with a significant shortfall and a reduction in its forecast for the full year, much worse than the expected reduction," said Deane Dray, an analyst at RBC Capital Markets. "Four of the five sectors recorded operating losses compared to our estimates, highlighting widespread weakness."
Cut the perspectives
Adjusted earnings will not exceed $ 9.75 per share in 2019, down from previous expectations of at least $ 10.45 to $ 10.90, 3M said. Analysts were expecting $ 10.53.
Excluding the impact of currency and portfolio fluctuations, sales may fall by 1%, 3M said. The company based in St. Paul, Minnesota, predicted a gain of 1 to 4%.
The planned cuts have become a routine for 3M, reducing its outlook for 2019 in January and reducing the 2018 forecast several times last year.
Adjusted earnings for the first quarter fell to $ 2.23 per share, far from analysts' average estimate of $ 2.48 per Bloomberg. Sales fell 5% to $ 7.86 billion. Analysts were expecting $ 8.02 billion.
3M announced a restructuring effort in response to a "slower than expected 2019 year," which includes 2,000 job cuts across all business groups and regions. This represents about 2% of the workforce of the company. This decision, which will result in a pre-tax charge of 20 cents per share this year, will save $ 100 million before 2019 and $ 225 to $ 250 million annually, the company said.
To contact the reporter about this story: Richard Clough in New York at [email protected]
To contact the editors in charge of this story: Brendan Case at [email protected], Tony Robinson, Susan Warren
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