- 3M slashed its full-year earnings outlook and announced a restructuring plan.
- The company saw sales slump in several key businesses.
- Shares were down 8% early Thursday.
- Watch 3M trade live.
3M shares tumbled 8% on Thursday morning after the company slashed its outlook and announced restructuring efforts after seeing sluggish sales in key end markets.
"The first quarter was a disappointing start to the year for 3M," said CEO Mike Roman in the earnings release.
"We continued to face slowing conditions in key end markets which impacted both organic growth and margins, and our operational execution also fell short of the expectations we have for ourselves. As a result, we have stepped up additional actions – including restructuring – to drive productivity, reduce costs, and increase cash flow as we manage through challenges in some of our end markets.
The manufacturing conglomerate said revenue fell 5% to $7.9 billion in the first quarter as its consumer (-1.9%), safety and graphics (-4.2%), industrial (-6.6%), and electronics and energy (-11.8%) businesses all saw declines.
3M earned $1.51 a share, or an adjusted $2.23 when excluding the $0.72 charge related to litigation expenses. It established a $235 million reserve to resolve litigation relating to its manufacture and disposal of PFAS-containing waste, and also added $$313 million to a reserve to address the cost of resolving coal-mine-dust lawsuits in Kentucky and West Virginia.
Both revenue and earnings missed expectations.
3M also announced a restructuring initiative that will result in the reduction of about 2,000 jobs worldwide that will save an estimated annual pre-tax savings of $225 million to $250 million, with $100 million for the rest of this year.
Looking ahead, 3M expects its adjusted full-year 2019 earnings to be in the range of $9.25 to $9.75 a share — below its previous expectation of $10.45 to $10.90 per share. It also sees organic local-currency sales growth of between -1% and 2% versus a prior range of 1% to 4%.
3M was up 15% this year through Wednesday, finishing near $219 apiece.
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Source: Business Insider – jgarber@businessinsider.com (Jonathan Garber)