(Reuters) – U.S. manufacturing conglomerate 3M Co on Thursday said it would lay off 2,000 workers globally as it reported a widely lower-than-expected quarterly profit and cut its 2019 earnings forecast due to worsening performance in key markets.
FILE PHOTO: The logo of Down Jones Industrial Average stock market index listed company 3M is shown in Irvine, California April 13, 2016. REUTERS/Mike Blake/File Photo
The company’s shares fell 8 percent in premarket trading.
Results from the maker of Post-it notes and Scotch tape, regarded as an economic bellwether, offer the latest evidence of cooling in the company’s biggest markets including Asia and Europe, and raise concerns of a possible slowdown that could stifle 3M’s growth.
“We continued to face slowing conditions in key end markets which impacted both organic growth and margins,” Chief Executive Officer Mike Roman said in a statement.
“Our operational execution also fell short of the expectations we have for ourselves.”
3M’s results come a day after heavy equipment maker Caterpillar Inc flagged tepid sales in its construction equipment business in the Asia-Pacific region pointing to continuing subdued growth in China.
3M also recorded pre-tax charges of $548 million, or $0.72 per share, in the first quarter ended March 31, related to litigation costs, including its historical disposal of a chemical waste.
Sales in Asia-Pacific, 3M’s biggest market outside the United States fell 7.4 percent, while Europe, Middle East and Africa reported declines of 9.4 percent. Sales in the United States rose just 0.1 percent.
“The only positive that may come out today for the stock is that one of the sell-side bulls may downgrade, as even the most disingenuous analyst has to admit a change in thesis,” J.P.Morgan analyst Stephen Tusa wrote in a note.
3M, which makes everything from adhesive tapes to air filters, now expects 2019 adjusted earnings between $9.25 and $9.75 a share, versus its prior forecast of $10.45 to $10.90 per share.
The company said the job cuts would result in an estimated annual pre-tax savings range of $225 million to $250 million, with $100 million in the remainder of 2019, the company said in a statement here.
Reporting by Rachit Vats and Ankit Ajmera in Bengaluru; Editing by Shailesh Kuber
