Description
3M Co. said it planned to cut about 2,500 manufacturing jobs, citing continued economic headwinds and projected profit this year that was below Wall Street estimates. The stock fell the most in nearly 13 years. The maker of Post-it notes, surgical supplies and touch screens said Tuesday that it expects 2023 adjusted earnings to be in the range of $8.50 to $9 a share, excluding special items. This is below the average estimate of analysts. Sales of organic products could fall as much as 3%, the industrial and consumer goods conglomerate said. "We're not happy with our progress or our performance," Chief Executive Mike Roman said on a conference call with analysts. "We're taking a closer look at everything we do."
The company's shares pared a 16% drop, the biggest intraday drop since May 2010, falling 6.3% to $114.85 at 10:38 a.m. in New York.
The St. Paul, Minnesota-based company sees continued macroeconomic headwinds this year and described the planned job cuts as a necessary measure due to lower production volumes. 3M's gloomy forecast follows several disappointing quarters, and could bode ill for other industrial companies heading into 2023.
"As an industry gauge, 3M's outlook for broad-based weakness in industrial and consumer markets could herald worsening conditions for other industrials," Karen Ubelhart, an analyst at Bloomberg Intelligence, wrote in a research note after the report. about the results.
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Consumer Demand Mitigation
3M's fourth-quarter adjusted earnings per share and adjusted operating margin for the period also missed analysts' estimates. The company has seen a sharp slowdown in segments like consumer electronics and retail channels, and expects sluggish demand to continue through 2023.
Weak demand has added to ongoing inflationary pressures that are driving up the cost of 3M materials, labor and logistics. Roman said the company has taken aggressive steps to reduce its manufacturing footprint in response and has imposed strict controls on hiring and discretionary spending.
The company, which had about 95,000 employees at the end of 2021, twice cut its full-year 2022 sales and earnings outlook. It did so most recently in October, saying strong and fragile demand for the US dollar added pressure on markets. margins. due to inflation and supply chain turbulence.
3M battled slowing demand in key segments as well as rising risks of litigation over allegedly defective combat earplugs. It also faces liabilities related to pollution caused by so-called everlasting chemicals, which the company plans to stop producing by the end of 2025.
