3M to Slash 1,500 Jobs After Top Line Misses Estimates
3M reported mixed third-quarter 2015 results and announced layoffs before markets opened Thursday morning.
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3M Co. (NYSE: MMM) reported third-quarter 2015 results before markets opened Thursday. The conglomerate posted diluted earnings per share (EPS) of $2.05 on revenues of $7.71 billion. In the same period a year ago, the company reported EPS of $1.98 on revenues of $8.14 billion. Third-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $2.00 and $7.85 billion in revenues.
Organic local-currency sales grew 1.2% and foreign currency translation reduced sales by 7.4% year on year.
3M also announced a restructuring plan that will result in an expected reduction of 1,500 positions worldwide and estimated pretax savings of $130 million in 2016. The company anticipates a fourth-quarter pretax charge of approximately $100 million, or $0.13 per share, related to this plan. Reductions will be primarily focused on structural overhead, largely in the United States, and slower-growing markets, with particular emphasis on EMEA and Latin America.
3M lowered its full-year adjusted earnings expectation from a prior range of $7.80 to $8.10 per share to a new range of $7.73 to $7.78. Organic local-currency sales growth is expected to be in the range of 1.5% to 2.0%, versus previous guidance of 2.5% to 4.0%. The company anticipates that full-year free cash flow conversion will be in the range of 95% to 100%, versus a previous estimated range of 90% to 100%. The current consensus analysts’ estimate calls for full-year EPS of $7.77 on sales of $30.78 billion.
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CEO Inge G. Thulin said:
We continue to take actions to strengthen our portfolio, increase our scientific edge through research and development, and transform our business processes through a new global ERP system. We are building a stronger, more streamlined and more focused company that can compete and win for years to come.
3M’s shares traded up about 3.7% late Thursday morning to $155.35. The current 52-week range is $134.00 to $170.50. Thomson Reuters had a consensus analyst price target of $156.50 before the report.
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
