DOW JONES NEWSWIRES
3M Co.'s (MMM) fourth-quarter net income fell 37% on a
restructuring charge, lower margins and falling international
sales. The company also cut its 2009 outlook because of economic
uncertainty and challenges in its markets.
The company lowered the range of its 2009 outlook to earnings of
$4.30 to $4.70 a share, in line with Wall Street's recent view for
$4.42, from last month's projection of $4.50 to $4.95 a share,
which was well below analysts' estimates at the time. 3M also said
it expected organic sales volumes to decline between 5% and 9% from
its earlier outlook of a 3% to 7% decline.
Industrial conglomerates and manufacturers have warned about
profits recently, noting that customers have sharply reduced orders
in recent weeks.
Chief Executive George Buckley said the company planned to
reduce capital spending by about 30% this year and is working
"aggressively" to conserve cash.
The manufacturer, whose products range from Scotch tape and
Post-It notes to furnace filters and power lines, posted net income
of $536 million, or 77 cents a share, down from $851 million, or
$1.17 a share, a year earlier. The latest results included a net
20-cent restructuring charge, while last year's included a 2-cent
charge for work-force cuts and asset impairments. Excluding items,
earnings fell to 97 cents from $1.19.
Revenue decreased 11% to $5.51 billion, hurt by a stronger
dollar.
The mean estimate of analysts polled by Thomson Reuters was for
earnings of 93 cents on revenue of $5.67 billion.
The company had cut back its full-year estimate last month amid
a 10% drop in fourth-quarter volume.
Operating margins fell to 43.7% from 46.9%.
Investors have been watching the company's health-care business
results. The health-care unit, which makes products including
bandages, braces, inhalers and other drug-delivery systems,
accounts for about 30% of 3M's operating profit. The degree to
which the unit can hold up in the slumping economy will play a role
in determining whether 3M can meet its lackluster 2009 forecast.
During the quarter, the health-care segment's profit fell 12% on a
2.1% slide in sales, though operating income was up 4.5%.
One of the company's six business segments reported increased
sales - safety, security and protection services' sales rose 2.9%.
The display and graphics segment posted the worst sales results,
down 28%.
Sales slumped at the company's previously higher-growth
international operations. Latin America and Canada sales performed
best, with a 9.2% drop. International operations account for 65% of
total sales, the highest in the company's history.
3M said last month it would cut at least 2,300 jobs, or about 3%
of its work force. It announced 1,800 cuts in one week, saying it
was urging some workers to take time off without pay or to take
December vacation time. The next week it said it would cut an
additional 500 jobs, and possibly more by the end of 2008. The
company had already announced 1,000 layoffs in the third
quarter.
3M's shares closed Wednesday at $55.42 and haven't traded
premarket.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com
(Bob Sechler contributed to this story.)
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