3M Co. (MMM) reported Thursday that its second-quarter earnings
fell 17% on amid lower demand, though the diversified
manufacturer's results beat analysts' estimates.
3M also raised its full-year forecast, projecting earnings of
$4.10 a share to $4.30 a share, with organic volume declining 10%
to 13%. This compares with its April view for earnings of $3.90 to
$4.30 a share on a volume drop excluding acquisitions, divestitures
and currency fluctuations of 11% to 15%.
Shares were up 2.4% at $66.20 premarket.
The company, which makes products ranging from Scotch tape and
Post-It notes to furnace filters and power lines, has cut costs but
still faces significant declines in manufacturing and
transportation markets. 3M offered early retirement to 3,600
nonunion employees, or about 11% of its U.S. work force, in early
April. It cut another 1,200 workers in the first quarter.
The company's second-quarter earnings fell to $783 million, or
$1.12 a share, from $945 million, or $1.33 a share, a year earlier.
Excluding items such as restructuring-related expenses, earnings
dropped to $1.20 from $1.39.
Revenue fell 15% to $5.7 billion.
Analysts polled by Thomson Reuters expected per-share earnings
of 94 cents on revenue of $5.41 billion.
Chairman and Chief Executive George W. Buckley said spending
controls and prior restructuring moves also boosted performance.
The health-care business, posted a 11% increase in earnings and a
2.2% rise in revenue.
Moody's Investors Service has taken notice of 3M's declining
profits, as well as its increasing debt-to-earnings ratio, cutting
the company's credit rating by one notch in early May. Moody's
cited the fact that 3M has taken out debt to fund share buybacks
and acquisitions and the company's pension funds are increasingly
underfunded. It did note, however, that 3M has now suspended its
buybacks and plans to pare its debt.
-By Melissa Korn and Tess Stynes, Dow Jones Newswires;
melissa.korn@dowjones.com