MMM 3M Company

By Austen Hufford 

3M Co., maker of coveted N95 face masks used by workers treating coronavirus patients, said sales grew in its medical business while a deepening industrial downturn is weighing on its business overall.

3M said Tuesday its adjusted sales in the Americas region fell 20% in April as factories suspended production, people put off dental cleanings and office managers bought fewer supplies with workforces being at home.

The company withdrew its guidance for the year, citing uncertainty about the broader industrial economy. While the pandemic has sharply increased demand for some 3M products, most notably its face masks, the company said demand has fallen for other goods in its vast product line, like industrial glues, as factory closures ripple through the industrial economy.

"The playbook is different this time," Chief Executive Mike Roman said in an interview. "There is more intensity. It's fast-changing. We are in a step-by-step approach to this."

Shares of 3M rose 2.2% in afternoon trading to $156.97, after revenue and profit for the first quarter came in above analyst expectations.

3M said it was cutting its capital investments this year to about $1.3 billion, down from as much as $1.8 billion planned previously. 3M also said it was temporarily shutting down some nonmask production lines due to weakened demand. About 25% of the company's factories and warehouses were closed as of earlier this month, 3M said.

The company plans to reduce costs by up to $400 million in its second quarter, largely by cuts in corporate travel, the use of external services and bringing on fewer temporary workers. The company said it expects the second quarter, which began in April, to be the weakest for the global economy.

3M has ramped up production of N95 masks, so-called because they block 95% of very small particles including those containing the virus. The company, based in St. Paul, Minn., has doubled global production to around 100 million a month and plans to double production again by early next year. 3M had $100 million in extra face-mask sales in its first quarter.

The increased production hasn't kept pace with the vast demand for the masks from front-line workers confronting the pandemic. The Trump administration in early April invoked the Defense Production Act to compel 3M to import 166.5 million masks from its facilities in China by the end of June. The Defense Department and the Department of Health and Human Services have also placed mask orders with 3M of nearly $250 million combined that will further increase domestic mask capacity.

Mr. Roman said 3M expects N95 masks to remain highly sought after, even as the pandemic appears to have peaked in some major U.S. cities.

There is "still going to be demand for having enough supplies, building inventories," he said.

Some hospitals have said they are turning to unknown resellers for masks they can't find through 3M's main distributors, such as W.W. Grainger Inc.

"We received orders for the same quantity of safety masks that we've usually received over several years, and in some cases even decades," Grainger's Chief Executive Donald Macpherson said last week.

3M has said it hasn't raised prices on its masks. The company has filed lawsuits against alleged price gougers and is working with authorities to clamp down on allegedly fraudulent behavior.

The maker of Post-it Notes also said that sales of office supplies decreased as many people began working from home.

Sales, excluding acquisitions and currency fluctuations, grew 0.3% in the first quarter. Revenue grew 2.7% to $8.08 billion in its first quarter. Profit rose 45% to $1.29 billion, or $2.22 a share, up from $891 million, or $1.51 a share, a year earlier. Profit last year was negatively hit by legal charges related to chemicals-product lawsuits. The company posted an adjusted earnings per share of $2.16, above the $2.03 expected by analysts.

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

April 28, 2020 16:27 ET (20:27 GMT)

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