3M falls on job cuts, earnings miss

By Geoffrey Smith 

Investing.com -- 3M (NYSE:MMM) stock fell nearly 5% in premarket trading on Tuesday after the industrial giant missed on quarterly earnings forecast, hurt by write-offs related to its exit from the business of producing so-called "forever chemicals"

The company also said it will cut 2,500 jobs this year and take a restructuring charge of between $75 million and $100 million in the first quarter, as demand for some of its core products weakens.

It reckons sales will fall by between 2% and 6% in 2023, while underlying earnings will fall by some 12% to a range of around $8.75 a share. 

"Based on what we see in our end markets, we will reduce approximately 2,500 global manufacturing roles – a necessary decision to align with adjusted production volumes," Chairman and CEO Mike Roman said in a statement.

Adjusted earnings per share for the three months ending in December were $2.28, some 4% below consensus forecasts of $2.37 and down some 7% from a year earlier. Revenue was down 6% year-on-year at $8.1B, with the company blaming the dollar's strength - which accounted for 5 percentage points - and divestitures for the drop. 

Costs related to the company's decision to stop producing per- and polyfluoroalkyl substances, or PFASs by 2025, wiped out more than half of the underlying profit in the quarter, generating a charge of $1.15 a share, leaving final EPS of only 98c according to GAAP.

Roman noted that "rapid declines in consumer-facing markets", which accelerated in December, had been responsible for the company missing its own forecasts for the fourth quarter.  In China in particular, the company had been hurt by a surge in disruptions related to the spread of COVID-19, which affected a broad swath of the country's factories and logistics hubs in the final quarter. 

"As demand weakened, we adjusted manufacturing output and controlled costs, which enabled us to improve inventory levels." Roman said. 

3M stock had weakened through 2022 as the pandemic-driven surge in demand for its health products - notably its disposable face masks - ebbed. The stock closed Monday down nearly 40% from its 2021 peak, although it is up around 15% from its October lows.

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