Shares in 3M posted their biggest one-day drop in decades after the company reported first quarter results that fell short of Wall Street projections. The company also announced plans to cut 2,000 jobs worldwide as part of a restructuring due to a slower-than-expected 2019.
The maker of Post-it notes, industrial coatings, ceramics and other consumer products said Thursday the restructuring would reduce its number of operating units from five to four and is expected to save about $225 million to $250 million a year. The St. Paul Minnesota-based company anticipates a pretax charge of about $150 million, or 20 cents per share, this year.
Of the five current units, only the health care group saw an increase in sales, albeit a modest 0.3% uptick. The other four units — industrial, safety and graphics, electronics and energy, and consumer — saw sales declines ranging from 1.9% to 11.8%. The company said effective April 1 it had restructured to four units: safety and industrial, transportation and electronics, health care and consumer.
3M lowered its full-year earnings guidance. The company now foresees its 2019 adjusted earnings in a range of $9.25 to $9.75 per share. Its prior outlook was for $10.45 to $10.90 per share. Analysts surveyed by FactSet expect $10.40 per share, on average.
The company took a $548 million charge in the quarter, or 72 cents a share, to resolve current and future litigation. 3M set aside a reserve of $235 million for “certain environmental matters and litigation” and an additional $313 million to address current and expected coal mine dust lawsuits in Kentucky and West Virginia. Citi analyst Andrew Kaplowitz said in a client note that the litigation “may play a more prominent role in the 3M story for an extended period of time.”
3M Co. earned $891 million, or $1.51 per share, in the first quarter. Adjusted for one-time costs, earnings were $2.23 per share. That missed the $2.50 per share that analysts surveyed by Zacks Investment Research were looking for.
Revenue was $7.86 billion in the period, down 5% year over year and also falling short of Street forecasts of $8.09 billion. A year ago, 3M posted adjusted earnings per share of $2.50 on revenue of $8.28 billion.
Shares closed at $190.72, down $28.36, or 13%, the stock’s largest one-day decline since Black Friday, 1987.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on MMM at https://www.zacks.com/ap/MMM