- 2015 revenue projection, top end of profit forecast reduced
- Workforce pullback is about 1.7% of total at start of 2015
3M Co. plans to cut 1,500 jobs in a global restructuring effort as the maker of touchscreens and Post-it Notes fights sluggish growth overseas and a strong U.S. dollar that’s crimping sales.
The workforce pullback, about 1.7 percent of 3M’s total at the start of the year, was announced Thursday along with a reduction in the top end of the company’s 2015 profit forecast. 3M said the move will result in pretax savings of $130 million next year, and the stock rallied.
“The current economic growth environment remains challenging,” Chief Executive Officer Inge Thulin said on a conference call. The restructuring is designed to make 3M “a stronger, more agile, more focused company.”
The currency squeeze highlights 3M’s dependence on international business, which accounts for about two-thirds of revenue, and echoed the experience of many U.S. manufacturers. Since becoming CEO in 2012, Thulin has emphasized organic growth in overseas markets and new-product development. This year, he has reshaped 3M with deals that include its largest-ever acquisition.
3M rose 4.1 percent, the biggest gain in almost a year, to $156 at the close in New York as major U.S. stock indexes advanced. That pared the shares’ 2015 loss to 5.1 percent.
3M said its restructuring plan, which will result in a fourth-quarter pretax charge of about $100 million, will focus on reducing U.S. overhead and retrenchment in slow-growth international markets. The St. Paul, Minnesota-based company had about 89,800 workers at the beginning of the year.
Excluding restructuring costs, 2015 earnings will be $7.73 to $7.78 a share, 3M said. The previous high end of the range was $7.93 a share. Third-quarter profit of $2.05 a share topped the $2 average of 13 projections compiled by Bloomberg.
Organic local-currency sales growth will be 1.5 percent to 2 percent, compared with a previous projection of 2.5 percent to 4 percent. Quarterly sales fell 5.2 percent to $7.7 billion, trailing the average estimate of $7.84 billion. Foreign currency translation trimmed sales by 7.4 percent, 3M said.
While sales grew 1.2 percent on an organic local-currency basis, the total “was significantly below our expectation,” Steven Winoker, an analyst with Sanford C. Bernstein & Co., said in a note.
During the quarter, Thulin extended a plan to overhaul 3M with the hiring of Goldman Sachs Group Inc. to study selling or spinning off the Health Information Systems unit. The move built on agreements earlier this year to buy Polypore International Inc.’s separations media business for $1 billion and a safety-equipment maker for about $2.5 billion.