- Continued softness in consumer electronics hurts revenue
- Second-quarter earnings beat analysts’ estimates, sales miss
3M Co. cut its outlook for sales growth as the strong U.S. dollar weighed on second-quarter earnings for the maker of Post-it notes and Scotch tape.
Currency-adjusted sales won’t increase by more than 1 percent this year, the St. Paul, Minnesota-based company said Tuesday. 3M earlier forecast a gain of 1 percent to 3 percent. The company also narrowed its annual earnings projection to $8.15 to $8.30 a share from a previous range of $8.10 to $8.45 a share.
The revisions signal continued challenges for the maker of adhesives, touch screens and dental tools, amid a sluggish global economy and currency headwinds. Second-quarter sales dropped sharply in 3M’s electronics operation.
Chief Executive Officer Inge Thulin overhauled operations last year to reduce U.S. expenses and strengthen 3M’s business in Europe and Latin America. The company, which generates about two-thirds of revenue overseas, cut its 2015 forecast more than once last year.
Second-quarter earnings rose to $2.08 a share, beating the $2.06 average of analysts’ estimates compiled by Bloomberg. Sales fell 0.3 percent to $7.66 billion, compared with analysts’ expectations of $7.7 billion. The strong dollar reduced revenue by 1.5 percent, 3M said.
Revenue in the electronics and energy division tumbled 9.1 percent after stripping out currency effects, with the company citing particular weakness in electronics and display materials. 3M has been restructuring the business, including 250 job cuts, amid persistent softness in the consumer-electronics market.
“I think we have to wait into some time in 2017 before we see growth specifically in consumer electronics taking place,” Thulin said on a conference call.
Revenue in the Asia-Pacific region dropped 5.4 percent, the most of any geographic area, as electronics sales declined.
The shares fell 0.7 percent to $178.35 at 10 a.m. in New York. 3M rose 19 percent this year through Monday following an 8.3 percent decline last year, the first annual drop since 2011.