3M’s Outlook Disappoints After Company Misses Profit EstimatesBy
Shares plunge most since December 2015 after earnings report
Maker of Post-it notes faces hurdles in office-supply markets
3M Co. is having trouble keeping up with high expectations.
The latest profit forecast by the maker of Post-it notes and touchscreen components fell short of analysts’ estimates even after raising the low end of the range. That added to the disappointment on Wall Street after second-quarter earnings trailed projections.
The outlook underscores the hurdles for the manufacturer after it recently acknowledged challenges in the consumer electronics and office-supply markets. 3M, which generates about two-thirds of its sales abroad, has sought to reduce U.S. expenses and strengthen business in Europe and Latin America.
“We had thought expectations were quite high going into what might be a messy” quarter, Julian Mitchell, an analyst at Credit Suisse Group AG, said in a note to clients Tuesday.
3M has been deploying capital more aggressively to overhaul its portfolio. The company agreed to buy Scott Safety in a $2 billion deal earlier this year, less than two years after making its biggest acquisition ever when it purchased a safety business from KKR & Co. for $2.5 billion.
The shares fell 3.5 percent to $202.76 at 9:32 a.m. in New York after plunging as much as 3.6 percent in their biggest intraday decline since December 2015. 3M advanced 18 percent this year through Monday, outpacing the 8.8 percent advance of a Standard & Poor’s 500 index of industrial companies.
Adjusted earnings this year will be $8.80 to $9.05 a share, the St. Paul, Minnesota-based company said in a statement. While the lower end was a dime higher than the previous projection, the midpoint of $8.93 trailed the $8.98 average of analysts’ estimates compiled by Bloomberg.
Second-quarter earnings climbed to $2.58 a share, missing the $2.59 average of analysts’ estimates compiled by Bloomberg. Sales rose 1.9 percent to $7.81 billion, compared with the $7.86 billion expected by analysts.