The diversified maker of consumer, medical and industrial products - its brand names include Post-it Notes and Scotch Tape - said its profit excluding charges fell to $392 million, or 97 cents a share, from $432 million, or $1.03, a year earlier. Analysts were expecting a gain of 98 cents, according to Zacks Investment Research.Revenue dipped to $3.77 billion from $3.82 billion.
"The slower pace of economic growth, combined with negative currency effects, impacted our results for the quarter," said L. D. DeSimone, 3M's chief executive.
Looking ahead, 3M (MMM) said it expects higher fourth-quarter sales and earnings compared with the same quarter last year.
"While we are facing a challenging economic environment, we expect to see increasing benefits from our cost-reduction efforts," DeSimone said. "We are monitoring global economic conditions closely, and we will make further adjustments as necessary."
Including a restructuring charge of $332 million, the company earned $178 million, or 44 cents a share, in the latest quarter. The charge stems from asset write-downs, severance costs and losses on business dispositions. 3M said it expects to take more restructuring charges related to "productivity improvement initiatives," bringing the total to about $500 million.
Outside the U.S., sales totaled $1.87 billion, about 2 percent below the year-earlier quarter. "Continued difficult economic conditions in the Asia Pacific area, together with economic slowdowns in Latin America and parts of Europe, held back 3M international sales gains during the quarter," the company said.
Domestically, sales edged up 1 percent to $1.89 billion from a year earlier, adjusted for the 1997 sale of the company's outdoor advertising business. 3M said U.S. growth "was constrained by softness in businesses that serve the electronics, industrial and trnsportation safety markets."
Also, fluctuations in currency exchange rates cut earnings by 8 cents a share, or about 8 percent, 3M said.
The company has been experiencing some turbulence as of late, leading some observers to question whether 3M is keeping up with the times. 3M has a reputation as a place where costly product research is given a free hand and where management is less concerned about controlling costs.
To combat that image and boost its performance, however, 3M has embarked on a restructuring plan, which includes closing plants, cutting jobs, mostly through attrition, and discontinuing some product lines.
Written By Jeffry Bartash