3M shares dipped on Tuesday after the company reported lower-than-expected earnings and more layoffs, reflecting declines in its industrial businesses amid slowing growth in China.
As The Wall Street Journal reports, 3M is “the latest manufacturer to exhibit signs of strain at a time of weakness for the industrial economy,” with fourth-quarter net income falling to $970 million, or $1.66 a share, from $1.35 billion in the same period a year ago.
Sales grew 2.1% year-on-year to $8.11 billion, while adjusted earnings were $1.95 a share. Analysts had expected earnings of $2.11 per share on revenue of $8.11 billion.
“Our team executed well in the fourth quarter and delivered results that were in-line with our expectations,” 3M CEO Mike Roman said in a news release. “While we continued to manage challenges in certain key end markets, we generated solid underlying margins and robust free cash flow.”
3M also said it will eliminate 1,500 jobs across the globe and create a new global operating model and streamlined organizational structure that will ultimately save it $110 million to $120 million. It had previously announced a 2% workforce reduction in April, resulting in about 2,000 layoffs in underperforming business lines, such as energy and electronics.
In trading Tuesday, 3M shares fell 5% to $166.80.
According to the Minneapolis Star Tribune, 3M, like many multinational industrial companies, “has been under pressure as overseas growth has slowed in such [countries] as China, and the worldwide automotive, aerospace and electrical sectors have seen a slide.”
In the fourth quarter, sales in 3M’s safety and industrial business fell 2.8% to $2.8 billion while sales in its transportation and electronics business fell 5.9%, excluding currencies and acquisitions. Revenue also declined in the aerospace unit, which makes industrial glues and other products for plane makers.
“The industrial production-related businesses are a little lower growth,” Roman told the WSJ.
For 2020, the company said it expects earnings between $9.30 and $9.75 a share, compared with analysts’ forecasts of $9.59 a share. Roman told analysts he expects a return to sales growth this year.