3M Co (NYSE: MMM) stock fell over 13.3% on 25th April, 2019 (as of 1:45 pm GMT-4; Source: Google finance) after the company said it would lay off 2,000 workers globally as it reported a widely lower-than-expected quarterly profit and cut its 2019 earnings forecast due to worsening performance in key markets. The first-quarter results were hurt by a litigation-related pretax charge of $548 million. Sales in Asia-Pacific, its biggest market outside the U.S., fell 7.4%, while sales in Europe, the Middle East and Africa declined 9.4%.
Moreover, the job cuts, part of moves to restructure its businesses into four operating units from five, would result in an estimated annual pretax savings of $225 million to $250 million, with $100 million in the remainder of 2019.
Meanwhile, two significant litigation issues impacted 3M’s first-quarter results. The company established a reserve of $235 million to resolve certain environmental matters and litigation, in which 3M is a defendant, related to its historical manufacture and disposal of PFAS-containing waste. The company has also increased its respirator reserve by $313 million to address the cost of resolving all current and expected future coal mine dust lawsuits in Kentucky and West Virginia.
MMM in the first quarter of FY 19 has reported the adjusted earnings per share of $2.23, missing the analysts’ estimates for the adjusted earnings per share of $2.49, as per Refinitiv survey of analysts. The company had reported 5 percent fall in the adjusted revenue to $7.86 billion in the first quarter of FY 19, missing the analysts’ estimates for revenue of $8.025 billion. Organic local-currency sales declined 1.1 percent while divestitures, net of acquisitions, decreased sales by 0.5 percent. Foreign currency translation decreased sales by 3.4 percent year-on-year. Total sales grew 0.3 percent in Health Care, with declines of 1.9 percent in Consumer, 4.2 percent in Safety and Graphics, 6.6 percent in Industrial, and 11.8 percent in Electronics and Energy. Organic local-currency sales increased 0.9 percent in Consumer and 0.7 percent in Health Care, with decreases of 0.1 percent in Safety and Graphics, 2.8 percent in Industrial, and 3.0 percent in Electronics and Energy.
Additionally, excluding significant litigation-related charges, operating income was $1.7 billion with operating margins of 21.4 percent. 3M paid $830 million in cash dividends to shareholders and repurchased $701 million of its own shares during the quarter.
The company, whose diverse products include adhesive tapes and air filters, said it now expects 2019 adjusted earnings between $9.25 and $9.75 a share, down from its prior forecast of $10.45 to $10.90 per share.