3M Company (NYSE: MMM) reported its first quarter financial results before the market open on Thursday. The Company missed its quarterly estimates for both revenue and earnings, which sent shares plunging by 10% at the opening bell.
For the quarter, 3M reported earnings of USD 2.23 per share on revenue of USD 7.86 Billion. Refinitiv analysts expected earnings of USD 2.49 per share on revenue of USD 8.02 Billion.
Earnings were heavily impacted due to a litigation charge of approximately USD 548 Million or 72 cents per share. Due to the litigation charge, 3M faced declines in both earnings and revenue, as they fell by 5% and 10.8%, respectively.
“The first quarter was a disappointing start to the year for 3M,” said Mike Roman, 3M Chief Executive Officer. “We continued to face slowing conditions in key end markets which impacted both organic growth and margins, and our operational execution also fell short of the expectations we have for ourselves.”
3M’s Industrial unit reported revenue of USD 2.9 Billion, down 6.6% year-over-year. The Safety and Graphics unit delivered revenue of USD 1.7 Billion, falling by 4.2% year-over-year. Healthcare sales grew by 0.3% to USD 1.5 Billion. Electronics and Energy plummeted by 11.8% year-over-year to USD 1.2 Billion. Lastly, 3M’s Consumer unit declined by 1.9% to USD 1.1 Billion.
As a result of the weaker-than-expected quarter, 3M expects a slowdown for fiscal 2019. 3M expects to reduce its workforce by 2,000 positions worldwide with an estimated annual pre-tax savings range of USD 225 Million to USD 250 Million, with USD 100 Million in the remainder of 2019.
As for the rest of 2019, 3M expects earnings, excluding the litigation-related charges, to be in the range of USD 9.25 to USD 9.75 per share compared to its prior guidance of USD 10.45 to USD 10.90 per share. 3M expects organic local-currency to grow by 1% to 2%, lowered from its previous estimates of 1% to 4%.
“While we take actions to manage through the near-term, we also continue to invest in growth to position 3M for the future,” Roman continued. “We recently implemented a significant portfolio realignment from five to four business groups, which will enable us to better serve our customers and global markets. Moving forward, I am confident that we are making the necessary changes and focused on the right priorities to accelerate 3M into a stronger future.”