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3M to miss 2Q, '01 marks
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July 2, 2001: 11:25 a.m. ET
Diversified manufacturer cites spreading of economic slowdown to Europe, Asia
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NEW YORK (CNNfn) - Diversified manufacturer Minnesota Mining & Manufacturing Co. warned Monday that it expects second-quarter and full-year profits to miss Wall Street expectations, citing a spreading of the U.S. economic slowdown to markets in Europe and Asia.
The company, popularly known as 3M (MMM: up $1.50 to $115.60, Research, Estimates), said it expects earnings per share of $1.10 to $1.14 in the just-completed quarter, rather than the $1.19 a share forecast by analysts surveyed by earnings tracker First Call. The company earned $1.18 a share a year earlier.
The company, which makes such diverse products as Scotch tape and Post-It Notes, industrial coatings, and health-care products and equipment, said it expects full-year EPS of $4.50 to $4.75 a share, compared with First Call's estimate of $4.83 and the $4.68 a share it earned in 2000.
This is the second warning on full-year results. The previous warning, given when first-quarter earnings were reported in April, included the announcement of 5,000 job cuts, equal to about 7 percent of its worldwide work force.
"Based on sales trends over the last half of the second quarter, it is clear that economic weakness is now manifesting itself in Europe and Asia Pacific in addition to the United States," W. James McNerney Jr., the company's new CEO, said. "This broad slowdown is impacting most of our businesses, with the exception of health care."
The company said results also are being affected by the strong dollar, which reduces the value of international sales in other currencies and makes U.S.-priced merchandise more expensive and less competitive.
The company said sales in the second quarter will increase 1 percent from $4.22 billion a year earlier. That's actually a bit below forecasts of $4.23 billion for the most recent period.
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3M said international sales will fall 8 percent due to the currency effect, reducing overall sales by 4 to 5 percent, and cutting earnings per share by 7 cents. That profit reduction is included in the company's new earnings guidance.
"Some say the U.S. economy may be strengthening, but there's as much of a head wind coming from Europe and Asia," said David Begleiter, an analyst with ABN Amro. "Half of 3M's sales are from overseas." 
From staff and wire reports
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