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3M edges lowered target
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July 23, 2001: 11:26 a.m. ET
Maker of Post-it notes, industrial products posts lower 2Q profit, revenue
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NEW YORK (CNNfn) - Diversified manufacturer 3M posted a second-quarter profit Monday that edged past its lowered guidance for the period, but its shares fell as it warned again an economic slowdown could hurt its full-year results.
The maker of a variety of products from Scotch tape and Post-it Notes to industrial coatings and medical equipment earned $451 million, or $1.12 a diluted share, excluding special items. That's down from net income of $470 million, or $1.18 a share, it earned a year earlier.
Analysts surveyed by earnings tracker First Call cut their earnings-per-share forecast for the period to $1.11 from $1.19 after the company warned July 2 that EPS would fall between $1.10 and $1.14.
The St. Paul, Minn.-based company also restated guidance from July 2 that it expects to earn $4.50-to-$4.75 a share for 2001, excluding one-time items, as "slower growth outside the United States and the persistently strong U.S. dollar" will continue to hit results in the next six months.
Wall Street analysts expect 3M to earn $4.57 a share, according to First Call, compared with the $4.68 a share it earned in 2000, excluding special items.
After the news, 3M (MMM: down $1.20 to $111.80, Research, Estimates) shares, a component of the Dow Jones industrial average, fell nearly 2 percent after falling about 1 percent Friday.
The company said the low end of the earnings range assumes the U.S. economy will be little changed for the rest of the year, with a continuing slowdown outside the United States.
Revenue fell to $4.08 billion from $4.24 billion a year ago, missing the forecast of $4.23 billion. The company said that in local currencies sales increased 3 percent in the period. The increase in value of the dollar led to the decline in reported revenue. But U.S. sales volume declined 3 percent, although a 0.5 percent average increase in prices limited the domestic revenue decline to 2.5 percent.
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The revenue drop was broad-based, as only its health-care and specialty products units had increased sales. Specialty products operating profit slipped slightly despite higher sales, but the consumer and office products division posted slightly better earnings despite lower sales.
Special charges, including restructuring charges for recently announced staff cuts, lowered 3M's net income to $202 million, or 50 cents a diluted share, in the latest period. 
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