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3M sees weaker 2Q profit
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June 15, 1998: 9:42 a.m. ET
MMM says second quarter affected by weakness in Japan, stronger dollar
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NEW YORK (CNNfn) - Minnesota Mining and Manufacturing Co. said Monday it expects second-quarter earnings to fall below expectations due to economic weakness in Japan and Asia, modest overall growth and the increasing strength of the dollar.
The St. Paul, Minn.-based company, more commonly known by its trademark 3M, is the first multinational corporation to attribute weaker earnings to the dollar's strength since last week's historic rise.
Last Thursday, the dollar reached its highest level against the yen since August 1990, making Japanese products and services cheaper in the United States than goods made here.
"We have a strong presence in Japan and Asia and our businesses continue to be affected by the economic contractions in that area," said L.D. DeSimone, 3M's chairman and chief executive.
The stock (MMM) was delayed for trading early Monday.
3M said earnings are estimated to be in the range of 90 to 94 cents a share on a diluted basis. Analysts had anticipated profits of $1.05 a share, according to First Call.
The company estimates that currency effects will reduce second-quarter earnings by more than 10 percent.
In the second quarter last year, 3M earned $418 million, or 99 cents a share on a diluted basis.
And the U.S. currency has continued higher. In early New York trading Monday, the dollar was at 146.18 yen and 1.8151 Deutsche marks.
For the remainder of the year, 3M said it expects higher second-half earnings but profits for the year as a whole are expected to be similar to 1997's.
In 1997, earnings from continuing operations totaled $1.63 billion, or $3.88 a share on a diluted basis.
"In the United States, we continue to see good demand in several businesses, paced by new products, but softness in electronics and certain other industries has held back overall growth," DeSimone said.
3M will report results for the second quarter July 23.
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