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3M tops 3Q, warns on 4Q
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October 22, 2001: 2:29 p.m. ET
Diversified manufacturer sees weaker sales cutting company's profit.
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NEW YORK (CNNmoney) - Diversified manufacturer 3M posted a 12 percent decline in third-quarter profit before items that edged past Wall Street expectations for the period, but it lowered earnings guidance for the fourth quarter.
The maker of such diverse products as Scotch tape, Post-it Notes, industrial coatings and health-care items earned $437 million, or $1.10 a share, in the period, excluding special items. That was 1 cent a share better than forecasts of analysts surveyed by earnings tracker First Call, but down from the $499 million, or $1.25 a share, it earned a year earlier.
Revenue for the company, whose full name is Minnesota Mining & Manufacturing, fell to $3.97 billion from $4.27 billion a year earlier due to changes in currency exchange rates. The company said the changes, primarily in Brazil and Asia, reduced revenue by 3 percent and earnings per share by 6 cents. First Call's forecast called for revenue of $4 billion in the period.
Despite the gloomy outlook, shares of 3M (MMM: up $3.84 to $106.01, Research, Estimates), a component of the Dow Jones industrial average, jumped $3.53 to $105.70 in afternoon trading Monday.
The company said it now expects to earn between 95 cents and $1.05 a share in the fourth quarter, which likely would put it below the current First Call EPS forecast of $1.05. The company cited the continuing difficult economic environment and unusually unpredictable market conditions for the new, lowered earnings guidance. The company earned $1.12 a share in the fourth quarter last year.
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During the latest quarter the company had a previously-announced after-tax charge of $43 million, or 11 cents a share, to cover severance costs and increased depreciation from a restructuring effort. Including that charge, the company posted net income of $394 million, or 99 cents a share.
The company largely cited a 9 percent decrease in expenses for beating third quarter expectations.
"The company's efforts to improve productivity and much more aggressively manage their asset base is really starting to become more evident," Prudential Securities Analyst Nicholas Heymann told CNNfn's The Money Gang Monday. "We see this certainly from the standpoint of the company being well ahead of schedule for its restructuring."
3M said its volume declines of the past few quarters have been its worst since at least the early 1970s. Health care was the only one of its six segments to post higher sales and operating profits in the third quarter.
"There's no place to hide other than our health-care business," Chief Financial Officer Bob Burgstahler on a conference call with analysts. "All segments of the industrial economy, every market across the world, and exchange rates have all lined up negative at the same time."
International sales totaled $2 billion as volume declined 2.3 percent. Volume decreased 2 percent in Europe and fell 3.4 percent in the Asia Pacific region. Latin America unit sales increased 0.8 percent.
U.S. sales fell 6.7 percent to $2 billion from the year-earlier period.
"Although the economic environment remains uncertain, we are focused on making the fundamental changes necessary to improve our competitive advantage via higher growth rates, increased productivity and improved asset turns," CEO James McNerney said in a statement. 
-- from staff and wire reports
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