3M cuts 2012 guidance, citing "economic realities'
MINNEAPOLIS (AP) — 3M Co. is reducing its profit expectations for this year because of what it calls "current economic realities."
3M makes everything from Post-it notes and Scotch tape to roofing granules, coatings for LCD screens, and traffic sign coatings. The variety of its businesses and its worldwide footprint make it an economic bellwether. And CEO Inge Thulin said what it's seeing right now is a "slow-growth economy."
"Q3 market conditions were challenging, and we expect this through the end of the year," Thulin said.
The company now expects to earn $6.27 to $6.35 per share for the year, versus its previous expectation for a profit of $6.35 to $6.50. Analysts had been expecting a profit of $6.40 per share, according to a survey by FactSet.
Revenue will be roughly flat because currency exchange rates will wipe out any increase.
3M often makes so-called "bolt-on" acquisitions, where it buys companies that it can quickly integrate into its own operations. Its latest 2012 guidance includes 3 cents per share of acquisition costs.
Earlier this month, antitrust concerns led 3M to call off its $550 million deal to buy Avery Dennison Corp.'s office supply operations. And on Oct. 1, 3M said it would pay buy ceramic components maker Ceradyne for $847 million in cash.
For the most recent quarter, 3M's net income rose 6.7 percent to $1.16 billion, from $1.09 billion a year ago. Revenue fell slightly to $7.5 billion.
The earnings of $1.65 per share matched analyst expectations, but revenue fell short of expectations for $7.63 billion.
The revenue shortfall was mostly because foreign exchange rates worked against 3M. All six of its business units reported at least small increases in sales, not counting foreign exchange or acquisitions. But revenue in U.S. dollars in some of those units declined.
Sales in its biggest division, industrial and transportation, fell a half-percent to $2.6 billion. Still, operating income rose 9.4 percent to $575 million.
Its health care business saw sales rise 1.4 percent to $1.3 billion, with operating income up 9 percent to $400 million. In general, health care businesses tend to be more recession-proof because people get treated for illnesses whether or not the economy is doing well.
3M said it would give 2013 financial guidance on Dec. 12.
Shares of Maplewood, Minn.-based 3M fell $3.80, or 4.1 percent, to close at $88.73 Tuesday. Its shares are down 7 percent from a 52-week high of $95.46 set Oct. 8.