3M to cut 1,500 jobs in global restructuring

3M Co. dropped the most in nine months after revealing it had received a grand jury subpoena in an environmental probe and saying it would cut 1,500 jobs amid slumping markets including car parts and electronics.

The pared workforce is part of a restructuring — affecting “all business groups, functions and geographies” — starting this month that will recast reporting lines and consolidate manufacturing oversight, 3M said in a statement Tuesday as it reported earnings. The company anticipates pretax savings of as much as $120 million a year from the changes.

The cuts, on top of 2,000 layoffs announced in April, capped a rough year for the maker of everything from Post-it notes to touchscreen displays. 3M trimmed its forecasts multiple times last year because of trade disputes, headwinds in China and flagging demand in the automotive and electronics markets. Chief Executive Officer Mike Roman said 3M is positioning itself to capitalize on an eventual rebound.

The shares fell 4.1% to $168.38 at 10 a.m. New York after skidding as much as 5.4%, the most intraday since April 25. 3M fell 7.4% in 2019, the third-worst performance in the Dow Jones Industrial Average.

The company received a federal grand jury subpoena last month regarding discharges at an Alabama facility that may not have complied with relevant permits, Roman said in a call with analysts. 3M is cooperating with the investigation, which followed a previously reported company disclosure to authorities, he said.

The St. Paul, Minnesota-based company took a pretax fourth-quarter writedown of $214 million for litigation related to PFAS chemicals. The company, along with chemicals- and materials-making peers such as Chemours Co., faces potentially substantial liability from lawsuits over the harmful effects of the so-called “forever chemicals.”

As part of the newly announced restructuring, non-U.S. employees will now report to their business groups rather than the international operations organization, which is being eliminated. Julie Bushman, who oversees international operations, will step down April 1, 3M said.

The job cuts, representing about 1.5% of the company’s workforce, prompted a fourth-quarter pretax charge of $134 million, the company said. Total adjusted profit fell to $1.95 a share in the period, trailing the $2.10 average of analysts’ estimates compiled by Bloomberg. Sales climbed 2.1% to $8.1 billion.

The quarter was “noisy,” with “unexpectedly large” charges, Deane Dray, an analyst at RBC Capital Markets, said in a note to clients.

The transportation and electronics unit continued to weigh on results, with revenue dropping 6.2%. The strain was countered somewhat by the health-care division, a recent bright spot, which boosted sales 25% in the quarter.

Roman acknowledged that 3M “continued to manage challenges in certain key end markets,” but said in the statement that the results were still in line with the company’s expectations.