3M plans 1,500 job cuts as dollar hits overseas sales

NEW YORK •3 M Co. plans to cut 1,500 jobs in a global restructuring effort as the maker of touchscreens and Post-it Notes fights sluggish growth overseas and a strong U.S. dollar that’s crimping sales.

The workforce pullback, about 1.7 per cent of 3M’s total at the start of the year, was announced Thursday along with a reduction in the top end of the company’s 2015 profit forecast. 3M also lowered its full-year revenue projection.

The currency squeeze highlights 3M’s dependence on international business, which accounts for about two-thirds of revenue, and echoed the experience of many U.S. manufacturers. Of 32 companies in the Standard & Poor’s 500 Industrials index reporting third-quarter results, 22 posted sales that missed analysts’ estimates, according to data compiled by Bloomberg.

“The current economic growth environment remains challenging,” chief executive officer Inge Thulin said on a conference call. The restructuring plan is designed to make 3M “a stronger, more agile, more focused company.”

Since becoming CEO in 2012, Thulin has emphasized organic growth in overseas markets and new-product development. This year, he has reshaped 3M with deals that include its largest- ever acquisition.

3M said its restructuring plan, which will result in a fourth-quarter pretax charge of about US$100 million, will focus on reducing U.S. overhead and retrenchment in slow-growth international markets. The company had about 89,800 workers at the beginning of the year.

3M shares declined 14 per cent this year through Wednesday.

Excluding restructuring costs, 2015 earnings will be US$7.73 to US$7.78 a share, 3M said. The previous high end of the range was US$7.93 a share. Third-quarter profit of US$2.05 a share topped the US$2 average of 13 projections compiled by Bloomberg.

Organic local-currency sales growth will be 1.5 per cent to two per cent, compared with a previous projection of 2.5 per cent to 4 per cent. Quarterly sales fell 5.2 per cent to US$7.7 billion, trailing the average estimate of US$7.84 billion. Foreign currency translation trimmed sales by 7.4 per cent, 3M said.

While sales grew 1.2 per cent on an organic local-currency basis, the total “was significantly below our expectation,” Steven Winoker, an analyst with Sanford C. Bernstein & Co., said in a note.

During the quarter, Thulin extended a plan to overhaul 3M with the hiring of Goldman Sachs Group Inc. to study selling or spinning off the Health Information Systems unit.