3M expects profit below estimates

3M Co forecast 2020 profit below expectations after narrowly missing quarterly revenue estimates on Tuesday as weak demand from China dents overall growth.

Sales in Asia-Pacific region, its largest market outside the United States, fell for the fifth straight quarter, weighed by softness in China’s automotive and electronics sectors, a reason that had forced 3M to cut jobs and production last year.

The company said it would cut 1,500 jobs as it continues to restructure its businesses and reduce costs.

The cuts, on top of 2,000 lay-offs announced in April, capped a rough year for the maker of everything from Post-it notes to touchscreen displays.

“We were looking at a sluggish start to China in first quarter ... based on automotive, and the build rate’s expected to be down mid-single digits and maybe even high single digits,” chief executive officer Michael Roman said.

Executives, however, said the company was ramping up production of its respiratory protection products to match global demand arising from coronavirus outbreak in China.

“We are focused on ramping up 24/7, not only in our China operations but in Asia, Europe and the US to meet that demand,” Roman said.

Asia-Pacific sales were down 1.7%, while Europe, Middle East and Africa reported a decline of 2%. Sales in the United States rose 7.4%.

Sales at its health-care unit, which accounted for 25% to total revenue, rose about 25.4% on strength in international markets.

3M said it expects 2020 earnings per share to be between $9.30 and $9.75, the midpoint of which was below analysts’ average estimate of $9.61 per share.

Net income attributable to 3M fell 28% to $969 million, largely due to restructuring and litigation charges. On an adjusted basis, it earned $2.15 per share, beating expectations of $2.10, according to IBES data from Refinitiv.

Net sales fell 2.1% to $8.11 billion and missed expectations of $8.12 billion.