3M is off to a rocky start in 2019 and plans on laying off 2,000 workers. The Maplewood, MN-based company missed consensus and lowered its 2019 earnings forecast. News of the earnings caused shares to drop as much as 10% on Thursday.
The firm said it now expects 2019 adjusted earnings to be from $9.25 and $9.75 a share. The prior forecast was from $10.45 to $10.90 per share. Sales were down 5% to $7.9 billion. Organic local-currency sales declined 1.1% while divestitures, net of acquisitions, decreased sales by 0.5%. Foreign currency translation decreased sales by 3.4% year-on-year
3M executives did not sugar coat the company’s 1Q19 performance.
“The first quarter was a disappointing start to the year for 3M,” Mike Roman, 3M CEO, said in a release. “We continued to face slowing conditions in key end markets which impacted both organic growth and margins, and our operational execution also fell short of the expectations we have for ourselves.”
The job cuts or restructuring, is expected to have an estimated annual pre-tax savings range of $225 million to $250 million, with $100 million in the remainder of 2019. 3M said the cuts will span all business groups, functions and geographies, with emphasis on corporate structure and underperforming areas of the portfolio. The cuts represent 2% of 3M’s workforce.
The restructuring measure comes a few months after 3M announced it would acquire M*Modal’s technology business in a deal valued at $1 billion. The technology business specializes in conversational artificial intelligence (AI)-powered systems that can help physicians efficiently capture and improve the patient narrative.