3M, parent company of Top 40 supplier 3M/Promotional Markets (asi/91240), reported Tuesday that first quarter earnings per share plummeted 55% compared to the same quarter the prior year. The decline occurred despite a nearly 8% year-over-year increase in total company sales during the three-month period.
The St. Paul, MN-based corporation said the drop in Q1 2018 GAAP earnings to $0.98 per share was primarily the result of an $897 million pre-tax expense, which stemmed from the settlement of a lawsuit brought against 3M by the state of Minnesota. The decline also occurred because 3M had to deal with a $217 million expense related to the new federally enacted Tax Cuts and Jobs Act. In February, Minnesota settled a lawsuit against 3M for a reported $850 million. Minnesota pressed the suit on allegations that the company’s production of PFCs damaged drinking water and natural resources.
Going forward, 3M has lowered its forecasted GAAP earnings for 2018. The company now predicts a range of $8.68 to $9.03 per share. 3M also tempered its organic local-currency sales growth guidance to be in the range of 3% to 4%, versus a prior range of 3% to 5%.
During the first quarter, 3M’s overall sales reportedly rose 7.7% to $8.3 billion. While 3M didn’t break out promotional product revenue in particular, the company reported sales growth in a number of business channels. It said sales rose 15% in Safety and Graphics, 7.1% in Industrial, 7.1% in Healthcare, 5% in Consumer and 4.6% in Electronics and Energy. Organic local-currency sales increased 6.9% in Safety and Graphics, 2.7% in Healthcare, 2.2% in Industrial, 2.1% in Consumer and 1.7% in Electronics and Energy, 3M said.
As reported by the company, 3M’s Q1 operating income tallied $1 billion, with operating margins of 12.2%. During the quarter, the company paid $810 million in cash dividends to shareholders and repurchased $937 million of its own shares.