3M Downgrades Outlook As Earnings Decline

3M Co., parent company of Top 40 supplier 3M/Promotional Markets (asi/91240), announced that in the second quarter its sales declined .3% year-over-year to $7.7 billion. The company downgraded its full-year outlook from 1-3% to 0-1%, and narrowed its 2016 earnings per share to $8.15-$8.30 from $8.10-$8.45, owing to negative impact overseas from the strong U.S. dollar.

The company’s second-quarter earnings of $2.08 per share represented a 3% increase compared to a year ago, which the company attributed to heightened margins. Organic local-currency sales declined .2%. 3M grew its operating income by .5 percentage points, while net income declined slightly from $1.3 billion to $1.29 billion.

“Building on a solid first-quarter performance, our team controlled the controllable and posted another quarter of strong earnings and expanded margins,” said 3M Chairman, President and CEO Inge G. Thulin. “Our execution of the 3M playbook is enabling us to deliver premium returns today while also building for the future, which includes making good progress on business transformation and investing approximately 10% of our sales into R&D and capital expenditures in the quarter.”

Sales in the company’s Safety and Graphics group grew by 4.7% (and 2.3% in organic local currency sales) for a total of $1.5 billion in the quarter. The company’s Health Care group grew 3% overall while its Industrial group declined .1% and its Electronics and Energy group fell by 10%.

3M did not report its promotional product revenue for the quarter. In the recently released Counselor Top 40 rankings, 3M/Promotional Markets ranked as the 15th largest supplier with estimated North American promotional product revenue of $99 million.