3M Co., parent company of Top 40 supplier 3M/Promotional Markets (asi/91240), will slash about 1,500 jobs as part of a restructuring plan announced in the wake of a disappointing third quarter.
Aiming to “further strengthen its competitiveness,” 3M will reduce structural overhead in the U.S. and other slower-growing markets, including Europe and Latin America. The layoffs amount to about 1.7% of 3M’s roughly 90,000-strong global workforce. Next year, the company anticipates pre-tax cost savings of $130 million.
While a decline in shares outstanding helped to boost earnings per share in the third quarter to $2.05 (an increase of seven cents), 3M still reported a small dip in net income to just under $1.3 billion. Overall, quarterly revenue fell 5.2% to $7.7 billion. For the year, 3M now projects earnings per share to be in the $7.73 to $7.78 range, a decrease from its previous top-end earnings projections of $7.93 per share.
3M reported that total sales decreased in all five of its business segments for the quarter, including decreases of over 7% in both Industrial and Electronics and Energy. Its recent struggles can be placed within a broader slow-down trend at major industrial firms. Slumping energy prices, slower growth in emerging markets, less demand and foreign-currency effects are factors hurting American industrial companies. “The industrial environment’s in a recession. I don’t care what anybody says,” Daniel Florness, chief financial officer of Fastenal Co. recently told investors.
A provider of Post-Its Notes, note pads and other items to the advertising specialty industry, 3M/Promotional Markets ranks as the 15th largest supplier in the industry.