Shares of 3M Co. plummeted toward its biggest one-day decline in over 30 years, after the industrial, health-care and revenue products reported, slashed its full-year outlook, and said it was cutting 2,000 jobs.
Management said that what made the first-quarter results even failed
dropped 12.8% in afternoon trade, as volume swelled to 11.6 million shares, compared with the full-day average of about 1.9 million shares. It was by far the biggest decliner in the Dow Jones Industrial Average, with the price loss of $ 28.12, acting as a 191-point drag on the Dow
which was down just 80 points. The decline also lopped $ 16.2 billion off the company's market capitalization.
19, 1987. This is the one-day crash with a 22.6% tumble.
The stock's selloff comes just two days after the stock had closed -year high of $ 219.50.
The company behind brands such as Post-it, Scotch, Nexcare and Command, reported first-quarter results before Thursday's open, showing net income of $ 891 million, or $ 1.51 a share, from $ 602 million, or 98 cents a share, in the same period a year ago. Excluding nonrecurring items, such as litigation-related charges and taxes, adjusted EPS slipped to $ 2.23 from $ 2.50, missing the FactSet consensus of $ 2.49.
The litigation-related charges include the establishment of $ 235 million in reserves to resolve PMCs (perfluorinated compounds) and a $ 313 million increase in respirator reserves to resolve current and expected future coal-mine dust lawsuits.
Excluding those charges, operating margins fell to 21.4% from 23.0% last year.
Sales declined 5% to $ 7.86 billion from $ 8.28 billion, below the FactSet consensus of $ 8.03 billion. Geographically, sales surprisingly fell 0.4% organically in the US, declined 4% in China / Hong Kong and fell 7% in Japan, while growing 1% in Latin America / Canada and EMEA (Europe, Middle East and Africa).
Analyst Jim Corridore at CFRA reiterated his hold rating on 3M while the $ 50 from $ 215, the quarter says "bad across all fronts."
And kudos to JP Morgan analyst Stephen Tusa, who got even more bearish last month, citing an "apparent apparent trade-off" between sales and margins.
3M cut its guidance range for 2019 adjusted EPS, which excludes litigation-related charges, to $ 9.25 to $ 9.75 from $ 10.45 to $ 10.90.
The company said it was taking "aggressive actions" to improve productivity, reduce costs and boost cash flow, including cutting its workforce by 2,000 positions, across all business groups. That represents a workforce reduction of about 2.1%, based on 93,516 employees at the end of 2018, according to the company's annual report.
Our Executive Execution, "said Chief Executive Officer Mike Gangstad said the industrial business saw a "broad-based slowdown across most of its portfolio," highlighted by a 9% drop in its automotive business, including a 6% decline in car and light-truck builds.
As the company witnessed the lower volumes through the quarter, it responded by cutting output at its factories by 4% to 5%. "Unfortunately, we did not pull down proportionately," Gangestad said on the call.
"[W] e did not respond aggressively enough to what we were seeing, and so we were behind the curve as we came through the quarterback, "CEO Roman added.
3M's stock has now edged up just 0.2% year to date, while the SPDR Industrial Select Sector exchange-trade fund
has soared 19.9% and the Dow has gained 13.7%.
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