The industrial conglomerate, whose products range from Post-it notes to industrial adhesives and orthodontic braces, also signaled the likely elevation of Inge Thulin, currently chief operating officer, to chief executive officer. Mr. Thulin, who took a leading part in Tuesday morning's analyst call, appears increasingly likely to succeed George Buckley as CEO when Mr. Buckley retires, perhaps within a few months.
A 3M spokeswoman declined to comment on the succession plans.
Shannon O'Callaghan, an analyst at Nomura Securities International in New York, said Mr. Thulin is expected to take the reins soon.
Many of 3M's products are films, fluids, abrasives and other raw materials used by other manufacturers. When manufacturers see slower demand and rush to trim their inventories of raw materials, "we always see the effect early, typically one to two quarters before our industrial peers," Mr. Buckley said.
3M said it was particularly hurt by lower demand in Europe, where shaky government finances and questions over the solidity of banks have sapped consumer confidence. Auto makers and other manufacturers are cutting production, hurting demand for 3M products. Meanwhile, European governments are reducing spending, slicing demand for 3M's health-care supplies and materials used to brighten highway safety signs, among other things.
The third quarter's weakness "could be short and temporary, or it could linger into next year," Mr. Thulin said. "We are prepared for either."
3M said it already has begun reducing staffing in some areas, such as production of films used in television screens, and is ready to chop costs much further if needed. "We're going to run much tighter on the cost side next year," said David Meline, chief financial officer.
3M earlier reported a 1.6% decline in third-quarter earnings. Net income was $1.09 billion, or $1.52 per share, down from $1.11 billion, or $1.53 per share, a year earlier. Analysts' forecasts had averaged about $1.61 per share for the latest quarter, according to FactSet Research Systems. Sales rose 9.6% to $7.53 billion.
For the full year, 3M said, earnings should be in a range of $5.85 to $5.95 a share, down from the July forecast of $6.10 to $6.25. In 2010, 3M had earnings of $5.63 per share.
One of the weakest areas is films used to brighten images on flat-screen television sets. 3M said makers of TV sets continue to squeeze suppliers for lower costs and frequently are eliminating 3M's films from their products to save money. Sales of these optical films to makers of factory automation equipment also have weakened, 3M said. But the films continue to sell well to makers of cell phones and tablet computers, the company said.
Analysts had been penciling in 2012 earnings of around $6.60 per share. Those forecasts now will have to come down by "a good chunk," said Nomura's Mr. O'Callaghan, whose forecast for next year was 50 cents below the consensus before today's results.
Organic sales growth—which excludes the effects of recent acquisitions, price changes and currency fluctuations—should be 3% to 4% for 2011, 3M said. That is down from the previous forecast of 6% to 7.5%. For several years, Mr. Buckley has been touting a goal of raising its average organic sales growth rate to between 7% and 8% a year from a past norm of around 4%. 3M has tried to do that by stepping up the pace of new-product launches, focusing on fast-growing markets like China and India, and making more acquisitions.
Mr. Buckley's growth goal "looked like a reach when the economy was good, and it looks like even more of a reach now," Mr. O'Callaghan said.
Mr. Buckley is due to step down on his 65th birthday in February 2012 unless his term is extended by mutual agreement with the board. A native of Sheffield, England, who was trained as an electrical engineer, Mr. Buckley took the top post at 3M five years ago. In May, 3M appointed Mr. Thulin as chief operating officer, a new position. Mr. Thulin, a native of Sweden, has worked at 3M since 1979 and has been executive vice president of international operations since 2003.source online.wsj.com For the latest updates PRESS CTR + D or visit Stock Market news Today
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