First quarter results brought bad news for Maplewood-based 3M Co. In the wake of a 5 percent drop in first quarter sales, the Fortune 500 company announced a restructuring with an expected 2,000 job cuts.
The company employed 93,516 people at the end of 2018. 3M has international operations: 60 percent of its employees work outside of the United States. It offered no specifics about where it would make the job cuts, but indicated that they would be felt companywide.
According to the company’s statement: “Reflecting a slower than expected 2019, 3M has initiated restructuring and other actions that will result in an expected reduction of 2,000 positions worldwide with an estimated annual pre-tax savings range of $225 million to $250 million, with $100 million in the remainder of 2019…These actions will span all business groups, functions and geographies, with emphasis on corporate structure and underperforming areas of the portfolio.”
3M announced the planned job cuts as part of its first quarter earnings announcement. The company reported sales of $7.9 billion for the quarter, reflecting a 5 percent decline from a year ago. Sales were nominally up 0.3 percent in its health care division, but sales were down in all of its other business units. At the same time the company also lowered its earnings expectations for the full year of 2019.
In late morning trading, 3M’s stock was down 11 percent on the news.
3M also noted that its first quarter results were affected by “significant litigation issues” related to environmental claims against the company. As a result, the company took a “significant litigation-related pre-tax charge of $548 million.”
For 2018, 3M reported sales of $32.8 billion and net income of $5.3 billion. 3M is one of five “Fortune 100” companies in Minnesota. 3M ranked 97th on the most recent Fortune 500 list, an annual survey of the largest public companies in the U.S. The other Minnesota companies in the top 100 are UnitedHealth Group Inc., Target Corp., Best Buy Co. Inc and CHS Inc.
3M and UnitedHealth are the only two Minnesota companies among the 30 that make up the Dow Jones Industrial Average. 3M joined the Dow in 1976. Only three companies have been on the index longer.
The company had already announced a “realignment” in March, reorganizing its five business units into four: Safety & Industrial, Transportation & Electronics, Health Care and Consumer.
Market watchers keep reading tea leaves to gauge where the overall economy is headed in 2019: company earnings reports and job numbers are two key factors that analysts track. Many forecasters expect slowing growth in the year ahead. But on Tuesday the S&P 500 and the Nasdaq Composite indexes both hit record highs. Despite volatility during the fourth quarter, the Dow Jones Industrial Average was up 14 percent for the year at yesterday’s market close.