Negative Foreign Currency Translation Eats Away At 3M Sales, Earnings
3M reported on Tuesday a slight year-over-year drop in its revenue and profit for the second quarter, largely due to negative foreign currency translations and a struggling electronics and energy division, which has seens its sales drop consistently over the last year and a half.
The Maplewood-based company, known for Post-It Notes, Scotch tape and the other industrial supplies it manufactures, narrowed its earnings outlook for the year to $8.15 to $8.30 earnings per share compared to its prior estimate of $8.10 to $8.45 per share.
The company's stock took a 1.6 percent tumble in early morning trading to $176.42.
For the three-month period ending June 30, three of 3M’s five business sectors posted year-over-year sales gains, although the growth was marginalized by overseas pressure on the U.S. dollar.
A financial breakdown of each 3M business division is as follows:
- Sales down 0.1 percent from a year ago to $2.6 billion
- Foreign currency translations cut sales by 1.3 percent
- Growth in auto parts, automotive aftermarket and abrasives
- Declines in the rest of its portfolio
Safety and Graphics
- Sales up 4.7 percent to $1.5 billion
- Foreign currency translations cut sales by 2.2 percent
- Largest growth in roofing granules and commercial solutions
- Sales up 3 percent to $1.4 billion
- Foreign currency translations cut sales by 1.9 percent
- Every business reported growth within this division
Electronics and Energy
- Sales down 10 percent to $1.2 billion
- Foreign currency translations cut sales by 0.9 percent
- Significant declines in electronics-related sales, including the films and adhesives used to construct smartphones and televisions
- Sales up 1.7 percent to $1.1 billion
- Foreign currency translations cut sales by 1 percent
- Growth in home improvement and consumer health care
All in all, sales took a 0.3 percent year-over-year dip to $7.66 billion for the quarter. Wall Street analysts expected $7.71 billion.
3M’s profits, however, edged past analyst expectations. The company reported earnings of $1.29 billion, amounting to $2.08 per share, which was a penny above Wall Street’s estimate.
“Building on a solid first quarter performance, our team controlled the controllable and posted another quarter of strong earnings and expanded margins,” 3M CEO Inge Thulin said in a statement. “Our execution of the 3M playbook is enabling us to deliver premium returns today while also building for the future.”