Strong Dollar, Restructuring Charges Weigh Down 3M In Fourth Quarter
Inge Thulin, the CEO of 3M, called 2015 “a year of disciplined execution” as the company reported weakened sales and profits in its fourth quarter amid tough currency translations and significant restructuring charges.
The Maplewood-based company behind scotch tape and sandpaper said it earned $1.04 billion, or $1.66 per share, during the three-month period ending December 31, 2015. 3M beat Thomson Reuters analysts’ predictions of $1.63 per share; however, the company did experience an 8.3 percent decline in profits versus its fourth quarter last year.
All five of 3M’s business sectors—industrial, safety and graphics, health care, electronics and energy, and consumer—reported drops in sales, resulting in a total sales decrease of 5.4 percent to $7.3 billion. Analysts anticipated sales closer to $7.2 billion.
With less demand for industrial adhesives, tapes and advanced materials, 3M’s industrial business was the poorest performer as year-over-year sales dropped $2.5 billion. Demand for materials used to construct smartphones, tablets and televisions also strained the manufacturer’s electronics and energy business, which posted reduced sales of 11.7 percent.
3M said its sales took a 5.8 percent dent due to foreign currency translations and the U.S. dollar’s steady rise in value.
During the fourth quarter, the company also incurred a $114 million charge related to corporate restructuring it announced in October. Amid all of its challenges, CEO Inge Thulin feels upbeat about 3M’s future.
“We strengthened and focused our portfolio, made significant investments in the business to support growth, and made good progress in moving toward a more efficient business model through business transformation and our corporate restructuring,” he said in a statement. “We are building an even stronger and more competitive company for 2016 and beyond.”
Thulin made a similar statement about the company after it dropped its full-year earnings forecast last month. At the time, he said that strategic acquisitions would hold tremendous potential for 3M.
In addition to acqusitions, the company appears interested in selling off business units. 3M sold its Pressurized Polyurethane Foam Adhesives unit last week. The deal was the third of its kind in about three month’s time.
Following 3M’s fourth quarter report, company shares took a more than 4 percent leap from its previous close during morning trading.
As part of TCB’s Companies To Watch In 2016 list, 3M was picked by an RBC Capital Markets analyst as a company to keep an eye on this year.