3M Cuts Earnings Outlook Amid Flat Sales -- Update

By Bob Tita 

3M Co. trimmed sales and earnings outlooks for 2016 and sees lackluster economic growth continuing into next year, curbing demand across its broad portfolio of consumer and industrial products.

"We cannot predict when a turnaround is coming in the economy," Chief Executive Inge Thulin said Tuesday. "When it comes, we are ready to capitalize on that."

The maker of Post-it Notes, Scotch tape and Ace bandages said it expects sales outside of acquisitions or currency gains to be flat this year. 3M previously forecast sales rising 1% in 2016. The company trimmed a dime off its profit per share forecast for the year, to $8.15 to $8.20.

Mr. Thulin said demand for many 3M products "tempered" in the third quarter, particularly in the U.S. and key developing markets such as Brazil and Turkey,

The St. Paul, Minn.-company continued to counter sluggish sales growth with stellar profit margins. 3M's overall operating margin for the quarter rose slightly from last year to 24.7%. Three of the company's five business units reported higher operating margins.

In 3M's weakest unit, electronics and energy, operating margin slipped just slightly from last year to 24.2%, despite a 9% drop in income and a 7.5% drop in sales. The business supplies components for cellphones, computers and other consumer electronics.

Electronics-related sales slipped 8% during the quarter, the company said. Mr., Thurlin credited the company's revamped business strategies for maintaining margins in a tough consumer electronics market.

3M's other business units fared better. Sales from the consumer unit rose 4% as operating income rose 8.3%. The company said growth was propelled by strong back-to-school demand for consumer products. 3M's industrial unit, including automotive products, recorded a 1% sales increase and a 2% increase in operating profit. The safety and graphics unit, which supplies materials for products like roofing shingles, reported a 12.3% operating profit increase on a 2.2% bump in sales.

Over all for the latest quarter, 3M earned $1.33 billion, or $2.15 a share, compared with $1.30 billion, or $2.05 a share, a year earlier. Analysts polled by Thomson Reuters expected $2.14 a share. Sales were essentially flat at $7.71 billion, meeting analysts' expectations.

3M stock was recently down nearly 3% at $166.16.

Ezequiel Minaya contributed to this article.

Write to Bob Tita at [e-mail]

(END) Dow Jones Newswires

October 25, 2016 11:28 ET (15:28 GMT)

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