MMM 2009 Q1 Earnings

As the global recession continues to take its toll on nearly every company’s quarterly performance, few companies seem to be able to avert its devastating effects. Much like many others, 3M Co. (MMM) could not side step the economic pressures placed on the company, as 1Q results showed. In a company statement released before the opening bell on April 24, 3M acknowledged that their profits declined just under half of what the company produced in the 1Q last year.

For the recent quarter, 3M booked net income of $518M, or $0.74 per share, compared to the previous year’s earnings of $988M, or $1.38 per share, a decrease in profits of nearly 48%. Contributing to the overall downturn of the company’s quarterly performance was a weakening demand by domestic consumers for products such as office supplies, LCD screen coatings and steel coatings.

In efforts to help maintain profitability during the economic turmoil, 3M made significant changed internally, which attributed to the company taking a $46M restructuring charge, affecting earnings by $0.07 per share.

Taking into account one-time charges and special items, 3M would have posted quarterly earnings of $563M, or $0.81 per share. Even on an adjusted basis, the company still came in below market expectations.

As for overall revenues, worldwide sales receded more than 21% during the quarter, as totals fell from $6.46B down to $5.09B. Inside the company’s largest division, Industrial and Transportation, plummeted nearly 28% to $1.6B, in large part to the ever-declining auto manufacturing in North America.

In other business segments, 3M’s Safety, Security and Protection unit saw its sales figures retreat by more than 15% during the quarter, as sales from products such as air duct wrap and steel coatings dwindled.

Lastly, the company’s Display and Graphics segment was the hardest hit, plummeting more than 30% over last year’s sales totals with only $611M in overall unit revenues.

Chairman, president and CEO of 3M, George Buckley, responded, "As expected, the global economic slowdown dramatically affected our businesses in the first quarter. Substantial end-market declines and continued inventory takedowns in major industries, including automotive, consumer electronics and general industrial manufacturing, resulted in significantly lower sales and profits."

On average, analysts within the industry were looking for the diversified technology company to record quarterly earnings of $0.86 per share on total revenues of $5.22B. Both of which 3M failed to meet.

With no apparent end in sight to the current economic downfall, 3M has already taken several steps towards reducing costs and implementing more cost effective measures. Included are 3M reportedly cutting an additional 1,200 jobs of its total 79,000 global workforce during the 1Q. 3M also offered some 3,600 workers early retirement, which would help alleviate future costs.

During the 4Q of 2008, 3M reduced their workforce by 2,400 positions in efforts to cut more than $235M in expenses. In another effort to cut costs, the company suspended its $7B stock repurchase program, yet increased their quarterly dividend by 2% to $0.51 per share.

Looking ahead, 3M reduced their forward guidance due to current economic situations in 2009. The company now anticipates annual earnings to come in between a range of $3.90 to $4.30 per share, down from the 3M’s previously stated range of $4.30 and $4.70 per share.

Although expected figures for sales production for the year were not released, 3M did state that they see organic sales volumes to decline between 11% and 15% for the year. The company previously thought that sales would slip between a range of 5% and 9%.

Analysts, in the meantime, are looking for 3M to post yearly results of $4.01 per share on total revenues of $21.59B.

In the final trading session of the week, shares of MMM were up despite falling short on quarterly expectations along with lowering yearly projections as well. By the sound of the closing bell, 3M shares were up just over 5%, or $2.79, to conclude the week at $57.00 per share. Over the past 52 weeks, 3M stock has traded in a range between $40.87 and $81.19 per share.

By BetterTrades