HomeMy WebLinkAbout2015 12-15 3M Co. lowers outlook for 2015, citing slowing global economy STAR TRIBUNE t1n ir[ui� snn�o.iowers ouuooic ror�ui 5,uti ng siowi ng giooai econor
BUSINESS
3M Co. lowers outlook for 2015,citing
slowing global economy
Company says that 201G sales should grow 1 to 3 percent.
By Dee DePass(http://www.startribune.tom/dee-depass/10644746/)Star Tribune
DECEMBEfl 15.3015–9:ISPM
Gting a slowing global economy and weake�g indus[rial sector,3M Co.lowered its
2015 oullook Tuesday and now ezpects fup-year organic�ow[h of 1 percent.
ThaYs down from the prior guidance of 1.5 to 2 percent growth.Earnings per share for
�ll 0(2015 aze now expected[o be$7.55,compared with[he prior estimate of 57.60 to
$7.65,company officials told analysts during a conference call Tuesday morning.
Nick Gangutad,3M's chief financial officeq said the]owered Corecast could not be
helped.
"We're seeing particulaz w�eakr�us in industriil-related businesses in the Uni[ed States,
and we're also seeing weaker[han ncpected demand im m�sumer electronics,"he said.
Shareholders oC the maker oC Smtch[ape,mllphone optical films and more,were not
pleased and stomped 3M's stock down 6 percent,or$9.50 per share,to close Tuesday at
$145.13.
Several inves[ment firms,including SS;P Capital IQ,said they understood the mazket
reaction,but held s[eady on their 3M stock forecasLS,given Ihat[he Maplewood-based
conglomerate is still performing above peer companies.
The subdued ouflook for[his yeu—final results will be announced on)an.26—tollows
3M and othu multinational Aants becoming hamstrung by the high U.S.dollar,which is
cdmping exports and cur[ailing profits here a[home once overseas sales and profits aze
mnverted to U.S.dollars.Economic slowdowns in China and parts of Europe and Brazil
also are weighing on results.
3M said it ramped up finanaal hed�g instruments designed to soften the impac[of
currency exchanges.
3M CEO Inge Thulin and Ganges[ad also discussed 3M's lowered outlook for this year
and their 201G ouflook during a conference call with investors and analysts Tuuday
morning.They reviewed 3M's research and development spending,capital deployment
and new ERP computer system.
They also noted fresh effidency efforts azound the globe that are cYpec[ed[o slash$500
million to$700 million in annual opera[ing cos[s by 2020.
Thulin and Gangestad said 3M expects 2016 earnings to grow 7[0 12 percen[to$810[o
$8.45 per share.Organic sales are expected[o grow 1 to 3 percent nezrt year.For the firs[
nine months of 2015,3M's sales fell 4.7 percen[whIle profits per share rose 4.4 percent.
3M plans to again invest$1.8 billion annually in R&D projec[s in both 2015 and 201G.
The amowt is[he same invested in 2014,but[ha[year R&D equaled 5.6 percent ot sales.
This year and next year,R&D spending will tick up to S.S percent ot sales,officials said.
Capital erzpenditures on manutacturing plan[s and equipmen[will be$1.4 billion to$1.5
billion in 2015 and betw�een$13 billion and SI.S billion nez2 year.3M spent$1.5 billion
building fac[ories and equipment unprovements in 2014.
This yeaz,3M opened"customer techcucal centers"in Australia,wuTern China,Italy and
Turkey,and announced that it is building an urban solutions lab in Singapore.3M's new
$150 million R&D lab in Maplewood will officially open euly ne�ct year.
"V✓e remain mrtvtutted to executing our playbook,controll'utg[he rnntrollable,and
making irrvestments for long-term success,"said Thulin ic�a statemenL"We aze building
our company for efficient growth in 2016 and beyond."
Thulin told analysts Ihat 3M is still conside�ing stra[egic alterna[ives for its profitable
heal[h-informa[ion systems business,which helps hospitals and cGnics maintain patient
data elec[ronically.The company has yet to decide if it will spin off,sell or keep the unit.
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