=3M (MMM) reported earnings on Thur 25 April 2019 (b/o)

3M misses by $0.27, misses on revs; slashes FY19 guidance, initiates restructuring and other actions

• Reports Q1 (Mar) earnings of $2.23 per share, excluding non-recurring items, $0.27 worse than the S&P Capital IQ Consensus of $2.50; revenues fell 5.0% year/year to $7.86 bln vs the $8.02 bln S&P Capital IQ Consensus.
  • Organic local-currency sales declined 1.1 percent while divestitures, net of acquisitions, decreased sales by 0.5 percent. Foreign currency translation decreased sales by 3.4 percent year-on-year.
• "The first quarter was a disappointing start to the year for 3M," said Mike Roman, 3M chief executive officer. "We continued to face slowing conditions in key end markets which impacted both organic growth and margins, and our operational execution also fell short of the expectations we have for ourselves. As a result, we have stepped up additional actions -- including restructuring -- to drive productivity, reduce costs, and increase cash flow as we manage through challenges in some of our end markets.
• Two significant litigation issues impacted 3M's first-quarter results. The company established a reserve of $235 million to resolve certain environmental matters and litigation, in which 3M is a defendant, related to its historical manufacture and disposal of PFAS-containing waste. 3M manufactured or used PFAS at five manufacturing plants globally, including in Alabama, Illinois and Minnesota in the United States, as well as in Belgium and Germany. The company also increased its respirator reserve by $313 million to address the cost of resolving all current and expected future coal mine dust lawsuits in Kentucky and West Virginia. These actions resulted in a total significant litigation-related pre-tax charge of $548 million. 3M's upcoming Form 10-Q filing will include additional details.
• Reflecting a slower than expected 2019, 3M has initiated restructuring and other actions that will result in an expected reduction of 2,000 positions worldwide with an estimated annual pre-tax savings range of $225 million to $250 million, with $100 million in the remainder of 2019. The company anticipates a pre-tax charge in 2019 of approximately $150 million, or $0.20 per share. These actions will span all business groups, functions and geographies, with emphasis on corporate structure and underperforming areas of the portfolio.
• Co issues downside guidance for FY19, sees EPS of $9.25-9.75 (Prior $10.45-10.90), excluding non-recurring items, vs. $10.52 S&P Capital IQ Consensus; expects organic local-currency sales growth in the range of -1 to +2% versus a prior range of +1-4%