3M Co MMM-N said on Tuesday it would cut 2,500 manufacturing jobs and forecast a gloomy first-quarter as the U.S. industrial conglomerate struggles with slowing demand for consumer and electronic items.
The downbeat outlook and quarterly results pile more pain on the company, at a time it faces separate lawsuits related to defective earplugs and its use of “forever chemicals,” which 3M said in December it plans to discontinue.
3M shares fell 4.7 per cent as it joined other industrial majors General Electric Co and Raytheon Technologies Corp in flagging a hit from inflation in 2023.
“MMM to some extent had recently lowered investor/Street expectation but weak 4Q22 results and softer 2023 guidance (weak demand environment) should weigh on the stock in the near-term,” Citi analysts wrote in a note.
Demand slowdown has extended into the current quarter as consumers cut discretionary spending and rigorous industrial de-stocking, especially in Asia, 3M said.
“Three weeks into January, we are seeing continued slowing in organic sales volume as we start the year,” Chief Financial Officer Monish Patolawala said.
The company, which has been battling with higher labor and energy costs, said it would continue to adjust its manufacturing levels and maintain spending discipline until volumes bounce back.
3M expects adjusted sales in the first quarter to be $7.2-billion to $7.6-billion, down 10 per cent to 15 per cent year-on-year, missing analysts’ expectations of $8.34-billion, according to Refinitiv data.
The company’s consumer unit, which generated about $5.30-billion in revenue in 2022, is likely to see similar demand trends through the first half of the new year.
“We expect macroeconomic challenges to persist in 2023,” Chief Executive Mike Roman said.
Sales in the fourth quarter fell 6 per cent to $8.1-billion. Excluding items, the company reported a profit of $2.28 per share compared to $2.45 per share a year earlier.