© Reuters. FILE PHOTO: The 3M logo appears on products at an Orchard Supply Hardware store in Pasadena, California, U.S., January 24, 2017. REUTERS/Mario Anzuoni/File Photo
By Kannaki Deka
(Reuters) – Industrial conglomerate 3M on Tuesday forecast full-year earnings below Wall Street estimates, saying the macroeconomic environment “remains calm” and sending its shares tumbling about 12%.
The company's electronics business, which makes displays for smartphones and tablets, has grappled with the effects of customers reducing their discretionary purchases due to higher interest rates and persistent inflation.
“China and consumer retail markets remain weak,” Chief Financial Officer Monish Patolawala said on a call with analysts.
The Post-it maker expects profit of between $9.35 and $9.75 per share in 2024, compared to analyst estimates of $9.81, according to LSEG data.
Companies were also pressured by a reduction in inventory, particularly in Greater China and the Europe, Middle East and Africa region, as distribution partners were cautious about demand coming in in 2024, the company said.
The diversified manufacturer has launched a major restructuring that includes cutting thousands of jobs and spinning off its healthcare business into a publicly traded company.
3M expects to save between $700 million and $900 million from the restructuring when it is completed.
“The outlook for 2024 disappoints on margins, including both expected restructuring savings and the underlying operating margins of the business,” said UBS analyst Chris Snyder.
The forecast comes as 3M grapples with the fallout from lawsuits related to its Combat Arms earplugs and water contamination claims linked to “permanent chemicals.”
The company said Tuesday that the forecast does not reflect the potential impact of financing some of the deals.
Last year, 3M reached a $10.3 billion settlement with a number of U.S. public water systems to resolve pollution claims linked to “perennial chemicals.”
On an adjusted basis, 3M earned $2.42 per share in the fourth quarter, beating estimates of $2.31.
The company reported adjusted revenue of $7.69 billion, compared to estimates of $7.70 billion.
