3M Co. announced on Tuesday that another restructuring plan is in the works in an effort to reduce costs and improve cash flow.
In an attempt to make 3M “stronger, leaner and more focused,” the Maplewood-based global manufacturer will be cutting around 6,000 jobs worldwide, per a company news release, including about 600 in Minnesota.
The reductions are expected to trim annual costs by as much as $900 million, 3M said in a statement reporting first-quarter earnings. The company has now announced 8,500 total job cuts this year, which would equate to about a 10% decline in its global workforce.
“… the reductions of approximately 6,000 positions globally includes about 600 employees in Minnesota, mostly in Maplewood, including corporate jobs,” wrote Tim Post, communications manager for 3M, in an email. The company had about 92,000 employees as of Dec. 31, according to its annual filing.
This announcement comes on the heels of another round of layoffs the company announced in January, targeting 2,500 manufacturing roles.
The company said it expects sales for 2023 to drop between 2% and 6%. 3M shares were flat in Tuesday trading, closing at $104.37 after initially rising. The company’s stock had declined 12% this year, the worst performance in the Dow Jones industrial average.
“There have been countless efficiency initiatives here, and little to show for it over the years,” JPMorgan analyst Steve Tusa wrote in research note. “This seems like more of the same.”
Future liabilities
The results highlight how the maker of Post-it notes, respirators and smartphone display materials is struggling to shake off weak demand for consumer goods, electronics and more of its roughly 60,000 products.
“To strengthen 3M for the future, today we announced actions that will reduce costs at the corporate center, further simplify and strengthen our supply chain structure, and streamline our go-to-market business models, which will improve margins and cash flow,” CEO Mike Roman said in the release.
Going forward, the company said it will focus on “high-growth” markets such as electric vehicles, climate technology, health care and next-generation consumer electronics.
But the company’s operational struggles have added to investor fears over what could be billions of dollars in potential civil liabilities stemming from allegedly faulty earplugs supplied to U.S. combat troops and contamination from so-called forever chemicals. Most commonly known to consumers as its Scotchgard brand family of products, the chemicals known as PFAS are ubiquitous in other industrial and consumer uses, which 3M said it plans to stop producing by the end of 2025.
Last year, the company announced it was spinning off its health care division, including products related to wound care, oral care, health care information technology and tiny filters used in the production of bio-pharmaceuticals. The unit had $8.6 billion in sales in 2021.
Executive change, earnings numbers
The company also announced Tuesday that Michael Vale will step into a new role at 3M as the group president and chief business and country officer to oversee three of the company’s four branches.
Vale has been with the company for more than 30 years and previously worked as the group president of safety and industrial business. In this new role, which is on the company’s corporate operations committee, Vale will report to the CEO.
On Tuesday, the company reported first-quarter profit of $976 million, or $1.76 a share; this compares with $2.26 a share in the same quarter last year. Earnings, adjusted for non-recurring costs, were $1.97 per share. The results beat Wall Street analysts, surveyed by Zacks Investment Research, for earnings of $1.60 per share. The company posted revenue of $8.03 billion, also exceeding expectations, but down 9% year-on-year, the company said.
The restructuring actions announced this year will result in pretax charges of as much as $900 million, the company said.
3M said it expects full-year earnings in the range of $8.50 to $9 per share.
This report contains information from the Associated Press and Bloomberg News.
