3M Co. will cut 1,500 jobs in a global restructuring as the manufacturer continues to grapple with challenges in markets including car parts and electronics.
The revamp — affecting “all business groups, functions and geographies” — is part of a new operating model starting this month that will recast reporting lines and consolidate manufacturing oversight, 3M said in a statement Tuesday as it reported earnings. The company anticipates pretax savings of as much as US$120 million a year from the changes.
The cuts capped a rough year for the maker of everything from Post-it notes to touchscreen displays. The company trimmed its profit forecasts multiple times last year because of escalating trade disputes, headwinds in China and flagging demand in the automotive and electronics markets. Chief Executive Officer Mike Roman said 3M is positioning itself to capitalize on an eventual rebound.
The shares dropped 2.1 per cent to US$171.87 before regular trading opened in New York. 3M fell 7.4 per cent in 2019, the third-worst performance in the Dow Jones Industrial Average.
As part of the newly announced restructuring, non-U.S. employees will now report to their business groups rather than the international operations organization, which is being eliminated. Julie Bushman, who oversees international operations, will step down April 1, 3M said.
The job cuts prompted a pretax charge of US$134 million in the fourth quarter, the company said. Total adjusted profit fell to US$1.95 a share in the period, trailing the US$2.10 average of analysts’ estimates compiled by Bloomberg. Sales climbed 2.1 per cent to US$8.1 billion.
The transportation and electronics unit continued to weigh on results, with revenue dropping 6.2 per cent. The strain was countered somewhat by the health-care division, a recent bright spot, which boosted sales 25 per cent in the quarter.
Roman acknowledged that 3M “continued to manage challenges in certain key end markets,” but said in the statement that the results were still in line with the company’s expectations.
Investors will look to 3M, which has a broad footprint around the world, for comments on the impact of the deadly coronavirus that has killed more than 100 people in China and is spreading around the globe. Many companies have restricted employee travel and taken other steps in response. 3M has a particularly direct relationship to the crisis as a top maker of protective face masks.
The St. Paul, Minnesota-based company took a pretax fourth-quarter writedown of US$214 million for litigation related to PFAS chemicals. The company, along with chemicals- and materials-making peers such as Chemours Co., faces potentially substantial liability from lawsuits over the harmful effects of the so-called “forever chemicals.”
3M gave the first peek at its expectations for 2020, saying adjusted profit will be US$9.30 to US$9.75 a share this year. The midpoint of the range trailed the US$9.60 average of analyst estimates. Organic sales, excluding the impact of currency conversions, will rise no more than 2 per cent this year.