Currency Woes Hit 3M Earnings, Cuts Full-Year Outlook
3M reported quarterly earnings on Tuesday in line with estimates, but lighter than expected revenues — hurt by a stronger dollar — forced the company to scale back its full-year guidance.
After the earnings announcement, the diversified manufacturing company saw its shares tumble more than three percent in early trading. (Click here to get the latest quotes for 3M.)
The technology company reported third-quarter earnings excluding items of $1.65 a share, above last year's $1.52 per share.
Revenue came in at $7.5 billion, compared to $7.53 billion a year ago. The company said currency impacts cut sales by 3.1 percent.
"In the face of the current slow-growth economy, our businesses continued to grow organically and generated record profitability," Inge G. Thulin, 3M chairman, president, and CEO said in a statement.
In February, Thulin was named as the company's CEO. His initial focus has been on controlling costs at the manufacturing giant.
The revenue shortfall was mostly because foreign exchange rates worked against 3M. All six of its business units reported at least small increases in sales, not counting foreign exchange or acquisitions. But revenue in U.S. dollars in some of those units declined.
Analysts expected 3M to post earnings excluding items of $1.65 a share on $7.63 billion in revenue, according to a Thomson Reuters estimate.
The company cut its earnings guidance for the full year as acquisition costs and a strengthening dollar hurt margins. 3M said it expects full-year earnings in the range of $6.27 to $6.35 per share. Previously, the company had expected 2012 earnings of $6.35 to $6.50 per share, excluding acquisition-related costs.
3M often makes so-called "bolt-on" acquisitions, where it buys companies that it can quickly integrate into its own operations. Its latest 2012 guidance includes 3 cents per share of acquisition costs.
Earlier this month, antitrust concerns led 3M to call off its $550 million deal to buy Avery Dennison's office supply operations. And on Oct. 1, 3M said it would pay buy ceramic components maker Ceradyne for $847 million in cash.
—Reuters and AP contributed to this article