ALBAWABA — 3M announced on Tuesday it would cut 2,500 jobs as the American multinational conglomerate warned that a slowdown in fourth quarter demand was expected to extend through the first half of this year.
The job cuts will be concentrated in 3M’s manufacturing operations, just under 2.7 percent of its reported 95,000 employees at the end of 2021.
As it reported lower profits and offered a lackluster 2023 outlook based on weakening demand, the company said it would continue to adjust its manufacturing levels and maintain spending discipline until demand bounces back.
"Three weeks into January, we are seeing continued slowing in organic sales volume as we start the year," Monish Patolawala, 3M chief financial officer and senior vice president, said.
Sales in the fourth quarter dropped 6 percent to $8.1 billion, sliding the company’s profit to $2.28 per share compared to $2.45 per share in 2021.
According to Refinitiv data, 3M’s adjusted sales in the first quarter is expected to be in the range of $7.2 to $7.6 billion, down 10 to 15 percent year-over-year, missing analysts' expectations of $8.34 billion.
"We expect macroeconomic challenges to persist in 2023," 3M Chief Executive Officer Mike Roman added in an earnings press release, blaming slower than expected growth on “rapid declines in consumer-facing markets… along with significant slowing in China”.
"Based on what we see in our end markets, we will reduce approximately 2,500 global manufacturing roles — a necessary decision to align with adjusted production volumes," Roman said.
Net profit in the fourth quarter was $541 million compared with $1.4 billion in 2021, while revenues fell 6.2 percent to $8.1 billion.
Roman said 3M was “looking at what additional actions” it could take as it prepares to spin off its healthcare business and deal with its many outstanding legal issues.
“We’ve been looking at 3M as well, and how do we simplify, streamline and put our position ourselves closer to customers. So it’s really looking deeper and broader,” Roman told analysts during the earnings call.
The company produces over 60,000 products under several brands.
3M shares, which closed down 6.2 percent after the announcement, dropped another 1.45 percent at 3:49pm GMT on Wednesday.
