3M reported fourth quarter results Tuesday that beat Wall Street expectations, despite unfavorable currency exchange rates that tamped down sales growth and a charge associated with costs from the Tax Cut and Jobs Act.
Sales fell 6 percent to $7.9 billion amid currencies exchanges that it said caused declines in 3M's largest business _ industrial, and its electronics/energy unit.
On a local currency basis, global sales rose 3 percent and enjoyed increases across all five of 3M's business segments.
Fourth quarter earnings were up 167 percent to $2.27 per share as tax costs associated with the new federal tax act fell significantly in fourth quarter 2018 from fourth quarter 2017.
Excluding tax act costs, fourth quarter adjusted earnings were $2.31 per share, which was 3 cents better than analysts had forecast.
The Minnesota-based company downgraded its profit guidance for full year 2019 to include the impact from a pending acquisition of M(ASTERISK)Modal. That deal is expected to be completed during the first quarter.
Full-year 2019 earnings are now expected to be $10.45 to $10.90 per share. That includes a 10 cent per share hit from the M(ASTERISK)Modal acquisition. The prior forecast called for $10.60 to $11.05 per share.
3M also lowered its sales guidance, saying that local currency sales are now expected to grow 1 to 4 percent, compared to the prior guidance of 2 to 4 percent.
3M executives told analysts during a conference call Tuesday that growth is slowing in China amid big improvements in air quality there. Growth will also slow in select automotive, electronic and roofing granule products.
Rising trade tariff costs will impact 3M by about $70 million a year prompting 3M to increase some of its prices, CFO Nick Gangestad said. 3M also expects to see continued strong sales of industrial advanced materials and adhesives, personal safety products and of food safety and health information products, officials said.
"3M executed well in the fourth quarter, with results that were in line with our expectations," CEO Mike Roman told analysts. "The fourth quarter capped an important year for 3M, as we posted good results and continued to take actions to strengthen our company for the future."
For full year 2018, 3M saw sales rise 3.5 percent to a record $32.8 billion, while earnings rose 12 percent to $8.89 per share.
Excluding one time costs, adjusted earnings were $10.46 a share, more than the $9.95 analysts expected.
3M shares were up 2.3 percent, to $197.64 in midday trading.
