3M reported double-digit declines in second quarter sales and profits, falling short of Wall Street forecasts, as coronavirus-induced economic distress continued to dog the giant manufacturer.
Still, Minnesota-based 3M on Tuesday posted a nice hike in sales for personal protective equipment _ a small silver lining from the coronavirus outbreak _ while the company's overall revenue trends have been improving so far in the third quarter.
July sales are up in the low single digits over the same time last year, and the improvements seen were "broad-based," the company said.
Investors reacted to 3M's results Tuesday morning by pushing its stock down nearly 5 %.
"While our results were significantly impacted by the global economic slowdown, we executed well, managed our costs and delivered another quarter of robust cash flow," said CEO Mike Roman in a statement. "We are taking actions to navigate near-term challenges."
3M posted second quarter adjusted earnings of $1 billion, or $1.78 per share, down 16% from the same time last year. Stock analysts on average were forecasting profits of $1.80 per share.
3M's second quarter sales tallied $7.2 billion, down 12 % year-over-year, and a notch below Wall Street expectations of $7.3 billion.
With its array of industrial products, 3M is often seen as bellwether for the U.S. economy and an indicator of global economic trends, too.
For instance, as global auto production as fallen by over 40%, 3M's sales to that industry fell by over 40% in the second quarter.
3M's health care sales have been hurt as COVID-19 led to waves of elective surgery and dental appointment cancellations. Sales in the company's "oral solutions" business alone were down 60% in the second quarter.
Some 3M businesses were helped by COVID-19 _ biopharma, cleaning products and particularly N95 respirators. N95 masks are the gold standard for filtering out particles, including the coronavirus, and 3M is the leading U.S. producer.
3M's global production of N95s and other respirators hit nearly 800 million in the first half of 2020. About half of that was distributed in the U.S. primarily to health care providers and the Federal Emergency Management Agency, 3M said.
The company reiterated that it's on track to meet its U.S. and global goals for N95 production. Yet for U.S. health care providers, that won't be enough as the COVID-19 menace keeps rolling.
"Demand continues to far outpace what the industry can supply," Roman told stock analysts in a conference call Tuesday.
3M expects that respirator sales will add 3% to 3.5% to organic revenue growth during the third quarter.
The company's third quarter has started out decently, with sales picking up in several business sectors and regions, notably China.
"It's adding up everywhere a little bit and that is making a difference," Roman told stock analysts. "I am encouraged by what I see," though he cautioned it's "still early days in the third quarter."
Indeed, 3M said Tuesday it "continues to believe it is prudent not to provide (earnings) guidance." The company earlier this year withdrew guidance due to uncertainties caused by COVID-19.
3M's transportation and electronics business was hit hardest during the second quarter. Its sales of $1.9 billion were down 21% over the same time last year, while its operating income fell 35% to $382 million.
While sales of 3M's N95 masks boomed, the company's overall safety and industrial business saw a 9.2% decline in revenue to $2.7 billion. Still, the division's operating income was down only 1.6% to $636 million.
In health care, 3M posted sales of $1.8 billion, down less than 1%, though the segment's operating income fell 37% to $306 million.
3M's fourth major business segment, consumer, experienced a 6.2% decline in sales to $1.2 billion, while its operating profits fell 4.8% to $287 million.
