3M to cut 2,500 more jobs

January 18, 2002 Posted: 1736 GMT

NEW YORK (CNN/Money) -- Minnesota Mining & Manufacturing Co. said it would cut another 2,500 jobs during the next year as it continues to cut costs in a tough global economy, after it announced a 13 percent drop in fourth-quarter earnings Friday.

The cuts follow 6,000 positions eliminated by 3M in 2001.

"These are tough and unusual times and I don't see the negative global economic situation abating anytime soon," Chairman and CEO W. James McNerney, Jr., said as he discussed the company's results with securities analysts.

Some of the work force reduction will come through attrition, he said.

Shares of 3M (MMM: up $2.28 to $106.80, Research, Estimates) posted gains Friday after the company reported a sharply lower fourth-quarter profit, yet edged Wall Street expectations, as demand for the conglomerate's products waned in the sluggish economy.

For the latest quarter, Dow component 3M posted earnings of $387 million, or 98 cents a share, before non-recurring items. That's down from $447 million, or $1.12 a share, a year earlier. Analysts on average anticipated a profit of 97 cents a share, according to earnings tracker First Call.

The maker of Post-it note pads, Scotch tape, medical products and telecommunications equipment reported net income of $381 million, or 96 cents a share, compared with net income of $326 million, or 82 cents a share, a year earlier.

"Broad-based economic weakness continued to impact demand for 3M products in the fourth quarter, but significant benefits from our five performance initiatives minimized this effect," McNerney said. "Cost savings from these initiatives, together with continued lower employment levels, resulted in a year-over-year reduction in selling, general and administrative expenses of $75 million, or about 7.5 percent."

Fourth-quarter revenue fell 6.6 percent to $3.9 billion.

In addition to declining sales, 3M has been bombarded by numerous asbestos-related lawsuits. The company's stock plunged Thursday after it revealed in a Securities and Exchange Commission filing it is a defendant in 20,000 asbestos-related lawsuits brought by about 85,000 plaintiffs. The company also said a Mississippi jury had ordered it to pay $22.5 million to four plaintiffs.

The company also said unpredictable economic trends and cost-reduction initiatives would result in 2002 earnings of $4.60-to-$5.05 a share, within the range of Wall Street forecasts of $4.80 a share, according to First Call.

3M also expects first quarter earnings of $1.05-to-$1.20 a share. Analysts on average forecast a first quarter profit of $1.15 a share.