3M cuts 2013 outlook on falling electronics demand

By Ernest Scheyder

(Reuters) - Diversified U.S. manufacturer 3M Co cut its 2013 profit forecast on Thursday, citing weakening demand for electronics products as well as foreign currency fluctuations.

The lowered outlook came after first-quarter profit and revenue both missed Wall Street expectations.

3M, which makes a range of products from Post-It notes to films used in television screens, blamed falling sales in its consumer electronics segment.

Executives had expected weak demand for electronic insulation, computer touch screen materials as well as fluids used to make computer chips, but they said actual sales were worse than feared.

"We expected a challenging start to the year, but in fact market conditions were tougher than we had expected," Chief Executive Inge Thulin said on a conference call with investors.

While a 56 percent drop in pension payments boosted first-quarter margins, analysts were wary as margin strength wasn't more reliant on higher sales.

Additionally, the company changed its reporting segments on January 1, making it difficult for analysts to compare performance to prior years and track results, William Blair & Co analyst Nick Heymann said.

"This is a little more complex than normal," Heymann said.

3M now expects to earn $6.60 to $6.85 per share this year, a range mostly below the $6.82 average analyst estimate, according to Thomson Reuters I/B/E/S.

3M previously had expected to earn $6.70 to $6.95 per share this year.

Also, the rising value of the U.S. dollar compared to other global currencies harmed results, executives said. Before, the company had not expected foreign currency changes to harm 2013 results, but now it was seen cutting revenue by 1.5 percent.

Its stock dropped 3.5 percent to $104.09 in mid-morning trading. It has gained about 16 percent this year, outpacing the Dow Jones industrial average's roughly 12 percent rise.

REVENUE RISES

St. Paul, Minnesota-based 3M posted first-quarter profit of $1.13 billion, or $1.61 per share, compared with $1.13 billion, or $1.59 per share, in the year-earlier period.

Profit per share missed analysts' estimates of $1.65. The number of outstanding shares fell, boosting the most recent earnings per share.

Revenue rose 2 percent to $7.63 billion, missing the $7.81 billion estimate from analysts.

Thulin, who took the top job last year, began a restructuring in January. He merged 3M's security and traffic-safety units, eliminating about 300 jobs, and identified other units that 3M would need to fix, sell or close.

Thulin has said 3M needs to prune its broad portfolio of products, and likely to focus on fewer but larger takeovers.

(Reporting by Ernest Scheyder; Editing by Gerald E. McCormick, Maureen Bavdek and Jeffrey Benkoe)

Source: http://news.yahoo.com/3m-quarterly-profit-slightly-2013-outlook-cut-115703087--sector.html

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