3M Co on Monday reported a 17 percent rise in third-quarter earnings due in part to the weak dollar, but the diversified manufacturer's results came in below Wall Street's estimates for the first time in nearly four years, sending shares down 5 percent.
The maker of Scotch tape and Post-It notes, whose stock decline sliced almost 30 points off the Dow Jones industrial average, forecast weaker-than-expected earnings in the current quarter, citing rising raw material prices and short-term inventory problems in its display and graphics business. The company also sounded a note of caution on the global economy.
"We look at 3M as the best proxy for world (gross domestic product) growth, and we're not surprised by its results," said Tim Ghriskey, chief investment officer with Solaris Asset Management. "It really goes hand in hand with what's been happening with the economy, growth slowly ratcheting down."
The St. Paul, Minnesota-based company, which also makes medical products, optical films and other products, reported a third-quarter net profit of $775 million, or 97 cents a share, compared with $663 million, or 83 cents a share, in the year-ago quarter.
Analysts had expected 98 cents, making it the first miss for 3M since the fourth quarter of 2000, according to Reuters Estimates. The results matched the company's July forecast.
Sales in the quarter rose 7.6 percent from last year to $4.97 billion, missing the $5.02 billion Wall Street had expected according to Reuters Estimates. 3M's display and graphics business, which makes optical films used to boost the brightness of liquid crystal displays used in televisions, computer monitors and wireless telephones, saw sales growth slow more than analysts had expected.
Global sales volumes rose 5.6 percent, while selling prices fell by one-half of a percent. Currency effects boosted sales by 2.5 percent. 3M had forecast in July a 5 percent to 7 percent increase in sales volume.
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