3M's Sales Drop Despite Demand for Face Masks, Cleaning Supplies -- Update
July 28 2020 - 11:41AM
Dow Jones News
By Austen Hufford
3M Co. suffered a sharp sales drop while many factories, offices
and dentists remained closed, offsetting gains from high demand for
N95 masks and home-improvement supplies.
The Saint Paul, Minn.-based manufacturer said Tuesday that the
global economy appeared to be recovering. Total sales so far in
July were higher than sales through this portion of the month last
year, and adjusted sales in China increased 3% in 3M's second
quarter, which ended in June.
But 3M's sales adjusted for acquisitions and currency
fluctuations fell 12% in the latest quarter as companies made fewer
cars and planes, hospitals performed fewer elective procedures and
office managers placed fewer supply orders. That weakness
outweighed growth in 3M's businesses that have grown due to the
impacts of the coronavirus, including the production of home
improvement and cleaning products as well as masks.
"We experienced steep, but expected, declines," Chief Executive
Mike Roman told analysts.
The company's shares fell 5.6% to $154.06.
3M has doubled production of its N95 masks this year to meet
skyrocketing demand from health-care workers. 3M said it produced
nearly 800 million respirators and N95s -- so-called because they
block 95% of very small particles -- in the first half of this year
globally and has distributed about half of them in the U.S.
The largest domestic maker of N95 masks is growing production
even further as it and other producers respond to what they see as
a long-term shift toward domestic production of medical
products.
Still, face masks make up a small part of 3M's business, which
spans from advanced wound-care products to Scotch tape and
industrial sandpaper. Adjusted sales fell 19% in its transportation
and electronics segment, 12% in health care, 6% in safety and
industrial and 5% in its consumer segment. The company had
previously said that it expected the second quarter, which went
through June, to be the weakest for the global economy.
3M said sales fell 57% in the quarter for products that are sold
to dentists, such as teeth cements, and 25% for office supplies
like its Post-it Notes.
The company said it is closely watching plans on how and whether
to reopen schools this fall. A number of prominent school
districts, including the country's second-largest, Los Angeles,
have said they would start the school year online. 3M, which sells
many popular school supplies, said it has been increasing inventory
and that retailers it works with are largely planning for
reopenings.
Adjusted sales fell 13% in the U.S., 23% in Canada and 38% in
Mexico. In all, total revenue declined 12% to $7.18 billion in the
quarter. The company posted a net profit of $1.29 billion, or $2.22
a share, up from $1.13 billion, or $1.92 a share a year earlier. On
an adjusted basis, earnings per share fell to $1.78 from $1.92.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
July 28, 2020 11:26 ET (15:26 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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