3M's Sales Drop Despite Demand for Face Masks, Cleaning Supplies -- 4th Update
July 28 2020 - 4:00PM
Dow Jones News
By Austen Hufford
3M Co. is the lead maker of the most critical face masks in the
fight against Covid-19. But mask demand hasn't protected the
company from the brutal economic impact of the pandemic.
The Saint Paul, Minn.-based manufacturer said Tuesday that it
suffered a sharp sales drop in its latest quarter while many
factories, offices and dentists remained closed, offsetting gains
from high demand for N95 masks and home-improvement supplies.
"We saw steep declines," Chief Executive Mike Roman said in an
interview. "About 80% of our portfolio was negatively impacted by
Covid."
The company's shares fell nearly 5% in recent trading.
3M said 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 quarter as companies made fewer cars
and planes, hospitals performed fewer elective procedures and
office managers placed fewer supply orders.
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.
In addition to masks, sales of home-improvement products also
rose for 3M as stuck-at-home consumers fixed up their houses. Paint
maker Sherwin-Williams Co. on Tuesday also reported a surge in
demand for its do-it-yourself paint products.
Mr. Roman said that demand for 3M's products rose in July, but
that the company remains unsure how the rest of the year would play
out as the coronavirus continues to spread in the U.S. and around
the world.
"What does a recovery look like? It's not likely to be a
perfectly smooth line," Mr. Roman said.
3M 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 15:45 ET (19:45 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
3M (NYSE:MMM)
Historical Stock Chart
From Aug 2024 to Sep 2024
3M (NYSE:MMM)
Historical Stock Chart
From Sep 2023 to Sep 2024