Dollar strength gives 3M a sticky problem

Shares in 3M came under pressure after the US manufacturer behind Post-it notes and Scotch tape lowered its full-year outlook and said first-quarter results were squeezed by the strength of the dollar.

The Minnesota-based company said earnings for the year will be in the range of $7.80 to $8.10 a share, weaker than its previous forecast of $8 to $8.30.

For the full year, the company said foreign currency translation was expected to reduce sales by 6-7 per cent, a steeper decline, than its previous forecast of a 4-5 per cent reduction.

3M, however, maintained its forecast for organic sales growth in the range of 3-6 per cent.

Dollar appreciation also showed up in its first quarter, reducing pre-tax profits by $90m, or 10 cents a share.

Overall, profits were little changed at $1.2bn or $1.85 a share in the first three months of the year.

Sales declined 3 per cent from the year-ago period to $7.6bn. The company derived more than 60 per cent of its sales overseas last year.

"We are executing well against a more challenging economic backdrop in early 2015," said Inge G Thulin, chief executive. "The stronger US dollar negatively impacted sales and earnings in the first quarter and global economic growth was mixed."

Shares of 3M, which gained 15 per cent in the past year, declined more than 3 per cent to $159.16.

The stronger US dollar continues to chip away at results from corporate America.

FactSet estimates that first-quarter earnings will decline 11.6 per cent for companies that generate less than half their sales in the US.

Procter & Gamble, the consumer products group behind brands such as Pantene and Tide detergent, said the dollar also dragged on its results.

The Ohio-based company reported profits of $2.1bn or 75 cents a share compared with $2.6bn or 90 cents a share in the year-ago period.

Sales fell 8 per cent to $18.1bn, which reflected an 8 percentage point hit from a dollar that has risen more than 20 per cent since July.

PulteGroup was the biggest per cent decliner on the S&P 500 after the third-largest US home builder by market value reported first-quarter results that fell short of Wall Street expectations.

The Georgia-based company reported profits of $55m or 15 cents a share on sales of $1.1bn. Analysts had forecast earnings of 20 cents a share on sales of $1.25bn.

Richard Dugas Jr, chief executive, said earnings were "impacted by higher income tax expense, acquisition accounting and construction delays which slowed closings". Shares of PulteGroup dropped 8 per cent to $19.88.

Shares of Hershey fell 3 per cent to $95.20 after the global confectioner reported weaker than expected results and lowered adjusted sales forecast for the year amid slowing sales growth in China.

US stocks were little changed on disappointing earnings and economic data.

The S&P 500 slid 0.1 per cent to 5,030.31, the Dow Jones Industrial Average declined 0.2 per cent to 18,007.94 and the Nasdaq Composite fell 0.1 per cent to 5,029.86.

[email protected]

Twitter: @mamtabadkar

© The Financial Times Limited 2015. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation