Minnesota Mining & Manufac-turing Co plans to cut 2,500 jobs this year, adding to reductions made by Chief Executive James McNerney that helped fourth-quarter profit rise 17 percent as sales fell.
Sales declined for a third quarter in a row with the US economy in recession and demand slowing overseas, where the maker of products ranging from Post-it Notes to electronic circuitry gets about half its revenue. McNerney spent his first full year on the job implementing the cost cutting and efficiency programs he learned at General Electric Co.
"These are tough and unusual times," McNerney said on a conference call with analysts and investors. "And I don't see the negative, global economic situation abating anytime soon."
McNerney expects to cut expenses by US$1 billion this year.
Selling, general and administrative costs were reduced by US$75 million, or about 7.5 percent, last year as 3M cut 6,000 jobs and closed seven plants. Five plants are being closed this year.
"This company has always had great people, they just needed more aggressive management," said Nick Redfield, an analyst with Banc One Investment Advisors, which owns 2.9 million 3M shares. "They are doing a lot of things internally, which over time will show the true value of the company."
Fourth-quarter net income rose to US$381 million, or US$0.96 a share, from US$326 million, or US$0.82, a year ago, St. Paul, Minnesota-based 3M said. Sales fell 6.6 percent to US$3.86 billion.
Shares of 3M rose US$2.28 to US$106.80. On Wednesday, the shares dropped as much as 8.5 percent amid concern about the company's potential asbestos liabilities. "There are no facts that this is getting incrementally worse, let alone getting out of control," McNerney said on the conference call.
New asbestos claims aren't accelerating and there are no new trial cases pending, he said. Insurance covers more than 90 percent of the associated costs, McNerney said.
A jury said in October that 3M's masks and respirators didn't protect workers who used them from asbestos exposure and ordered the company to pay US$22.5 million in damages. The verdict hasn't yet been entered, which means the judge can still overturn it, throw out the case, or send it to appeal, McNerney said.
3M has said that it believes the verdict will be overturned and that it will appeal the verdict if necessary.
Full-year profit is expected to be US$4.60 to US$5.05 a share, the company said. 3M forecast first-quarter earnings of US$1.05 to US$1.20 a share. Both forecasts are within the range of estimates from analysts surveyed by Thomson Financial/First Call.
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