3M
(NYSE: MMM)
announced today that it will reduce its headcount by 6,000 — on top of the previously announced 2,500.
It was unclear how many of the jobs are in the company’s Health Care business, which 3M remains on track to spin off. The total 8,500 jobs getting cut represent nearly a tenth of the manufacturing giant’s global workforce.
3M officials expect the restructuring initiative to save the company $700–900 million a year before taxes. They plan to save money by reducing the size of the company’s corporate center, simplifying the supply chain, streamlining the company’s geographic footprint and reducing management layers. 3M will also streamline its go-to-market models to more closely align with customers’ needs.
“We’re confident that these are the right actions about positioning us for growth and profitability as we go forward. And it’ll help us navigate … some of the challenges and uncertainty we have in the current market,” CEO Mike Roman told analysts during the company’s first-quarter earnings call this morning.
3M is also shuffling some executive roles near the top, including having Jeff Lavers solely focus on being Health Care’s interim group president. Roman said Lavers will support the progress made toward Health Care’s spinoff and the transition to a new CEO and management team.
MMM shares were down 0.55% to $104.48 apiece by afternoon trading today. MassDevice’s MedTech 100 Index — which includes stocks of the world’s largest medical device companies — fell more than 1%.
3M’s disposable respirator sales decline continues
The company’s Q1 sales were down 9% year-over-year, to $8 billion. The adjusted organic sales decline was 5.6% — with 3.4 percentage points of the decline due to falling disposable respirator sales and the company’s 2022 exit from Russia.
Earnings were $976 million, or $1.76 per share, for the quarter ended March 31. The bottom line was down nearly 25% compared with Q1 2022.
However, 3M’s adjusted EPS was $1.97. The result was 39¢ ahead of the projections of Wall Street analysts, who expected EPS of $1.58 and $7.49 billion in revenue.
3M is sticking with its 2023 outlook: adjusted sales down 2–6% and adjusted EPS $8.50–9.00.
Out of 3M four business segments, Health Care was the only one with organic sales growth, up 1.6% year-over-year in the first quarter. The Health Care business in the first quarter saw low-single-digit organic sales increases in medical solutions and oral care, while health information systems sales were flat. 3M also saw a high-single-digit decline in separation and purification due to the normalization of post-COVID-related biopharma demand.
Overall, Health Care sales were down slightly, to $2.01 billion.