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3M Reports Q3 Sales Dip

The parent company of a Top 40 supplier saw stocks drop too in early premarket trading despite a rise in Q3 earnings.

3M, parent company of Top 40 supplier 3M/Promotional Markets (asi/91240), reported Tuesday that total third quarter sales declined 0.2% year-over-year to $8.15 billion, but that revenue for the first nine months of the year rose 5% to $24.82 billion. The St. Paul, MN-headquartered corporation also said Q3 earnings increased to $1.54 billion, or $2.58 in earnings per share – a 10.7% jump over the same three-month period the prior year but below forecasted targets.

MarketWatch reported that 3M’s stock dropped 6.3% in premarket trading on Tuesday morning. According to MarketWatch, 3M shares have lifted 1.3% over the last three months, compared with a 1.8% decline in the S&P 500 SPX, -0.43% and a 1.1% rise in the Dow Jones Industrial Average DJIA, -0.50%.

In addition to the Q3 sales decline and earnings miss, 3M’s Tuesday stock drop was driven by the company lowering its anticipated GAAP earnings per share for 2018 from a previously expected range of $9.08 to $9.38 down to a range of $8.78 to $8.93.

Excluding impacts from a communication markets business divestiture gain and related actions, a first-quarter legal settlement, and a Tax Cuts and Jobs Act-related expense, 3M noted that its adjusted 2018 earnings should fall in the range of $9.90 to $10.00 per share versus a prior expectation of $10.20 to $10.45. “The update to the ranges reflects an estimated full-year earnings headwind of $0.05 per share from foreign currency versus a prior expectation of a benefit of $0.10 per share,” 3M said in an earnings summary. 

According to a company financial statement, 3M’s safety and graphics division increased year-over-year sales by 7% during the third quarter. Sales in the firm’s industrial division were flat, while there were declines of 2.8% in the healthcare segment, 3.4% in the consumer division, and 4.8% in the electronics and energy channel. On a geographic basis, total sales grew 1.6% in Asia Pacific and 1.3% in the U.S. Meanwhile, total sales declined 3.9% in EMEA (Europe, Middle East and Africa) and 5.5% in Latin America/Canada.

With estimated North American promotional product revenue of $93 million, 3M/Promotional Markets ranked 18th on Counselor’s latest list of the largest suppliers in the industry.