3M announced a very weak sales report for the first quarter of this year. The company's shares shrunk by 13 percent and this was the lowest drop since October 1987.
Consequently, the company revealed its plans to lay off 2,000 workers. The job cuts are said to be part of the move to The Dow component blames worsening performance in key markets.
The job cuts are part of the scheme to reorganize its businesses to just four units from its original five, CNBC reported.
Moreover, the sales went down 5 percent to $7.9 billion compared to the same period last year. The sales in the U.S. rose a bit since it is the region that has the most outlets for 3M products but in Europe, Africa, and the Middle East, the company saw a drop of 9 percent. Sales in Asia are also lower by seven percent compared to 2018.
"The first quarter was a disappointing start to the year for 3M," CNN News quoted 3M chief executive officer, Mike Roman, as saying in a statement. "We continued to face slowing conditions in key end markets."
David Berge, an analyst at Moody's Investors Service added, "3M's first-quarter results, along with lower revenue growth and earnings guidance for 2019, shows unusual weakness at this point in the industrial cycle compared to other larger manufacturers."
He added, "In the context of restructuring initiatives, this indicates operating deficiencies at 3M that management will need to address to restore performance normally associated with the company."
In any case, the number of job cuts that will be implemented soon makes up the two percent of 3M's total workforce worldwide. By laying off some of the employees, the company will be able to save at least $250 million every year.
The elimination of the workers will be divided across the regions and business divisions of the company. Those who will be cut from their positions are underperforming workers in various job areas.
Finally, Deane Dray, an analyst at RBC Capital Markets, said that the investors of the company are very disappointed with the outcome of the Q1 sales report. "3M sharply disappointed investors with a sizable operating miss and full-year guidance cut, significantly worse than the cut we had anticipated. Four out of the five segments posted operating misses versus our estimates, underscoring the broad-based weakness," he said.
