3M plans 1,500 job cuts as US dollar pinches overseas sales

US conglomerate 3M plans to cut 1,500 jobs in a global restructuring effort.
US conglomerate 3M plans to cut 1,500 jobs in a global restructuring effort. PHOTO: BLOOMBERG

NEW YORK (BLOOMBERG) - US conglomerate 3M Co plans to cut 1,500 jobs in a global restructuring effort as the maker of touchscreens and Post-it Notes fights sluggish growth overseas and a strong U.S. dollar that's crimping sales.

The workforce pullback, about 1.7 per cent of 3M's total at the start of the year, was announced Thursday along with a reduction in the top end of the company's 2015 profit forecast. 3M said the move will result in pretax savings of US$130 million next year, and the stock rallied.

"The current economic growth environment remains challenging," chief executive officer Inge Thulin said on a conference call. The restructuring is designed to make 3M "a stronger, more agile, more focused company."

The currency squeeze highlights 3M's dependence on international business, which accounts for about two-thirds of revenue, and echoed the experience of many US manufacturers.

Since becoming CEO in 2012, Thulin has emphasized organic growth in overseas markets and new-product development. This year, he has reshaped 3M with deals that include its largest-ever acquisition.

3M rose 4.1 per cent, the biggest gain in almost a year, to US$156 at the close in New York as major US stock indexes advanced. That pared the shares' 2015 loss to 5.1 per cent.

3M said its restructuring plan, which will result in a fourth-quarter pretax charge of about US$100 million, will focus on reducing U.S. overhead and retrenchment in slow-growth international markets. The company had about 89,800 workers at the beginning of the year.

Excluding restructuring costs, 2015 earnings will be US$7.73 to US$7.78 a share, 3M said. The previous high end of the range was US$7.93 a share. Third-quarter profit of US$2.05 a share topped the US$2 average of 13 projections compiled by Bloomberg.