PPE supplies and household adhesives manufacturer 3M announced Jan. 24 it plans to lay off approximately 2,500 employees later this year. 3M chairman and CEO Mike Roman explained the decision in a financial report, which revealed 3M experienced slower-than-expected growth in 2022’s fourth quarter.
“We expect macroeconomic challenges to persist in 2023,” Roman said in a news release. “Based on what we see in our end markets, we will reduce approximately 2,500 global manufacturing roles — a necessary decision to align with adjusted production volumes.”
Minnesota-based 3M posted organic sales growth of 0.4% year-over-year in 4Q22, falling short of 3M’s expectations for growth between 1 and 3%, according to the release.
“The slower-than-expected growth was due to rapid declines in consumer-facing markets — a dynamic that accelerated in December — along with significant slowing in China due to COVID-related disruptions,” Roman said. “As demand weakened, we adjusted manufacturing output and controlled costs, which enabled us to improve inventory levels.”
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The report also attributed the slow growth to a decline in disposable respirator demand, as well as the exit of Russia from 3M’s markets.
“In a year impacted by inflation, global conflicts, and economic softening, our team took actions to position 3M for future success,” Roman said. “We managed our portfolio – including the divestiture of our Food Safety business, planned spin-off of our Health Care business, and commitment to exit PFAS manufacturing by the end of 2025 — while continuing to work towards a mediated resolution for Combat Arms litigation.”
3M reported adjusted earnings per share (EPS) of $2.28 in 4Q22, down from $2.45 in 4Q21. 3M’s 4Q22 sales of $8.1 billion were also down 6% year-over-year.
For the full year 2022, 3M posted adjusted EPS of $10.10, down from $10.73 in 2021; sales of $34.2 billion, down 3% year-over-year; and organic sales growth of 1.2% year-over-year.
3M’s 2022 financial report also included full-year expectations for 2023, which shed light on the company’s decision to cut jobs. According to the report, 3M forecasts:
- -6 to -2 percent adjusted total sales growth reflecting the following:
- -3 percent to flat adjusted organic sales growth, includes -2 percentage point impact from disposable respirator decline and exit of Russia
- -2 to -1 percent adjusted foreign currency translation impact
- -1 percent adjusted divestiture impact
- Adjusted earnings per share of $8.50 to $9, versus 2022 of $9.88 on a comparable basis
- 2023 adjusted earnings per share include –$0.55 to –$0.80 of combined year-on-year headwinds from the decline in disposable respirator demand, exit of Russia, foreign currency translation and divestitures