3M cuts profit forecast after sales miss on slowing Asia demand

U.S. industrial conglomerate 3M fell well short of Wall Street estimates for quarterly revenue and cut its full-year profit forecast on Thursday, adding to signs of U.S. corporations suffering from trade tensions with China.

Shares of the Scotch tape and Post-it notes maker fell as much as 3% premarket. The Dow component has lost about 11% so far this year, underperforming a near 14.8% rise for the index.

China, a high-growth market for 3M, expanded at its weakest pace in almost three decades in the third-quarter as the bruising trade war hit factory production.

So far this week, industrial bellwether Caterpillar Inc reported weak demand in Asia, including a 29% plunge in construction equipment sales, while toymaker Hasbro Inc highlighted a hit from the tit-for-tat tariffs.

3M also said sales in Asia-Pacific, its biggest market outside the United States, fell 5% in the third quarter ended Sept. 30, while Europe, Middle East, and Africa declined 4.1%. Sales in the United States rose by just 0.8%.

“While the macroeconomic environment remains challenging… we continued to effectively manage costs and reduce inventory levels,” Chief Executive Officer Mike Roman said in a statement.

The company earlier this year announced plans to reduce production and cut 2,000 workers.

“We believe investors anticipated a weak quarter and guide down. Operationally, this appears worse,” Gordon Haskett analyst John Inch wrote in a note.

3M said it now expects full-year sales to decline in a range of 1% and 1.5%, excluding the effect of currency changes, compared with sales growth of 1% at the mid-point forecast earlier.

The company also lowered its full-year adjusted earnings expectations to be between $8.99 and $9.09 per share, down from its prior outlook of $9.25 to $9.75 per share.

Net income attributable to the company rose to $1.58 billion, or $2.75 per share, in the quarter, from $1.54 billion, or $2.64 per share, a year earlier, helped by a gain from a divestiture.

Net sales fell 2% to $7.99 billion, missing the average analyst estimate of $8.16 billion, according to IBES data from Refinitiv.