3M Co. Chief Executive Mike Roman said the industrial giant is taking “aggressive actions,” after a disappointing start to the year that last week sent the stock to its worst one-day rout in three decades.
“We’re aggressively taking down costs,” Roman, who took over last July, said in an interview on Bloomberg Television on Tuesday. “It is not simple across-the-board cost-cutting. You have to be focused.”
The Maplewood-based company, which is known for its Post-its but makes goods ranging from auto parts to touchscreens, tumbled Thursday when it acknowledged a confluence of operational missteps and deteriorating markets.
The problems were partly self-inflicted: 3M failed to adjust its cost structure quickly enough. The company announced measures that included 2,000 global job reductions.
“We didn’t take enough actions in the first quarter,” Roman said, as declines in three key markets — automotive, electronics and China — accelerated.
The automotive and electronics markets have been a drag for several quarters amid flagging demand for cars and smartphones around the world. Roman signaled that the weak car and electronics markets may not recover as fast as some may hope.
“A lot of people see that improving as we get in the second half,” the CEO said. “We are taking a more cautious approach.”
3M, whose clients primarily are manufacturers, is still “hopeful that it will improve as we go through the year,” Roman said.
Taking Wall Street by surprise on Thursday, 3M cut its annual forecast for the second time this year, shaking its reputation for steady results. As a result, its stock fell 13 percent Thursday, biggest one-day drop since the broad market crash in 1987.
“We have to rebuild our credibility,” Roman told investors on an earnings conference call last week.
3M, which makes more than 30 percent of its revenue in the Asia Pacific region, cited headwinds in China. In Tuesday’s interview, the CEO said China, while a challenge in the near term, remains a “very attractive market” for 3M, which has a health care business in the country.
In the U.S., where 3M makes just below 40 percent of sales, the broad macroeconomic environment remains strong, Roman said.
On Thursday, 3M reported first-quarter adjusted earnings of $1.7 billion or $2.23 per share, down 11% from a year ago and well below the $2.49 per share expected by stock analysts. The company’s first-quarter sales tallied $7.9 billion, down 5% from a year ago.