3M earnings limited by drop in LCD demand
Go Deeper.
Create an account or log in to save stories.
Like this?
Thanks for liking this story! We have added it to a list of your favorite stories.
3M's stock price dropped after a disappointing second quarter earnings report was released Tuesday.
Maplewood-based 3M reported record earnings of $1.16 billion in the quarter ending June 30th. However, shares fell at least 5 percent in afternoon trading. Analysts had hoped the company would beat their earnings expectations and that some key metrics would be stronger.
One disappointing aspect of 3M's report is the company's slowing organic growth, which reflects the amount of product they delivered, said Adam Fleck, an equity analyst at Morningstar.
"In the first quarter, they delivered 9 percent more on volume. This quarter it was all the way down to 3 percent," Fleck said. "That's a pretty sharp drop-off, and it's pretty far from management's stated goal in the high single-digit range."
Turn Up Your Support
MPR News helps you turn down the noise and build shared understanding. Turn up your support for this public resource and keep trusted journalism accessible to all.
Supply disruptions due to the Japanese tsunami, as well as rising raw materials costs played a role in that decline, Fleck said.
3M has also seen a decline of more than 20 percent over the same quarter last year in sales of films that coat the screens of LCD televisions
Still, Fleck said the company's long-term outlook seems positive.
Jeff Windau, a research analyst for Edward Jones, said 3M is highly sensitive to changes in the economy and consumer spending.
"There's some concerns in the overall environment from the economic growth perspective, as well as just global geopolitical type issues," Windau said. "I think there's potentially a pause here, but I don't think it impacts their long-term growth potential."