3M Plans Job Cuts; Profit Rises 2%

3M Co. said Monday that it will cut 7% of its work force and boost productivity as it faces “unusually unpredictable” markets and currency trends.

The St. Paul, Minn.-based company said about half of the 5,000 jobs to be eliminated in the next 12 months will be outside the United States. It declined to provide details on where the cuts will be made, saying it will make additional announcements in the coming weeks.

3M, whose products range from Post-It notes and Scotch tape to industrial adhesives and fiber-optic connectors, made the announcement as it reported a 2% rise in first-quarter earnings to $467 million, or $1.16 a share. Sales rose 2.3% to $4.17 billion.

“In this uncertain economic environment, we are focusing on the things we can control, such as investing for future growth, tightly managing working capital and sizing our costs to meet our revenues,” Chief Executive James McNerney said.

In its first quarter, 3M said its cost cutting and international sales gains more than offset the effects of higher energy costs and the soft U.S. economy.

The company’s unit sales, both in the U.S. and overseas, saw slower growth than in the previous quarter, analysts said.

The firm said it will take a $600-million pretax restructuring charge in coming quarters. It estimated the moves will eventually produce $300 million in annual savings, with $75 million, or 25%, of that in 2001’s third and fourth quarters.

McNerney said businesses and geographic areas to be most affected by the restructuring will be those facing the biggest long-term economic challenges or have the biggest need to reduce unnecessary structure. High-growth areas, such as optical systems, fiber optics and immune system modifier drugs, will be less affected.

For its second quarter, 3M expects earnings to be flat or to rise slightly. Analysts had expected it to earn $1.17 to $1.26 a share, with an average estimate of $1.23, according to First Call. It had earned $1.18 a year earlier.

The company also said it expects to earn about $4.75 to $5 a share for all of 2001, at the lower end of analysts’ expectations. Wall Street had predicted the company would earn $4.70 to $5.30 for the year, with an average estimate of $4.98, according to First Call.

3M shares, which have outperformed Standard & Poor’s 500-stock index by 40% in the last 12 months, rose $3.80 to close at $116.30 on the New York Stock Exchange.