US giant 3M to cut 6,000 roles on weak demand globally
Photo used for illustrative purpose.
The diversified manufacturer said on Tuesday it will shift its focus to high-growth businesses, including automotive electrification and home improvement, and prioritize emerging growth areas such as climate technology and next-generation consumer electronics.
The job-cut decision comes as an uncertain economy along with rising interest rates and stubbornly high inflation forces corporate America to get leaner in recent months.
3M, which makes electronic displays for smartphones and tablets, has been struggling with waning demand for consumer electronics as people are cutting back on discretionary spending amid recession worries.
The company’s consumer electronic business fell 35% in the first quarter, Chief Financial Officer Monish Patolawala said on a call with analysts.
“Relative to the first quarter of last year, consumers have shifted their spending patterns to more non-discretionary items and retailers have aggressively reduced their inventory levels,” Patolawala said.
The restructuring, which is expected to hit all functions, businesses, and geographies, is aimed at reducing management layers and the corporate centre’s size, the company said.
Earlier this year, the company had announced announced a reduction of 2,500 roles. With the second round of job cuts, the company has now reduced its total global workforce by 10%.
3M expects to take total pretax restructuring charges of $700 million to $900 million, with about half of those to occur in 2023 and the balance in 2024.
“End-market dynamics appear mixed, but MMM continues to be prudent in managing cost/spending that should, over time, support profitability as the company navigates a slow macro environment,” Citi analysts said in a note. The St. Paul, Minnesota-based company reported an adjusted profit of $1.97 per share for the quarter ended March 31, above analysts’ expectations of $1.58 per share, according to Refinitiv. Revenue of $8.03 billion also topped estimates of $7.49 billion.
Separately, Wall Street is slipping on Tuesday after a torrent of companies gave mixed earnings reports for the first three months of the year.
The S&P 500 was 0.9% lower in afternoon trading. The Dow Jones Industrial Average was down 159 points, or 0.5%, at 33,716, as of 12:05pm, while the Nasdaq composite was 1.2% lower.
First Republic Bank tumbled 29.5% for the sharpest loss in the S&P 500 after it said customers withdrew more than $100 billion in deposits during the first quarter. That doesn’t include $30 billion that big banks plugged in to build faith in their rival after the second- and third-largest US bank failures in history shook confidence.
The size of the drop in deposits overshadowed First Republic’s beating analysts’ expectations for earnings at the start of the year.
The majority of companies so far this reporting season have been topping expectations, but the bar was set considerably low. Analysts are forecasting the worst drop in S&P 500 earnings since the spring of 2020, when the pandemic froze the global economy. That’s why Wall Street is focused just as much, if not more, on what companies say about their future prospects as they do about their past three months.
UK’s Ocad: British online supermarket and technology business Ocado Group said on Tuesday it planned to close its oldest automated warehouse, putting about 2,300 jobs at risk.
The site at Hatfield, north of London, serves Ocado Retail, the online grocery joint venture of Ocado Group and Marks & Spencer.
The warehouse, or Customer Fulfilment Centre (CFC) as Ocado calls it, opened in 2002 but has been superseded by the advanced robotic technology of the group’s newer sites.
Ocado has started a consultation process with affected workers, hoping to redeploy as many as possible to its other sites, primarily to a soon-to-be-opened warehouse in Luton, about 14 miles from Hatfield.
It expects the consultation to close this summer, with Hatfield operations planned to halt in line with the start of operations at Luton.
Ocado does not expect Hatfield’s closure to impact the volume of orders fulfilled.
Customer orders currently fulfilled in Hatfield, some 20% of the joint venture’s 400,000 orders per week, would be moved to Ocado’s other UK sites, including Luton.
While during the pandemic Ocado didn’t have enough capacity to meet consumer demand, it currently has surplus capacity, which represents a cost to the business in the short term.
