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3M forecasted slow-paced Consumer-Electronics Demand

 The company had announced, a couple of months ago, to cut almost 1,500 jobs.

15th December 2015, Due to constrained demand for industrial supplies and consumer electronic products, 3M has decreased its earnings forecast and growth in sales.

3M products ranges from a scotch tape to sand paper and medical supplies but company is expecting a sluggish growth in the upcoming year though the world economy remains stable.

The company’s stock fell down 6% early this week on the NYSE.

3M supplies adhesives, films, coatings and other products, which are used in making consumer electronics goods such as television, smartphones, tablets globally, and has forecasted a slump in sales of these products due to weak demand of consumer electronics merchandise throughout the globe.

The company is also facing a decline in demand of products like abrasives, adhesives, and other materials from various US industrial companies. Although, consumer products and health-care businesses are still strong.

3M forecasted earnings per share to be $7.6 - $7.65 for the year 2015 but had reduced it to $7.55.

For the next year, 3M is anticipating earnings per share to be up by 7-12% as compared to 2015.

Company’s organic sales growth is expected to be 1% in 2015, as compared to previous anticipation of 1.5-2%. This excludes current acquisitions and currency fluctuations. 3M is expecting 1-3% organic sales growth in 2016 which is far below the company’s long term vision to reach 4-6%.

As an answer to a slow paced economy, 3M was planning to cut 1,500 jobs in October 2015.

Despite of the slow growth economy, 3M is still positive in Asia region for its organic sales growth. There will be a single digit sales growth in few countries like China and Japan, whereas, in few countries the economy may remain weak for and year or two like Brazil.

As of late, 3M has brought about more obligation and channeled more cash to shareholders through stock buybacks and profits. Profits for 2015 are relied upon to add up to 54% of income for each offer, up from 37% in 2013. 3M has expanded its profit for each of the previous 57 ye

According to Techsci Research restructuring plan of the company by cutting 1,500 jobs will result in further strengthening the company’s competitiveness. This move would include parting few of the structural overhead in the US and few other slow growing economies. Slow growth of the worldwide economy will be continued which would impact in lowering the short-term earnings but commitment in making investments will be fruitful in a long run.

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