* Europe's debt crisis hitting demand
* Consumer exposure takes a toll on 3M
* 3M misses Street view, lowers 2011 forecast
* Cummins cuts 2011 revenue forecast
* 3M, Cummins shares down 5 percent
By Scott Malone and John D. Stoll
Oct 25 Diversified U.S. manufacturer 3M Co sounded a warning on Tuesday, telling Wall Street that
Europe's brewing debt crisis and weakening consumer demand were
taking a toll on profit.
The maker of products ranging from Post-It notes to films
used in flat-panel televisions was not alone in calling out
Europe, with Illinois Tool Works Inc and Paccar Inc also citing worsening demand from the continent, where
investors worry that sovereign debt default could rattle the
3M on Tuesday became the first blue-chip U.S. manufacturer
to miss third-quarter earnings forecasts.
3M is typically quicker to feel the effects of a downturn
than General Electric Co or United Technologies Corp , whose bigger-ticket items are ordered longer before
delivery and which generate a lot of revenue maintaining their
jet engines, electric turbines and elevators.
"The quarter turned out to be a very different one than
what we expected," 3M Chief Executive George Buckley told
analysts on a conference call. "Cause No. 1 was worries about
European sovereign debt and the European economy. Cause No. 2
was the rapid contraction of the electronics end markets."
In particular, the St. Paul, Minnesota-based company said
weak consumer electronics sales hurt its results.
Its shares fell 5 percent to $78.11 in morning trading,
making it the biggest drag on the Dow Jones industrial average .
Paccar, which makes Peterbilt, Kenworth and DAF heavy
trucks, also raised a red flag on Europe.
"Recent euro zone economic uncertainties have resulted in
lower industry truck orders," Paccar CEO Mark Pigott said in a
Even with these worries, top executives at U.S. companies
said they believe the nation's economy is not headed back into
United Parcel Service Inc CEO Scott Davis told
investors on Tuesday he believes the U.S. economy has
stabilized, while 3M Chief Financial Officer David Meline said
he did not expect a double-dip recession.
With a little more than two months to go in 2011, some
industrials took an opportunity on Tuesday to revise their
forecasts for the rest of the year.
Diesel engine maker Cummins Inc cited global
economic uncertainty, including efforts by the governments of
India and China to fight inflation, in pulling back its
full-year revenue and profit margin forecasts.
The Columbus, Indiana-based company said it now expects
full-year sales of $17.5 billion to $18 billion; previously it
forecast $18 billion. Analysts, on average, look for $18.08
billion, according to Thomson Reuters I/B/E/S.
The report, which came on a day the company posted
better-than-expected third-quarter revenue, amounted to a
fourth-quarter guidance cut, one analyst said.
"Third-quarter revenue was in line, so you have a weaker
fourth-quarter number coming," said Eli Lustgarten, analyst at
Longbow Research. Cummins shares fell 5 percent to $93.79 on
the New York Stock Exchange.
3M cut its profit forecast for the year, saying it now
expects $5.85 to $5.95 per share, down about 4 percent at its
midpoint from its previous view and well below the $6.16
analysts had expected.
ITW, which makes restaurant equipment, industrial packaging
and car and truck components, reported profit that topped
analysts' forecasts. It set a fourth-quarter profit forecast of
86 cents to 94 cents per share, which at its midpoint was a
penny shy of Wall Street expectations.
ITW shares were down 4 percent at $46.21 and Paccar eased
less than 1 percent to $42.17, with the Standard & Poor's
capital goods industry index falling 2 percent.