MINNEAPOLIS — 3M Co. reported a 17 percent increase in third-quarter profits on Monday, but the maker of Post-it notes and Scotch tape missed analyst expectations and said full-year earnings would do the same.
Chairman and chief executive W. James McNerney said 3M is "cautious on the global economy."
Investors got cautious about 3M, at one point driving the Dow component's shares down more than 5 percent. 3M stock recovered to close down $1.88, or 2 percent, at $76.10 on the New York Stock Exchange. The shares are at the low end of their 52-week range of $73.27 to $90.29.
The company earned $775 million, or 97 cents a share, for the three months ended Sept. 30, up from $663 million, or 83 cents a share, a year earlier. The results met 3M's forecast in July but missed by a penny the estimate of analysts surveyed by Thomson First Call.
Sales rose 7.6 percent to $4.97 billion — the low end of analyst estimates — from $4.62 billion during the same quarter last year.
The Maplewood company's display and graphics business, which includes film coatings for flat-screen televisions, computers and cell phones, continued to be its most profitable — with operating income of $286 million, up 14 percent from $251 million during the same period last year. But that same division grew 49 percent in the second quarter.
Chief financial officer Patrick Campbell told analysts that 3M is under pressure to cut prices as flat-screen televisions become more popular. And manufacturers have added to their inventory of the films, meaning that sales have been sluggish for 3M even as demand increases for the products.
"We see this as a short-term correction only. We remain confident in the long-term growth prospects of the LCD display market," Campbell said.
Analyst John Roberts of Buckingham Research said that makes sense.
"I think it was a little bit of an overreaction," he said of the sell-off in 3M stock. "You'd think this company only made films for flat panel displays if you looked at the stock today."
Roberts said investors also may have been concerned that 3M showed little sales growth of its Aldara cream — originally a wart treatment that has now been approved for some types of cancer. Aldara is the single biggest product in 3M's health care pipeline, Roberts said, and investors probably expected more from it with the new approvals.