(Reuters) - Diversified manufacturer 3M Co (MMM.N) 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 (ITW.N) and Paccar Inc (PCAR.O) also citing worsening demand from the continent, where investors worry that sovereign debt default could rattle the banking system.
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 (GE.N) or United Technologies Corp (UTX.N), 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 .DJI.
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 statement.
Even with these worries, top executives at U.S. companies said they believe the nation’s economy is not headed back into recession.
United Parcel Service Inc (UPS.N) 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 (CMI.N) 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 .GSPIC falling 2 percent.
Reporting by Scott Malone in Boston and John D. Stoll in Detroit; additional reporting by Nick Zieminski in New York; editing by John Wallace