3M, the US maker of Post-It notes, has warned that the Eurozone crisis is threatening its business as its quarterly profits fell well short of market expectations.
Shares in 3M have fallen 3.8 per cent after it said weaker demand for electronics and Europe's sovereign debt crisis had hit its sales and it would have to reduce its forecasts for full-year earnings.
In a conference call, chief executive George Buckley said the crisis in Europe had impacted exchange rates, disproportionately hitting 3M due to its exposure to international markets.
"The business environment remains challenging, as the economic softening that we experienced late in the second quarter continued into the third," he added in a statement.
3M said it made $1.09bn (£683m) net profit in the third quarter, or $1.52 per share, down from $1.1bn, or $1.53 per share, a year earlier.
Analysts on average had expected $1.61 per share.
The company's quarterly sales also fell short of expectations, rising ten per cent to $7.5bn, compared with expectations of $7.8bn. 3M said many of its customers are lowering inventories in anticipation of slowing demand.
3M also cut its full-year 2011 earnings forecast to $5.85 to $5.95 per share, from A previous forecast of $6.10 to $6.25.
The company also now expects organic sales volume growth to be just 3-4 per cent, down from a previous forecast of 6-7.5 per cent.
But despite weakness in key pockets of its business, 3M enjoyed continued growth for industrial, security, transportation and healthcare products during the quarter. Growth in do-it-yourself products also helped the company.
Its relatively wide earnings miss and cautionary outlook are also out of step with some of its conglomerate peers in the US industrial sector. On Monday, Caterpillar Inc solidly beat expectations with a 44 per cent earnings increase, sending its shares and the overall market significantly higher.
The report from 3M represents the view of a company more exposed to buyers of smaller-ticket items. The company makes products such as office supplies and sandpaper as well as healthcare and security products.
It is also a supplier to other industries, such as automakers and television makers.