A strong dollar depressed the 3M Co.'s sales for the quarter ending last month. But the company's profits rose as officials cut costs.
Net income rose about a half percent, to $1.2 billion, while revenue fell 2 percent, to $7.5 billion.
Most of Maplewood, Minn.-based 3M's sales are outside the United States, and with the strong dollar, the company takes a hit when sales abroad are converted to dollars.
Morningstar analyst Adam Fleck says that has been an issue for many multinational firms lately.
"You have to hand it to a lot of companies that we've seen report lower than expected sales but better than expected profitability," Fleck said. "Many of these companies have been dealing with a pretty weak European situation for some time. And have learned lessons from the prior recession and got out in front of cost reductions and restructuring. You're seeing some pretty decent earnings reports, even though sales have been maybe a bit weaker than expected."
Fleck says 3M cut costs about 3 percent, in large part by laying off workers in Europe, implementing hiring freezes, and clamping down on travel and discretionary spending.
He adds that says the cost-cutting has more than offset the drag from foreign-exchange rates.
"The company is really doing a great job holding on to costs and cutting discretionary spending," Fleck said. "Still investing in growth, which we like to see, but nonetheless there's a lot of leverage they can pull on the cost side. They've got hiring freezes in place, travel costs, of course. Keeping an eye on employment levels."
Sales at 3M fell most in the display and graphics segment, which makes films for LCD televisions, stop signs and overhead projectors.
The company's stock was up about 2 percent in Thursday morning trading.