Summary
3M Company has announced the deconsolidation of its Venezuelan subsidiary as of May 31, 2019, due to the ongoing challenging political and economic conditions in Venezuela, including a sustained lack of demand. This action will result in a pre-tax charge of approximately $160 million, or $0.27 per diluted share, in the second quarter of 2019. This charge was not anticipated in the company's previously issued 2019 outlook. Importantly, 3M states that there is no economic impact from this deconsolidation, as the Venezuelan operations were immaterial to the company's overall business. The charge is primarily non-cash and relates to foreign currency translation losses that were previously recorded in accumulated other comprehensive losses. While reporting GAAP results, 3M expects to present non-GAAP measures that will exclude this charge.
Key Highlights
- 13M deconsolidated its Venezuelan subsidiary effective May 31, 2019, due to ongoing challenging conditions.
- 2A pre-tax charge of approximately $160 million ($0.27 per diluted share) is expected in Q2 2019.
- 3This charge was not included in the company's previously provided 2019 earnings outlook.
- 4The deconsolidation has no economic impact on 3M, as the subsidiary's operations were immaterial.
- 5The charge is primarily non-cash, related to foreign currency translation losses.
- 63M will likely report non-GAAP earnings that exclude this deconsolidation charge.