3M Cos. (NYSE:MMM) said yesterday that the turmoil in Venezuela prompted it to shut down its operations there.
The South American country plunged into a constitutional crisis in 2017 after years of runaway inflation and debt defaults. President Nicolás Maduro barred opposition parties from participating in elections the following year; Maduro won the 2018 election in a landslide, but the result was challenged as fraudulent by countries including Argentina, Chile, Colombia, Brazil, Canada, Germany, France and the U.S. (other countries including Cuba, China, Russia, Turkey, and Iran recognize Maduro as president). Maduro and democratic opposition leader Juan Guaidó are in a stalemate after a failed coup in April 30, when Guaidó failed to win the support of the country’s military; Norway is now brokering negotiations between Maduro and Guaidó.
3M said that, given the uncertainty in Venezuela and its belief that no resolution is in sight “for the foreseeable future,” it “deconsolidated” its operations there May 31.
“3M notified relevant employees today that it has suspended local operations of this subsidiary for the foreseeable future,” the company said yesterday.
The move means a second-quarter, non-cash, pre-tax charge of roughly $160 million, or 27¢ per share, but the St. Paul, Minn.-based conglomerate said the Venezuela business is otherwise immaterial.
In April, 3M announced layoffs for some 2,000 of its employees after missing the consensus forecast for its first-quarter results and cutting its outlook for the rest of the year. In May the company agreed to pay more than $6.7 billion to acquire wound care giant Acelity, including its debts, from the private equity consortium that took KCI private for $6.3 billion back in 2011.
