Minnesota's 3M Co. illustrated Wednesday just how unpredictable the world economy can be.

On a region-by-region basis, 3M sales were up in terms of local currency. Factor in the strength of the U.S. dollar, however, and the Maplewood-based industrial giant posted a slight decline in first-quarter net profit and sales and was battered in the stock market as a result.

Virtually every multinational company is seeing the same trend as 3M. Consumer giant Procter & Gamble said revenue for its most recent quarter fell more than 7 percent. PepsiCo estimated an 11 percent decline in earnings for the year because of currency exchange rates.

"This is a problem that fixes itself," said Santiago Bazdresch, finance professor at the Carlson School of Management at the University of Minnesota. "The dollar is strong because the U.S. economy is doing well. It's a temporary accounting mismatch. Margins will be smaller, but in the long term it will be a wash."

3M CEO Inge Thulin said 3M experienced growth in every product unit and geography, when measured in local currency. But the effect of translating 3M's operations into U.S. dollars reduced its pretax profit by $90 million, or about 10 cents a share.

"We executed well and delivered a solid quarter against a challenging economic background," Inge told analysts in a conference call Wednesday morning.

3M’s health business also saw a drop in operating income. Above, a demonstration at an annual 3M meeting in St. Paul.

3M's net profit, which is after taxes, amounted to just under $1.2 billion, or $1.85 a share, in the first three months of the year. Analysts had expected a profit of $1.93 a share. In the same period a year ago, the company earned just over $1.2 billion.

Revenue in the latest period was $7.6 billion, down 3.4 percent. 3M said its sales rose 3.3 percent when measured on a local basis, or before being translated into U.S. dollars.

The dollar in recent weeks has been at its strongest level against world currencies since 2001, and many U.S. firms that have a major presence in other countries are reporting negative effects in their financial results from currency translation.

"This is not a 3M issue. It's a broad economic issue," said Matt Arnold, an equity analyst with Edward James. "In terms of operating metrics, 3M continues to do just fine, in fact quite fine in a world of choppy economics."

Nonetheless, 3M's stock price declined by $5.01, or 3.14 percent, to close at $159.66.

The company's biggest business segment, industrial products, reported a sales decline of 4.3 percent in dollars but a 2.7 percent jump based on local currency. Sales grew in every region except Europe. Its operating income fell 3.3 percent compared with a year ago.

3M's electronics and energy business segment was the only one of the company's five units to report sales growth on both a dollar and local currency basis. The unit's gains were driven by electronics materials and display materials and systems. Its energy-related products showed a sales drop. The unit's operating income surged 24 percent.

3M's other business units — consumer, health care, safety and graphics — reported small sales drops on a dollar basis with growth on a local currency basis. The health care business experienced a drop in operating income, while consumer and safety and graphics reported gains.

3M lowered its profit outlook for the rest of the year, citing the dollar's effect on financial accounting. It said it now expects per-share profit in a range of $7.80 to $8.10, below its previous guidance that ranged from $8 to $8.30.

"The most fundamental thing is that the U.S. economy is becoming more healthy while Europe, China, Japan and Brazil are not," the U's Bazdresch said.

Staff writer Evan Ramstad contributed to this report.

David Phelps • 612-673-76269