By Kannaki Deka
(Reuters) -U.S. industrial giant 3M Co posted a better-than-expected quarterly profit on Tuesday on higher sales in its electronics unit, sending its shares up about 5%.
Improved demand for electronics used in mobile phones and cars helped the company that had been struggling as consumers put off buying big-ticket items amid high inflation.
CEO Mike Roman, who will be succeeded by former L3Harris Technologies (NYSE:LHX) top boss Bill Brown on May 1, said smartphone makers were getting ready for demand in the second quarter.
3M also expects sales in the second half of the year to be slightly stronger than the first half, CFO Monish Patolawala said in a call with analysts.
However, the company, which has raised its dividend for several decades and paid a dividend for over a century, cut its dividend on Tuesday.
It said it planned to reset its dividend at about 40% of adjusted free cash flow, with a potential to increase over time following the spin off of its healthcare business.
"The dividend has been cut as broadly flagged ... this suggests an annual dividend of $2.80 vs. prior $6," Wolfe Research analyst Nigel Coe said in a note.
This comes even as the company has been benefiting from steady price increases over the past two years and cost cuts through layoffs and spin-off of its healthcare business.
The St. Paul, Minnesota-based company said it expects 2024 adjusted profit between $6.80 and $7.30 per share.
3M reported an adjusted profit of $2.39 per share for the first quarter on adjusted net sales of $7.72 billion, above the average analyst expectation of $2.10 of profit and $7.63 billion in revenue, according to LSEG data.
First-quarter sales in its transportation and electronics business rose 2.6%.