Industrial conglomerate 3M has tapped Bill Brown, the former top boss at L3Harris Technologies, as its next CEO, betting on an outsider to steer the company through a period of slowing sales and the fallout of multiple lawsuits.
The company's shares jumped nearly 7% on Tuesday. They are down about 14% this year through last close as 3M agreed to pay billions to settle lawsuits related to its earplugs and "forever chemicals" while facing easing demand.
Brown, 61, will succeed Michael Roman on May 1. Roman, a 35-year company veteran, will become the executive chairman of the board on the same day.
"3M has brought in an external CEO, which indicates the desire for change," said Wolfe Research analyst Nigel Coe in a note, adding it would be seen as a welcome move during "such challenging financial and stock market performance."
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In January, 3M forecast full-year earnings below Wall Street estimates, citing a "muted" macro environment.
Its electronics business, which makes displays for smartphones and tablets, has been hit particularly hard due to a slowdown in discretionary spending, mainly in China.
"Bill has a reputation for driving margin and working capital efficiency as well as bold strategic moves," Coe added.
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An industry veteran, Brown was the CEO of aerospace and defense technology major L3Harris from June 2019 to June 2021, and then executive chair for another year.
He was CEO of Harris Corp prior to its merger with L3 and spent 14 years at United Technologies in different leadership roles before that.
To mitigate the impact of a slowdown in demand, 3M has rolled out a major restructuring that includes cutting thousands of jobs and the spinoff of its healthcare business into a listed company.
3M in August agreed to pay $6.01 billion from 2023 to 2029 to settle thousands of lawsuits related to its Combat Arms earplugs, which allegedly caused hearing damage among U.S. military service members.
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In June, the company reached a tentative agreement to pay $10.3 billion to settle water pollution claims tied to "forever chemicals".
