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3M to cut 1,500 jobs after profit beats Street, revenue misses

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By Lewis Krauskopf and Ankit Ajmera

Oct 22 (Reuters) - 3M Co said on Thursday it would cut 1,500 jobs to lower expenses as the diversified U.S. manufacturer reported a higher-than-expected quarterly profit despite disappointing revenue.

Shares rose 2.9 percent to $154.18 in morning trading as investors looked past a reduced revenue forecast and weaker-than-expected third-quarter sales from 3M, which makes Scotch tape, Post-it notes and an array of adhesives and abrasives.

The job cuts, which amount to 1.7 percent of 3M's 89,800 employees as of Dec. 31, will focus on overhead and affect about 500 positions in the United States, with other reductions in slower-growing markets in the Europe, Middle East and Africa regions, as well as in Latin America.

3M estimated the cuts would yield $130 million in pretax savings next year, as it takes a fourth-quarter charge of about $100 million.

"We are living in a competitive world and we adjust as we go," 3M Chief Executive Officer Inge Thulin said on a conference call with analysts.

Third-quarter net income was little changed from a year ago at $1.3 billion. Earnings per share of $2.05 topped the average analyst estimate of $2.00, according to Thomson Reuters I/B/E/S.

Sales fell 5.2 percent to $7.71 billion. Revenue rose 1.2 percent excluding the impact from currency swings. Analysts were looking for revenue of $7.85 billion.

3M's operating margin stood at 24.3 percent in the quarter, up 0.9 percentage points from a year ago.

"Margins were above our expectations in all segments," Credit Suisse analyst Julian Mitchell said in a research note.

For the year, 3M said it expects sales to grow 1.5 percent to 2 percent, excluding the effect of currency changes. The company, which derives more than 60 percent of sales from outside the United States, previously forecast such sales growth of 2.5 to 4 percent.

The company forecast for full-year adjusted earnings in a range of $7.73 to $7.78 per share, lowering the top end from $7.93. However, the new range still included the average analyst estimate of $7.77 per share.

(Reporting by Ankit Ajmera in Bengaluru; Editing by Don Sebastian and Christian Plumb)