Nestle CEO Mark Schneider was ousted in a sudden move by the world's biggest foodmaker as a result of the group's under performance, three sources familiar with the matter said.
Nestle announced Schneider's departure late on Thursday following a board meeting and appointed company veteran Laurent Freixe as its new CEO. This put an end to a near eight-year tenure by Schneider, a 58-year-old German, the first company outsider to lead Nestle in nearly a century.
The company declined to give further details beyond comments made on an investor call on Friday, where Chairman Paul Bulcke said the board together with Schneider had assessed the current environment and together had agreed to make the change.
Schneider did not immediately respond to requests for comment. Bernstein analyst Bruno Monteyne said Schneider had made it clear recently he expected to be around for the long haul.
The suddenness of the move "is another sign that this is not a planned transition. It is clearly not his choice either, or he probably would have managed a smoother transition," he said.
Nestle shares hit a record high in January 2022 as the group enjoyed a pandemic-driven boom, but they have been on a downward slide since May 2023 after a series of mishaps, earnings misses and guidance downgrades.
Nestle's price-to-earnings ratio, used to gauge the relative value of a company's stock, is 17.7, down from more than 25 in June 2022. That is higher than the consumer goods industry average of 10, but below rival Unilever's 18.5.
The shares were down around 1.8 per cent on Friday and were among the biggest fallers in Europe, after Freixe's appointment, showing how investors were unsettled by the unexpected change of CEO.
Analysts said uncertainty about whether Nestle could reach its 2024 and 2025 targets and concerns the new CEO may reduce profit guidance as he focuses more on sales growth than margins, were among the factors weighing on the stock.
"We’ve been of the view that the current CEO has been rather seduced into doing too many deals, often chasing growth through expensive acquisitions," said Freddie Lait, managing partner at Latitude Investment Management.
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