Nestle announces CEO departure, shares slump

23rd Aug 2024 08:42

(Sharecast News) - Nestle slumped on Friday as it announced the departure of chief executive Mark Schneider, who will be replaced by Laurent Freixe.

The Swiss food and drink conglomerate said Schneider had "decided to relinquish his roles as CEO and member of the board of directors" after eight years with the company.

Freixe, who is currently executive vice president and chief executive of the Latin American business, will take on the role on 1 September.

Freixe joined Nestle in France in 1986. Since then, "he has continuously progressed within the company, assuming various positions of increasing responsibility across different businesses, markets and zones," the company said.

Paul Bulcke, chairman of the board of directors, said: "I have known Laurent for a long time and highly regard him as a talented leader with strategic acumen, extensive in-market experience and expertise as well as a deep understanding of markets and consumers. He has demonstrated his ability to deliver results in challenging market conditions.

"Laurent's curiosity fuels his passion for innovation and positive change. Laurent is the perfect fit for Nestlé at this time. Under his leadership, Nestlé will further strengthen its position as a dependable, reliable company through consistent and sustainable value creation."

At 0935 BST, the shares were down 1.5% at CHF88.02.

Jefferies said in a note: "After an increasingly difficult year, it's not a total surprise to see a CEO change at Nestle.

"The new CEO and current Latam head Laurent Freixe will be a familiar face to investors, not only with former experience running Zone Europe and Americas, but also as a contender in the last CEO change.

"At the time, an outsider in Schneider was preferred to shake things up; Freixe's appointment today to us feels like a sign that the board wants to rebuild Nestle culture."

Dan Coatsworth, investment analyst at AJ Bell, said: "It's not a huge surprise to see Schneider head out the door given the company's uneven performance in recent times. Schneider's strategy of focusing on core areas like pet food, coffee and nutritional products had largely been successful during the first part of his tenure but over the last year the situation has deteriorated - partly thanks to an uncertain backdrop but also as a result of problems of Nestlé's own making.

"The botched integration of a new IT system was never going to reflect well on Schneider and the company also faces a probe by the French authorities over the potential use of illegal purification methods on bottled mineral water.

"The immediate share price reaction might suggest the market would have preferred an outsider to come in and shake up Nestlé rather than someone who has held senior positions at the company for years.

"Freixe will face the same challenges as his predecessor and counterparts at rival consumer goods firms - how to persuade shoppers, particularly in the West, back to premium brands after a period when households have been tightening their belts and trading down to cheaper alternatives."