Nestlé’s chief executive Mark Schneider has stepped down after eight years as head of the world’s largest food company, following a period of underperformance that has hit the company’s share price.
Schneider “has decided to relinquish his roles as CEO and member of the board of directors”, the company said on Thursday.
He will be replaced by Laurent Freixe, Nestlé’s executive vice-president and CEO in Latin America, who will begin in the role in September.
“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,” said chair Paul Bulcke.
Nestlé said that Schneider, who was previously chief executive of German healthcare company Fresenius, had helped shape the company’s portfolio by focusing on high-growth categories such as pet food, coffee and nutritional health.
For much of his tenure, the company, whose brands include Nescafé and KitKat, had outperformed many of its rivals in the consumer goods sector like Unilever. However, a string of mishaps and earnings misses disappointed investors and weighed on the share price, which has fallen 14 per cent over the past 12 months.
At the end of last year the company warned of a hit to sales after the integration of an IT system was botched, causing delays to its supply chains for vitamins and supplements. Then, earlier this year, Nestlé was investigated by French regulators for using illegal purification techniques on bottled mineral water.
The share price fell 6 per cent following the recent half-year earnings, after the group cut its sales outlook for the year, and after analysts concluded that its midterm growth forecast had been too ambitious.
“After an increasingly difficult year, it’s not a total surprise to see a CEO change at Nestlé,” said Jefferies analyst David Hayes. When Mark Schneider was appointed, Freixe had also been a contender for the top job, he added.
“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 Nestlé culture,” he said.
Bernstein analyst Bruno Monteyne said that, if Schneider had been asked to step down by the board, this would have been a “harsh judgment”.
“Changing the chief executive isn’t going to change the categories they are in and the quality of the brands,” Monteyne said, adding that Schneider had a good record at the company.
Freixe, a Frenchman who joined the group almost four decades ago, has previously run its European and Americas businesses. “There will always be challenges, but we have unparalleled strengths . . . “ Freixe said. “We can strategically position Nestlé to lead and win everywhere we operate.”
Christopher Rossbach, portfolio manager at J Stern, a long-term holder of Nestlé, said he welcomed the appointment of Freixe, and believed he could get the business past its recent challenges.
“Nestlé’s shares have sold off this year alongside other consumer products companies and are trading at multiyear valuation lows, both because of higher inflation and interest rates and the issues it has faced in its business,” he said. But that picture would improve as wages caught up with inflation, he added.