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Nestlé chief executive Mark Schneider has stepped down after eight years at the helm of the world’s largest food company, following a period of poor performance that has seen the company’s share price plummet.
The company said Thursday that Schneider “has decided to step down from his role as CEO and a member of the board of directors.”
He will be replaced by Laurent Freixe, executive vice president and managing director of Nestlé Latin America, who will start in the role in September.
“Laurent is the perfect choice for Nestlé at this time. Under his leadership, Nestlé will further strengthen its position as a trustworthy, reliable company through consistent and sustainable value creation,” said chairman Paul Bulcke.
Nestlé said Schneider, formerly chief executive of German healthcare company Fresenius, has 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, outperformed many of its consumer goods rivals such as Unilever. However, a series of setbacks and lost income disappointed investors and weighed on the stock price, which has fallen 14 percent over the past 12 months.
Late last year, the company warned of a hit the sales after an IT systems integration failure caused delays in the vitamin and supplement supply chain. Then, earlier this year, Nestlé was investigated by French regulators for using illegal purification techniques for its bottled mineral water.
Shares fell 6 percent following its recent half-year earnings report, after the group cut its sales outlook for the year and after analysts concluded that the group’s medium-term growth forecast was too ambitious.
“After an increasingly difficult year, it’s no surprise to see a CEO change at Nestlé,” said Jefferies analyst David Hayes. When Mark Schneider was appointed, Freixe was also a contender for the top job, he added.
“At that time, an outsider like Schneider was in demand — to shake things up. Freixe’s appointment today seems to us like a sign that the board wants to rebuild the Nestlé culture,” he said.
If Schneider is asked by the board to resign, it would be a “harsh judgment,” said Bernstein analyst Bruno Monteyne.
“Changing CEOs is not going to change the categories they are in and the quality of the brands,” Monteyne said, adding that Schneider has a good track record at the company.
Freixe, a Frenchman who joined the group nearly four decades ago, previously ran the company’s European and American businesses. “There will always be challenges, but we have unique strengths . . . ” Freixe said. “We can strategically position Nestlé to lead and win wherever we operate.”
Christopher Rossbach, portfolio manager at J Stern, a long-time Nestlé shareholder, said he welcomed Freixe’s appointment and believed he could steer the business through recent challenges.
“Nestlé shares have sold off this year along with other consumer products companies and are trading at their lowest valuations in years, both because of higher inflation and interest rates and the problems the company faces in its business,” he said. But that picture should improve as wages catch up with inflation, he added.
