The original KitKat chocolate bar is manufactured by Nestle SA.
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LONDON — Investors may think that replacing Nestle CEO Mark Schneider along with company veteran Laurent Freixe “is not a bad thing,” analyst Jon Cox said Friday.
Cox, head of consumer equities at Kepler Cheuvreux, told CNBC he expects many investors to welcome the move after a period of underperformance at the world’s largest food producer.
“I think trust has been seriously damaged in this case and particularly with Schneider,” he said.Squawk Box Europe“
“I think most people would think that Schneider leaving is not a bad thing at this point,” he said.
Nestle shares fell 2.57% at 8:48 a.m. London time.
The Swiss company said in a declare On Thursday, Schneider, who has been at the helm for eight years, “has decided to step down from his role as CEO and a member of the board of directors.”
Freixe, who joined Nestle in 1986 and most recently served as executive vice president and chief operating officer of its Latin America unit, will take over from September 1.
“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 Paul Bulcke, chairman of the board.
The move comes as Nestle’s share price has come under pressure following a series of earnings reports that missed expectations.
The company is struggling to hold on to market share as consumers have shifted away from branded products amid inflationary pressures.
Cox said the timing was “unfortunate” for Schneider but noted that investor confidence had taken a hit in recent years. He also said there had been some strategic missteps on Schneider’s part, including failing to successfully integrate some consumer health add-ons.
The appointment of Schneider, who moved from the healthcare industry in 2017, is seen as an unusual move for Nestle, which typically appoints someone from within the company to the CEO position.
Bernstein analysts said in a note Friday that Schneider’s replacement may have been due to disagreements over his management style.
“The chairman’s focus on the new CEO’s ability to execute and his leadership style could imply that this is Mark’s weakness,” they wrote.
“Now we’re back to basics. We’re back to a 30, 40-year veteran of the company,” Cox noted.
Deutsche Bank said it expects the new CEO to focus more on revenue growth than on mergers and acquisitions, although it also said there could be some modest changes to the portfolio.
“We expect the new CEO’s skill set to be more aligned with Nestle’s needs at this point in time and we do not see any major changes in margins for now,” the report added.
