Nestlé: Leadership Change After Period of Underperformance

8/23/2024, 4:22 PM

Mark Schneider is stepping down as CEO of Nestlé after eight years, following a period during which the company has fallen short of expectations.

Eulerpool News Aug 23, 2024, 4:22 PM

After a Period of Underperformance and a 14 Percent Decline in Stock Price Over the Past Twelve Months, Mark Schneider Resigns as CEO of the World's Largest Food Manufacturer Nestlé. Schneider, Who Had Led the Company Since 2016, Will Be Succeeded by Laurent Freixe, the Previous Head of Latin American Operations. Freixe Will Assume His New Role in September.

Nestlé announced that Schneider has decided to step down from his positions as CEO and board member. Under his leadership, the company focused heavily on growth segments such as pet food, coffee, and nutrition products, which positioned Nestlé ahead of the competition for a long time. However, recently, difficulties have accumulated, shaking investor confidence.

The setbacks included a faulty IT system integration that led to delays in the supply chain, as well as an investigation by French regulators into illegal cleaning techniques for mineral water. These issues, along with disappointing half-year results that led to a downward revision of the sales forecast, significantly impacted the stock price.

Laurent Freixe, who has been with Nestlé for nearly four decades and previously led the businesses in Europe and America, is now expected to bring the turnaround. "Laurent is the perfect choice to lead Nestlé during this time. Under his leadership, Nestlé will continue to strengthen its position as a reliable company and create sustainable value," said Paul Bulcke, Chairman of the Board of Directors.

Analysts assess the leadership change differently. While David Hayes from Jefferies finds the change unsurprising after a difficult year, Bruno Monteyne from Bernstein emphasizes that Schneider's resignation, if forced by the board, would be a "harsh judgment." Despite recent challenges, Schneider has a solid track record to show.

Christopher Rossbach, Portfolio Manager at J Stern, a long-term Nestlé investor, welcomes the appointment of Freixe and believes he can lead the company through the current challenges. Rossbach expects the situation to improve once wages keep pace with inflation.

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