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Nestlé announced that chief executive Mark Schneider was stepping down, and will be succeeded by company veteran Laurent Freixe, following a period of underperformance at the world’s largest food manufacturer.
Schneider, who has been chief executive for eight years, “has decided to relinquish his roles as CEO and member of the board of directors”, Nestlé said on Thursday.
Freixe, Nestlé’s executive vice-president and head of its Latin America business, who has worked at the Swiss multinational for almost 40 years, will begin his new role on September 1.
“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 company chair Paul Bulcke.
A Nestlé insider said Freixe’s immediate priorities as chief executive would be to expand the company’s market share and boost organic growth.
Nestlé said 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, such as Unilever.
However, mishaps at Nestlé and earnings misses disappointed investors and weighed on the share price, which has fallen 14 per cent in the past year.
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 this year Nestlé was investigated by French regulators for using illegal purification techniques on bottled mineral water.
The share price fell 6 per cent after the latest half-year earnings, when the company cut its sales outlook for the year and analysts concluded that its midterm growth forecast had been too ambitious.
Freixe, a Frenchman, has previously run the company’s 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.”
Jefferies analyst David Hayes said that after “an increasingly difficult year, it’s not a total surprise to see a CEO change at Nestlé”.
When 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,” Hayes said.
Bernstein analyst Bruno Monteyne said 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,” he added, saying Schneider had a good record at the company.
Christopher Rossbach, portfolio manager at J Stern, a long-term shareholder 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.
