London
19 °C
Manchester
17 °C
Glasgow
17 °C
Dublin
Belfast
Washington
19 °C
Denver
Atlanta
23 °C
Dallas
Houston Texas
New Orleans
El Paso
Phoenix
Los Angeles
22 °C
28 °C
32 °C
17 °C
Nestle shares fall after CEO's surprise departure / Photo: © AFP/File
Nestle shares fall after CEO's surprise departure
Nestle shares fell Friday after the surprise departure of chief executive Mark Schneider, which followed slowing sales growth and bad headlines at the Swiss food group.
The company announced after markets closed Thursday that Schneider would step down on September 1 after almost eight years in charge and be replaced by Nestle's Latin America chief, Laurent Freixe.
Nestle shares fell more than three percent in early deals on the Swiss stock exchange but pared down those losses later in the morning for a 1.5 percent drop.
In a conference call with investors on Friday, chairman Paul Bulcke acknowledged that the decision "may come as a surprise for many of you" but that it was "time ... for a change" at the company.
He added that "different qualities" were needed.
Nestle, whose brands range from Nespresso coffee capsules to Purina dog food and Haagen-Dazs ice cream, lowered its sales growth outlook for 2024 last month as it slowed its price increases in the first half of the year.
The global packaged-food giant and its rivals had logged high sales growth in the past three years as they raised prices to make up for higher costs due to soaring inflation.
The company has also faced controversy in recent years, with Swiss NGO Public Eye accusing Nestle of selling baby food with high levels of added sugar in low-income countries but not in wealthier nations.
Nestle has countered that it had "no double standard" and applied the same nutrition and health principles everywhere.
It has also scrambled to ease any concerns over its Perrier brand after France's food safety watchdog recommended stricter monitoring of sites where Nestle extracts mineral water following the discovery of traces of "faecal" contamination.
The company has since said it has stepped up monitoring of the sites, and Schneider has said the group's water was safe to drink.
Schneider's departure "does not come as a major surprise given that both Nestle's operational and share price performances have proved disappointing over the past 2 and a half years", Swiss bank UBS said in a note.
"Furthermore, the company suffered through an unusually high number of negative headlines," it said.
Freixe, a Frenchman who joined Nestle in 1986, told investors on Friday that his "big focus" will be on sales growth and "market share gains".
"It all starts with strengthening trust in Nestle," he added.
Schneider, a German-American who took over in January 2017, said that "it has been an honour and a privilege to serve Nestle and leaving is not a decision I've taken lightly".
L. Dias--JDB
