Nestle shares slump after surprise departure of CEO

By Steve Goldstein

Nestle shares slumped Friday after the food giant abruptly announced the departure of its chief executive.

Nestle shares (CH:NESN) opened 3% lower as Mark Schneider, a 58-year-old who has run the company for eight years, will step down, and be replaced by Laurent Freixe, a veteran of the company who currently runs its Latin American division and has been on the executive board for 16 years.

Nestle didn't give a reason for Schneider's departure. "I would like to thank the entire Nestle community for what we have accomplished together and wish Laurent all the best in his new role," he said in a statement.

Nestle in its half-year results lowered its organic sales forecast to "at least 3%" from "around 4%."

Analysts at Deutsche Bank led by Tom Sykes said his departure raises questions about how much sales can recover in the second half, as well as whether the 2025 margin guidance remains and whether productivity can be increased.

"We expect the skill set of the incoming CEO to be more suited to the needs of Nestle at this time and at the moment we don't see a big one off margin reset but with CEO and CFO having now changed, this is a time where any higher investment or change in accounting practices may be viewed by the market as resetting margin expectations," they said.

Last year, Nestle CFO Francois-Xavier Roger stepped down, and its European chief executive Marco Settembri retired at the end of June.

Jean-Philippe Bertschy of Vontobel said it's unusual for Nestle to change leadership that abruptly.

"The company must regain momentum with its brands to regain market share and continue to drive efficiency. We do not expect radical changes: continuity with a refocus on markets/consumers," he said.

-Steve Goldstein

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08-23-24 0317ET

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