Nestle CEO Sudden Departure

CEO Mark Schneider was ousted in a sudden decision by the world's biggest foodmaker as a result of the group's underperformance. Nestle announced Schneider's departure late on Thursday following a board meeting and appointed company veteran Laurent Freixe as its new CEO. This put an end to a near eight-year tenure by Schneider, a 58-year-old German, the first company outsider to lead Nestle in nearly a century.

Nestle shares hit a record high in January 2022 as the group enjoyed a pandemic-driven boom, but they have been on a downward slide since May 2023 after a series of mishaps, earnings misses and guidance downgrades. There were also worries about slowing product development, with new and revamped products taking longer to be devised and rolled out, with the accompanying marketing campaigns. The virtuous circle of introducing products, which generated cash for new products, was slowing down. That was a real concern.

Nestle's price-to-earnings ratio, used to gauge the relative value of a company's stock, is 17.7, down from more than 25 in June 2022. That is higher than the consumer goods industry average of 10, but below rival Unilever's 18.5.

Analysts said uncertainty about whether Nestle could reach its 2024 and 2025 targets and concerns the new CEO may reduce profit guidance as he focuses more on sales growth than margins, were among the factors weighing on the stock. So far in 2024, Nestle's shares have lost 10.3% of their value, trailing Danone's 3.9% gain and lagging Unilever's 29% increase.

Industry analysts have said Nestle has been too reliant on price increases, which have hit sales volumes as cash-strapped customers turned to cheaper brands.