When the chief executive of an underperforming company steps down, it raises hopes that things will soon start to improve. Nestlé’s shareholders may be waiting for a long time, however.
The departure of CEO Mark Schneider, while abrupt, is not inexplicable. The Swiss food and beverage group performed well in the initial part of his tenure, helped by increased spending on food during the pandemic.
Yet, of late, it has suffered a series of mishaps. The acquisition of Palforzia, a peanut allergy remedy, led to a $2.1bn impairment and was swiftly re-sold. It also suffered IT issues at its health science business which reduced the division’s organic growth potential. Meanwhile, sales growth has been on a disappointing trend. In February, Nestlé guided to an increase of about 4 per cent for 2024, lower than the market had hoped. Even that proved too optimistic: the sales outlook was cut to “at least” 3 per cent at interim results in July.