Nestlé S.A. stock price fell by 4% on Friday, as the company's CEO suddenly announced his resignation

The CEO of the world's largest food manufacturer suddenly announced his resignation, causing the company's stock price to fluctuate in early trading on Friday.

Local time on Thursday, Nestlé stated in a declaration that Schneider "has decided to relinquish his position as CEO and member of the board of directors," to be succeeded by the company's senior executive Laurent Freixe. Following the announcement, Nestlé's stock price fell by 4% in early trading on Friday, before narrowing the decline. As of now, Nestlé is trading at 88.08, down by 1.52%.

The company responded by saying, "We expect the skills of the new CEO to be better suited to Nestlé's current needs, and we currently do not anticipate a one-time significant adjustment in profit margins."

Schneider has been serving as Nestlé's CEO since 2017, with a tenure of nearly eight years. He was also the first non-Nestlé insider to hold the position in nearly a century, and this time the position will return to an internal candidate.

Some analysts believe that the departure of Nestlé's CEO is "not a bad thing" for investors. This move comes at a time when Nestlé's stock price is under pressure, with consumer enthusiasm significantly cooling off under inflationary pressures.

During his tenure, Schneider restructured the company through measures such as selling the U.S. confectionery business and North American water brands, earning praise at one point. Nestlé also enjoyed prosperity in January 2022 due to the pandemic, reaching historic highs. However, since May 2023, the company's stock price has been continuously declining, with a 14% drop in the past year, leading to a loss of investor confidence. In recent quarters, Nestlé's performance has been poor, lagging behind competitors such as Danone and Unilever.

Jefferies analyst David Hayes stated:

"After a challenging year, it is not entirely surprising that Nestlé is changing its CEO, as Schneider was more inclined to change the status quo with an outsider. Today's appointment of Freixe is like a signal from the board that they hope to rebuild Nestlé's culture."

Incoming CEO Laurent Freixe joined Nestlé in 1986 and previously served as Executive Vice President and CEO of the Latin America division. He will assume the role starting from September 1.

Facing the task of rebuilding market share and increasing sales in a challenging market, he has pledged to focus Nestlé's efforts on organic growth rather than acquisitions.

He also mentioned:

"Challenges always exist, but we have unparalleled advantages. We can strategically position Nestlé and lead to victory wherever we operate."