Unilever (ULVR) shares fell 2% in early London trading on Tuesday following the surprise announcement that chief executive Hein Schumacher will step down after just 18 months in the role.
The consumer goods giant, which has been undergoing a major strategic reset, has appointed finance director Fernando Fernandez as his successor, effective March 1.
The departure, described as “by mutual agreement,” comes as the company continues its efforts to revive growth under its “growth action plan.”
Schumacher will remain with Unilever until May 31, 2025, to ensure a smooth transition.
Board signals need for faster execution
Unilever chairman Ian Meakins praised Schumacher for laying the groundwork for change but made it clear that the company must accelerate its strategy.
“On behalf of the board, I would like to thank Hein for resetting Unilever’s strategy, for the focus and discipline he has brought, and for the solid financial progress in 2024,” Meakins said.
“The Growth Action Plan (GAP) has put Unilever on a path to higher performance and the Board is committed to accelerating its execution…while the board is pleased with Unilever’s performance, there is much further to go to deliver best-in-class results.”
Meakins’ comments suggest Schumacher may not have been implementing changes quickly enough.
The company’s board appears to want a more aggressive push to improve financial performance, particularly after the company’s latest results showed only modest underlying sales growth of 4.2%.
What does the exit mean for Unilever?
The sudden leadership shift has raised concerns among investors.
Chris Beckett, head of equity research at Quilter Cheviot, said the change casts doubt on Unilever’s progress in its turnaround.
“Losing a chief executive after 18 months is never a good thing, especially in the middle of a strategy overhaul,” Beckett said.
“For Unilever, especially during a strategy turnaround, it does not suggest things were going well behind the scenes or the business was firing on all cylinders. The last set of results suggested that turnaround had stalled somewhat, with weak guidance and sales growth only likely to improve as the company passes on higher commodity costs,” he added.
Despite this, Beckett noted that Fernandez, as CFO, had been deeply involved in shaping Unilever’s current strategy.
His appointment could ensure continuity and stability, even as investors demand evidence of faster operational improvements.
A long road to recovery for Unilever
The leadership change comes at a critical time for Unilever.
The company has been restructuring its operations, including the planned separation of its ice cream division and a cost-cutting program that will see 7,500 jobs eliminated.
The firm has also struggled with rising commodity costs and competitive pressures in the consumer goods sector.
Fernandez, who previously led Unilever’s beauty and wellbeing division, has been described as a “decisive and results-oriented” leader by the board.
His challenge will be to reinvigorate growth while maintaining investor confidence in the company’s strategic direction.
“Unilever has a long way to go on its road to recovery. The share price offers a bit of headroom to do that, but events such as this will not go down well with investors. Results will be watched even more closely now to ensure there are no signs of cracks within that turnaround strategy,” Beckett said.
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