Consumer goods giant Unilever surprised investors on Tuesday by moving to replace its chief executive Hein Schumacher with finance chief Fernando Fernandez, who will take on the tough task of reviving the group's performance.
Schumacher's sudden departure after less than two years in the job hit Unilever's shares, which fell as much as 3.4% on Tuesday. They had gained more than 9% since Schumacher took the helm.
Unilever, which gave no specific reason for the change, is facing pressure from investors to revitalize its fortunes and the top management upheaval comes just weeks after Unilever announced underwhelming full-year earnings.
Schumacher's appointment and strategic changes had been welcomed by billionaire activist investor Nelson Peltz, who built a stake in the company in 2022.
Peltz, who is also on Unilever's board, did not immediately respond to requests for comment sent to representatives at his Trian fund.
"We are gobsmacked at the news that Unilever's very highly regarded CEO Hein Schumacher is to step down after a very successful 18 months in charge," RBC Capital analyst James Edwardes Jones said in a note.
When Schumacher became CEO, analysts and investors applauded Unilever's decision to choose an external candidate as CEO.
"We conclude that it has to be something to do with his style of managing the company. We felt that the job needed an outsider, but maybe this was not the view of a meaningful proportion of Unilever's employees," Jones said.
Schumacher reset the group's strategy to address years of underperformance and laid out cost cuts last year, including separating its ice cream division and cutting thousands of jobs.
But Chairperson Ian Meakins said the Board was impressed by Fernandez's "decisive and results-oriented approach," and had given him the task of executing the growth strategy.
"While the Board is pleased with Unilever's performance in 2024, there is much further to go to deliver best-in-class results," Meakins said in a statement.
UBS analyst Guillaume Delmas said he believed that the board saw Fernandez as best equipped for the role as "execution is key" in the new phase of the company's strategic journey. Delmas said Fernandez was well-known in the investor community.
Fernandez, 58, has been with Unilever since 1988. Before he became CFO last year, he held several roles including leading the business in the Latin America region and Brazil.
"Difficult to see this any other way as a negative, as growth was slowing recently, and the market will worry that more disappointing news may come," said Tineke Frikkee, a portfolio manager at Waverton Investment Management, a Unilever investor.
Frikkee said investors may know Fernandez from when he worked in Unilever's personal care division.
Harsharan Mann in the Global Equities team at Aviva Investors, a Unilever shareholder, said: "We were surprised by the announcement but have a positive view of the CFO and are encouraged by the appointment. He is a 30-year veteran of the business who ran the Beauty and Wellbeing division very well."
Unilever, which owns Hellmann's mayonnaise, Dove soap and Ben & Jerry's ice cream, said there was no change to its 2025 outlook or medium-term forecast and that the board was committed to "further accelerating" Schumacher's growth plan.
Schumacher, who joined in July 2023, will step down as CEO in March and leave the company on May 31. He is leaving by mutual agreement, the company said.
"We have made real progress and I am proud of what we have achieved in a short period of time," Schumacher said in a statement.
Schumacher, 53, will be treated as a "good leaver" and will continue to get his 1.85 million euros ($1.94 million) fixed pay until he leaves the business, the company said. He will then get an undisclosed payment for the remainder of this notice period, it said.
Srinivas Phatak, currently Unilever's deputy chief financial officer and group controller, will become acting CFO, while the company looks for a permanent replacement.
