By Yadarisa Shabong
(Reuters) – Unilever surprised investors on Tuesday by ousting chief executive Hein Schumacher and replacing him with finance chief Fernando Fernandez, who will take over the tough task of reviving the consumer 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.
The management change was made after a board meeting on Monday, a source familiar with the matter told Reuters. The board concluded that Fernandez, who has been with Unilever for more than 30 years, was the right person to execute the company’s strategy, the source said.
Unilever, which gave no specific reason for the change, is facing pressure from investors to revitalise its fortunes and the top management upheaval comes just weeks after Unilever announced underwhelming full-year earnings.
The consumer goods industry has had a difficult couple of years coping with a supply chain crunch triggered by the COVID-19 pandemic, plus sky-high commodities prices and an energy crisis after Russia invaded Ukraine.
Profit margins have been squeezed and sales volumes hit by consumers switching to cheaper options.
Nestle CEO Mark Schneider was ousted last year after several quarters of weak sales volume growth.
Schumacher’s appointment and strategic changes had been welcomed by billionaire activist investor Nelson Peltz, who built a stake in the company in 2022 and sits on Unilever’s board.
Peltz’s Trian Fund declined to comment on the change.
“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 had applauded Unilever’s decision to choose an external candidate as CEO.
“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 Chairman 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.
“There is much further to go to deliver best-in-class results,” Meakins said in a statement.
EXECUTION
Analysts and investors said that while the news was unexpected, Fernandez was a good choice to lead Unilever’s turnaround strategy.
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 a number of roles such as President Latin America and CEO Brazil and President of the Beauty & Wellbeing business.
“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.
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 … 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.
($1 = 0.9549 euros)
(Reporting by Yadarisa Shabong in Bengaluru; Editing by Mrigank Dhaniwala, Kirsten Donovan and Jane Merriman)
