Unilever has announced the surprise departure of its Chief Executive after just over 18 months in the role as the consumer goods giant intensifies its efforts to revive its fortunes.
Hein Schumacher, who has led the business since July 2023, will step down by “mutual agreement” on 1st March. He will be replaced by its current Chief Financial Officer, Fernando Fernandez. Before becoming CFO in January 2024, Fernandez had a successful tenure as President of Beauty & Wellbeing, one of Unilever’s fastest-growing divisions.
Srinivas Phatak, currently Unilever’s Deputy CFO and Group Controller, will become acting CFO while the company looks for a permanent replacement.
The unexpected change comes as Unilever faces mounting pressure from investors to improve its results after years of lacklustre performance. Despite moves by Schumacher designed to accelerate Unilever’s growth, the company recently posted sales figures behind expectations and warned of muted growth at the start of this year.
The group is currently in the middle of a wide-ranging restructuring, including cutting 7,500 jobs and demerging its ice cream business. Schumacher has also outlined plans to sell smaller and underperforming food brands, amounting to about £1bn in revenue.
A source quoted by the Financial Times said the decision to remove Schumacher was taken at a board meeting on Monday after directors concluded that Fernandez was “better suited” to execute the turnaround plan. The person added that Fernandez was popular with investors and had impressed at Unilever’s capital markets day at the end of last year.
After thanking Schumacher for “resetting Unilever’s strategy”, the company’s Chair Ian Meakins said: “The board has been impressed with Fernando’s decisive and results-oriented approach and his ability to drive change at speed.”
He added: “While the Board is pleased with Unilever’s performance in 2024, there is much further to go to deliver best-in-class results. Having worked with Fernando closely over the last 14 months, the Board is very confident in his ability to lead a high-performing management team, realise the benefits of the Growth Action Plan (GAP) with urgency, and deliver the shareholder value that the company’s potential demands.”
The company stated that there was no change to its 2025 outlook or medium-term forecast.
Shares in Unilever slipped 2% in trading this morning as investors digested the news. They had gained more than 9% since Schumacher took the helm.
“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.
“On the other hand, it does show that the Unilever Board is decisive when corrective action is deemed necessary.”
RBC Capital analyst James Edwardes Jones added: “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,” adding that he did not think one set of “slightly wayward” results should warrant his departure.
NAM Implications:
- While others may explore cause & effect…
- …rivals will concentrate on inevitable change and its pace.
- Meaning the obvious changes will be made faster…
- i.e. cuts and divestments to help optimise (possibly redefined) core products.
- Rivals in related categories need to prepare for possible ‘bargain’ divestments that may complement their ranges.
