Nestle’s shares dropped nearly 3% as the markets opened on Tuesday after the Swiss food and beverage giant dismissed its chief executive, Laurent Freixe, following an internal probe into an undisclosed relationship with a subordinate.
However, the stock was able to recover some losses by 10 am, and was down by about 1.5% at 10:15 am.
The company said the affair breached its code of business conduct, prompting his immediate removal late on Monday.
The abrupt ouster deepened concerns over leadership instability at the Vevey-based group, which has now replaced its top executive twice in little over a year.
The latest upheaval comes as Nestlé continues to struggle with weak sales and persistent investor dissatisfaction with its shares, having lost almost a third of their value over the past five years.
Nestlé named Philipp Navratil, head of its Nespresso business since July 2024 and a company veteran since 2001, as the new chief executive.
Freixe’s leadership: a turbulent chapter for Nestlé
Freixe had been appointed only the previous year, following the sudden departure of long-serving Chief Executive Mark Schneider.
However, his brief tenure failed to stem Nestlé’s slide, with the group’s shares declining a further 17% during his leadership.
Maurizio Porfiri, chief investment officer at Maverix, said Freixe’s tenure was marked by delays in restructuring.
“Another fresh start is needed, and it is time for more stability to return to the management at this global corporation,” he told Reuters.
“The market did not particularly like Freixe, and the restructuring goals were also put on the back burner,” Porfiri added.
The turmoil comes just months after Nestle launched a review of its vitamins and supplements business, signalling that divestments could be on the horizon following disappointing first-half results.
“Nestle has received much unwanted scrutiny over the past 13 months after the departure of Freixe’s predecessor—also unexpected—and the poor share performance of the preceding 2.5 years,” Bernstein analysts wrote in a note.
Investor sentiment remains cautious
The latest change is likely to leave questions unanswered about Nestle’s mid-term direction and “keep a lid on the equity story until we hear more about Mr Navratil’s plan,” JPMorgan analysts said in a research note.
They added that the latest move was unlikely to reassure investors, noting that it was the second time in a year that the company had chosen a new chief without a wide search process.
They also cautioned that Navratil risked being “boxed in” by his predecessor’s turnaround plans at a time when the market remained unconvinced about the group’s prospects.
Bernstein also expressed concern that Navratil would inevitably seek to put his own stamp on strategy despite initially signalling alignment with the company’s current direction.
“This adds an element of uncertainty around the future direction of the business in the near term, which is unlikely to be helpful toward investor sentiment,” the analysts said.
Analysts hope for a ‘generational reset’ with Navratil’s appointment
At 48, Navratil represents a generational shift in leadership and will be tasked with restoring investor confidence in a company whose shares have lost almost a third of their value over the past five years.
Analysts at Baader Helvea described Navratil’s appointment, alongside the planned succession of chair Paul Bulcke by former Inditex executive Pablo Isla in 2026, as a long-awaited generational handover.
“We see Mr. Navratil’s appointment–born 1976–, together with the change at the chairman position next year with Mr. Pablo Isla as the real generational step that should probably have happened 12 months earlier,” Baader Helvea’s Andreas von Arx said.
He added that Navratil could bring fresh ambition to underperforming divisions such as frozen foods, infant nutrition, generic milk products, and water.
“The reasons for these issues seem structural, but Freixe’s view was that they were due to mismanagement,” the analyst says.
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