- CEO to step down on 1 March
- Fernando Fernandez promoted to hot seat
- Unilever reaffirms 2025 outlook
After a largely successful 18 months in the role, Hein Schumacher is to step down as Unilever’s (ULVR) CEO on 1 March, news that stunned the market and sent shares in the global consumer goods giant down 3.2% to £43.39 in early deals on 25 February.
Schumacher’s turnaround strategy has borne early fruits, although Unilever’s recent results did show that progress has stalled somewhat with the Hellmann’s-to-Horlicks supplier issuing weak guidance.
The worry for investors is, to quote Jefferies, ‘that this slowdown has deepened in the last few weeks’, but there is at least continuity in the form of Schumacher’s replacement, Unilever’s current CFO (chief financial officer) Fernando Fernandez, an executive with ‘a love of brands and a profound knowledge of Unilever’s operations’ according to chair Ian Meakins.
LEAVING SO SOON?
Just over a year and a half into the job, Schumacher is stepping down as the €60.8 billion-in-revenue goliath’s CEO ‘by mutual agreement’ and his exit comes as a shock.
Since Schumacher joined Unilever in July 2023, underlying operating profit has increased by 15%, free cash flow has risen by a third and margins have gone up by 2.3 percentage points.
Strategic decisions have been taken to slim down the business, with the proposed demerger of the Ice Cream arm, while other non-core assets are thought to be up for sale including Unilever’s Vegetarian Butcher plant-based meat brand and skincare brand Kate Somerville.
As Morningstar analyst Diana Radu explained: ‘The announcement of Unilever’s CEO stepping down is quite unexpected. There’s nothing in the company’s recent performance to warrant such a move - in fact, Unilever has delivered a strong 18-month period under his leadership, marked by greater focus and disciplined execution.’ This unforeseen change at the top shouldn’t lead to a radical change in Unilever’s strategy, one Fernandez agreed to and was implementing.
Before becoming CFO in January 2024, Fernandez had a successful tenure as President of Beauty & Wellbeing, one of the FTSE 100 firm’s fastest-growing businesses. And in previous roles as President Latin America, CEO Brazil and CEO Philippines, Fernandez led ‘some of the company’s best performing markets, delivering strong financial results while developing exceptional talent’, according to Unilever, which also reaffirmed its 2025 outlook and medium-term guidance.
FUTURE-FIT PORTFOLIO
Fernandez said that being appointed as CEO of Unilever is ‘an honour. Our focus will be on building a future-fit portfolio with an attractive growth footprint and delivering unmatched functional and perceivable superiority across our top 30 power brands. I have full confidence in our team’s ability to propel Unilever to a global industry-leading position and create substantial value for our shareholders.’
On 13 February, Unilever reported encouraging full-year 2024 results with volume growth across every division and margins on the rise and also treated investors to a fresh €1.5 billion share buyback. However, sales growth decelerated in the final quarter and the Marmite-to-Magnum maker warned of a slower start to 2025 amid a tough market for consumer goods companies.
CHANGE AT SPEED
AJ Bell investment director Russ Mould said a clue to the surprise change at the top might be found in the comments from Meakins, who said Fernandez has the ability to ‘drive change at speed’ and that the board has confidence in him realising the benefits of a growth plan ‘with urgency’.
According to Mould, that implies the board ‘might have viewed Schumacher’s progress as being too pedestrian. It begs the question whether Meakins is too focused on the short-term and not thinking about what’s best for the company longer-term. Being too aggressive simply to get the share price moving higher is a dangerous road to travel as mistakes can easily be made.’
Mould added: ‘Schumacher will have completed 1.7 years in the top job for Unilever by the time he departs on 1 March. That’s considerably less than the current 5.5-year average across the FTSE 100, according to AJ Bell analysis. It means Unilever joins a growing list of companies, including gambling group Entain (ENT), where investors have been left wondering what on earth is going on.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Martin Gamble) own shares in AJ Bell.
