Unilever PLC (LSE:ULVR) giving CEO Hein Schumacher his marching orders after less than two years was highly unexpected, analysts said, but those at Barclays said replacement Fernando Fernandez is "best placed" to unlock value in the FTSE 100 group.
On Tuesday morning, the Anglo Dutch consumer goods colossus announced that Schumacher, who started in July 2023, will be stepping down at the end of the week, with finance chief Fernandez taking over as CEO.
Equity analyst Diana Radu at Morningstar said the announcement "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."
Similarly, Russ Mould, head of investment at AJ Bell, noted that underlying operating profit has increased by 15% under Schumacher, with free cash flow up by a third and margins widening, with strategic decisions taken to slim down the business, including the proposed demerger of the ice cream arm.
"Schumacher has breathed new life into the business," said Mould, "making it run more efficiently and focusing on what the company does best. Under normal circumstances, the progress so far would be applauded. That makes his departure all the more mysterious. It suggests disagreements behind closed doors with colleagues and/or shareholders."
Barclays analyst Warren Ackerman said: "Usually when you get unexpected CEO change, the market worries about a problem or trading. This isn't the case here – rather, the board have made a decisive decision to empower, in our view, the best candidate for the next leg of the story."
Praising Schumacher for "a very good job overseeing a lot of change in a short period of time", including resetting the strategy and delivering the best results in more than a decade in 2024, Ackerman described it as "a hard-nosed decision by the board about who is the best person going forward into the next stage of its evolution".
It was noted that only last month Fernandez took on a bigger job title as head of procurement as well as being CFO, with a pay increase of 7.5%, and the Barclays analyst suspects he "would have been in high demand" from rival US consumer goods companies who could pay considerably more.
"Therefore in committing to Fernandez as CEO, we suspect it could prove to be an astute decision for the long-term benefit of Unilever's shareholders," Ackerman added, with his corporate experience more more home and personal care "Unilever's future" rather than Schumacher's in food, as the ice cream business is sold off.
"The market may conclude that Fernandez may look to accelerate portfolio change and drive costs out more quickly," Ackerman said, seeing the current levels in the shares as "another good opportunity to buy into one of the most compelling turnaround stories in European equities".
Alongside the CEO change, Unilever said the 2025 outlook and medium-term guidance both remained unchanged.
UBS analyst Guillaume Delmas said his understanding is that the "decision is driven by the board's willingness to accelerate the pace of change at Unilever" and that while Schumacher was instrumental in building the foundation of the new growth plan "Unilever is entering the new phase of its strategic journey where execution is key.
"As such, we believe the board sees Mr Fernandez as best equipped for the role. Note that Mr. Fernandez is well-known by the investor community."
Shares in Unilever, which hit a six-year high last autumn as they topped 5,000p, fell 3% early to below 4,350p on Tuesday but consolidated around 4,408p in late morning, for a deficit of 1.7% on the day.