Nestlé's new CEO Laurent Freixe's will focus on increasing sales at the food giant by gaining market share and investing in its brands, he told investors on Friday.
"The focus will be on driving the current portfolio. Primarily organic growth is of the essence," said Freixe, whose appointment was announced late on Thursday.
"On the portfolio there might be of course adjustment but again top priority is absolutely organic growth," he added, saying acquisitions were not at the centre of the company's strategy.
Nestlé shares were expected to fall early on Friday following the abrupt departure of CEO Mark Schneider from the world's biggest foodmaker and his replacement by Freixe.
Board Meeting
Schneider's surprise exit was announced following a board meeting that put an end to the near eight-year tenure at the helm by the 58-year-old German, the first company outsider to lead Nestlé in nearly a century.
Investors, whose confidence in Schneider had waned over the last 15 months, appeared rattled as shares in the maker of KitKat chocolate bars and Nescafe instant coffee were indicated nearly 3% lower in premarket activity in Zurich.
A Popular Figure
Freixe, a 62-year-old Frenchman, is seen as knowing the food industry inside and out, with a broad network within and outside the Swiss giant.
A popular figure at Nestlé's HQ in Vevey, next to Lake Geneva, Freixe has already started work in his new role, but knows it will take time to rebuild market share and increase sales volumes in a tough market.
"There will always be challenges, but we have unparalleled strengths," he said. "We can strategically position Nestlé to lead and win everywhere we operate."
He is used to challenging times, having led Nestlé's European business in the wake of the global financial crisis before heading the business in the Americas.
Most recently he has been head of Nestlé's Latin America zone, which has seen strong growth in recent years.
Analyst Viewpoint
"With Laurent Freixe in charge, the priority for Nestlé will be to go back to its roots, its fundamentals. He's a sales and marketing guy with a real passion for the products," said Jean-Philippe Bertschy, an analyst at Bank Vontobel.
"If you look at successful food companies lately, like Lindt and Danone among others, they all have marketing and sales people as CEO."
Restoring sales growth will be vital to winning the trust of investors, Bertschy said.
Elsewhere, AJ Bell investment analyst Dan Coatsworth said, “It’s not a huge surprise to see Schneider head out the door given the company’s uneven performance in recent times. Schneider’s strategy of focusing on core areas like pet food, coffee and nutritional products had largely been successful during the first part of his tenure but over the last year the situation has deteriorated – partly thanks to an uncertain backdrop but also as a result of problems of Nestlé’s own making.
“The botched integration of a new IT system was never going to reflect well on Schneider and the company also faces a probe by the French authorities over the potential use of illegal purification methods on bottled mineral water.
“The immediate share price reaction might suggest the market would have preferred an outsider to come in and shake up Nestlé rather than someone who has held senior positions at the company for years."
Additional reporting by ESM
