(Bloomberg) -- Reckitt Benckiser Group Plc’s shares fell on news that Chief Executive Officer Laxman Narasimhan will step down at the end of the month to pursue a new opportunity in the US.
The UK consumer goods company’s stock fell 5% in London early Thurdsay, reflecting investors’ disappointment at the departure of a CEO who steadied the maker of Lysol disinfectant after a turbulent period under his predecessor.
Reckitt said Nicandro Durante, currently senior independent director, will step into the role of CEO while the board considers a longer-term replacement for Narasimhan, whose family home is in the US.
It’s a surprise move for an executive who only joined in 2019 and was making headway in restructuring the company and unwinding the missteps of former chief Rakesh Kapoor, most notably the highly priced takeover of Enfamil infant formula maker Mead Johnson.
When Narasimham joined Reckitt, he was an outsider who had previously worked at PepsiCo Inc. and McKinsey & Co. The UK consumer goods company at the time wanted fresh leadership after Kapoor’s tenure was marred by a cyberattack, production glitches, a failed product launch and a sluggish performance of core brands.
The digital-savvy CEO has revamped the consumer health business, best known for making Nurofen pain relief tablets, which had gone from a strength to an area of investor concern under Kapoor. Narasimhan also took strategic moves to sell parts of the portfolio, such as the company’s infant formula business in China.
In July, Reckitt raised its sales forecast as it weathered soaring inflation and benefited from an infant formula shortage in the US that boosted demand and prices.
The news of his departure is disappointing given the ongoing changes and improvements just starting to happen at Reckitt, said James Edwardes Jones and Emma Letheren at RBC. They added that they “also can’t help but think that an ex-tobacco executive doesn’t seem well placed at the head of a company focused on consumer health.”
Durante is the longest-serving board member at the consumer goods company and was previously British American Tobacco Plc’s chief executive officer. He ran the tobacco company for nine years until 2019.
Reckitt said Durante will move from Brazil, where he is currently based, to the UK and will receive relocation expenses and a salary of £1.1 million ($1.3 million). He’ll be eligible for a bonus and participation in the company’s long-term incentive program.
(Updates with additional information throughout and share fall.)
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Author: Deirdre Hipwell