Reckitt Benckiser Chief Executive Laxman Narasimhan will step down at the end of September after three years in the role, the company said on Thursday, and will be replaced by insider and former BAT boss Nicandro Durante.
Shares in the maker of Durex condoms and Dettol cleaning products tumbled more than 4 per cent on the news, with JP Morgan analysts citing Narasimhan’s sudden departure just when investor confidence in the group’s turnaround is improving.
“It was a surprise to find out Reckitt’s CEO is stepping down, having only been in the role for three years and just starting to receive some credibility,” said Tineke Frikee, fund manager at Reckitt shareholder Waverton Investment Management.
“It is surprising that it is immediate, rather than serving his notice period … a handover period between Laxman and a new permanent CEO replacement would have been preferred.”
Narasimhan, 55, joined the company in September 2019 from PepsiCo and was the first external candidate to take the helm at Reckitt since it was formed in 1999.
He led the household goods maker through the pandemic, which boosted sales of its health and hygiene products, and as the company navigated a baby formula crisis in the United States.
He will be replaced by senior independent director Durante while the board “evaluates and selects the future leadership”, Reckitt said in a statement.
“It’s kind of a double whammy of uncertainty about what’s ahead, given that (Narasimhan) was three years at the company and at a time when market conditions are tougher, especially for companies like Reckitt Benckiser, which are highly reliant on consumer spending,” said Hargreaves Lansdown analyst Susannah Streeter.
Brazilian-Italian Durante previously led tobacco giant British American Tobacco (BAT) for eight years until 2019. He joined Reckitt’s board in 2013.
The 66-year old will receive a salary of 1.1 million pounds ($1.3 million) as Reckitt CEO, the company said, adding that he is being appointed on a rolling contract with six months’ notice on either side.
Reckitt, which also makes Nurofen tablets and Lysol cleaning products, will continue to implement its current strategy under Durante, the company added.
Narasimhan decided to leave for personal reasons and to relocate to the United States, having been approached with a new opportunity there, Reckitt said without elaborating.
He did not immediately respond to a request for comment via his LinkedIn account.
Chairman Chris Sinclair and the nomination committee have started the process to identify the “best long-term candidate to take Reckitt on its next phase of growth”, the company said.
The British consumer goods group in July raised its annual revenue forecast after steep price increases helped the company to beat its second-quarter sales expectations.