Laxman Narasimhan will step down as chief executive of Reckitt Benckiser at the end of September, the company announced on Thursday, in a surprise departure after three years leading the consumer goods group.
The UK-based maker of Dettol disinfectant and Durex condoms said Narasimhan had decided to move to the US “for personal and family reasons” and to pursue “an opportunity that enables him to live there”.
Shares in the company dropped more than 5 per cent in early trading to £63.06 on the news, before recovering somewhat to 4.5 per cent below their opening price.
Nicandro Durante, the senior independent director who was previously chief executive of British American Tobacco, will take over temporarily while the company seeks a permanent replacement.
The unexpected announcement follows three years in which Narasimhan pursued a turnround following a series of missteps and lacklustre growth that marked the final years of his predecessor, Rakesh Kapoor.
Martin Deboo, an analyst at Jefferies, said: “Narasimhan has attracted a dedicated following for his turnround and investment plan, and we expect the announcement of his departure to be a cause for concern amongst holders of Reckitt.”
Tineke Frikkee, fund manager at Waverton Investment Management, which has a small holding in Reckitt, said: “Whilst it is understandable that for family reasons he is moving back to the US, it is surprising that it is immediate, rather than serving his notice period . . .
“The Reckitt strategy appeared sensible and margin fears had receded. These will now raise their head again, until it is clear what the new strategy is.”
The board will consider both internal and external candidates in its search for a new chief executive, said people briefed on the situation.
Reckitt said Narasimhan, a former PepsiCo executive and consultant at McKinsey, had “led a successful rejuvenation of the company’s strategy, execution and foundational capabilities”.
Narasimhan has restructured the Slough-based group since taking over, selling off underperforming businesses such as its Chinese infant nutrition arm, which had been plagued by problems since Kapoor’s ill-fated $18bn acquisition of baby milk group Mead Johnson.
He has also wrestled with supply chain challenges since the start of Covid-19, but avoided problems such as a failed Scholl foot product launch, a cyber attack and manufacturing mishaps that affected his predecessor.
More recently, the company benefited from baby formula shortages in the US after rival Abbott was forced to shut down a major plant.
Reckitt’s shares have risen only slightly since Narasimhan took the post in September 2019, however, following a volatile period in which the company benefited from surging disinfectant sales at the start of the pandemic, which then subsided.
The company took a hit to margins in 2021, but improving numbers in July prompted Narasimhan to declare that “Reckitt is a much stronger business today than it was in 2020”.
Reckitt will continue its current strategy under Durante, the company said.
Alicia Forry, analyst at Investec, said that investors would be reassured by the presence of Jeff Carr, chief financial officer, who “has been able to deliver the productivity savings ahead of schedule and is widely admired by the market.
“He would be a safe pair of hands alongside an incoming chief executive”, Forry said. Carr could also be considered for the chief executive’s role himself, she said.
Narasimhan said he was “extremely proud of what we have accomplished together in these last three years”, adding that “although it is difficult to leave, it is the right decision for me and my family”.
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