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 at the helm of the consumer goods group.
British disinfectant maker Dettol and condom maker Durex said Narasimhan had decided to move to the United States “for personal and family reasons” and to pursue “an opportunity that allows him to live there”.
The company’s shares fell more than 5% in early trading to £63.06 on the news, before recovering somewhat to 4.5% below their opening price.
Nicandro Durante, the senior independent director who was previously chief executive of British American Tobacco, will temporarily take over while the company searches for a permanent replacement.
The unexpected announcement follows three years in which Narasimhan continued a turnaround after a series of missteps and lackluster growth that marked the final years of his predecessor, Rakesh Kapoor.
Jefferies analyst Martin Deboo said: “Narasimhan has attracted a devoted following for his turnaround and investment plan, and we expect the news of his departure to be a source of concern among bondholders. Reckitt.”
Tineke Frikkee, fund manager at Waverton Investment Management, which has a small stake in Reckitt, said: “While it is understandable that for family reasons he is returning to the United States, it is surprising that this is immediate, rather than serve his notice period . . .
“The Reckitt strategy seemed sensible and fears over margins had faded. They will now raise their heads until we know what the new strategy is.
The board will consider both internal and external candidates in its search for a new chief executive, people briefed on the situation said.
Reckitt said Narasimhan, a former PepsiCo executive and consultant at McKinsey, had “successfully led the rejuvenation of the company’s strategy, execution and core capabilities.”
Narasimhan has restructured the Slough-based group since taking office, selling underperforming businesses such as its Chinese infant nutrition arm, which had been plagued by problems since Kapoor’s ill-fated $18 billion acquisition of the Mead Johnson infant formula group.
It has also struggled with supply chain challenges since the start of Covid-19, but avoided issues such as a failed launch of a Scholl foot product, a cyberattack and manufacturing incidents that have affected its predecessor.
More recently, the company took advantage of the baby formula shortage in the United States after rival Abbott was forced to close a major factory.
Shares of Reckitt, however, have risen only marginally since Narasimhan took office in September 2019, following a volatile period in which the company benefited from increased sales of disinfectants at the start of the pandemic, which s then calmed down.
The company hit margins in 2021, but improving numbers in July prompted Narasimhan to say that “Reckitt is a much stronger business today than it was in 2020.”
Reckitt will continue his current strategy under Durante, the company said.
Alicia Forry, an analyst at Investec, said investors would be reassured by the presence of Jeff Carr, chief financial officer, who “was able to realize the productivity gains ahead of schedule and is widely admired by the market.
“He would be a safe pair of hands alongside a new general manager,” Forry said. Carr could also be considered for the role of general manager himself, she said.
Narasimhan said he was “extremely proud of what we have achieved together over the past three years”, adding that “although it is difficult to leave, it is the right decision for me and my family”.
Reckitt Benckiser chief Laxman Narasimhan steps down