By Mathias de Rozario
(Reuters) – Schneider Electric has ousted CEO Peter Herweck in a surprise move due to differences in how the company’s strategy was being executed, the French industrials giant said on Monday.
“The Board of Directors decided to remove from office Peter Herweck as Chief Executive Officer due to divergences in the execution of the company roadmap at a time of significant opportunities,” it said in a statement.
Schneider Electric declined to comment when asked by Reuters what those divergences were.
Herweck had been the CEO of Schneider, which specialises in digital transformation of energy management and automation, since May last year.
“The CFO and Head of IR hosted a short call this morning that outlined the Board felt the strategy was not being as decisively or collaboratively implemented as hoped and that the CEO’s style was not a fit,” J.P.Morgan said in a note to clients.
Analysts at J.P.Morgan, Jefferies and Berenberg said the decision was unexpected. Schneider’s shares have added more than 50% to their market value since Herweck took the top job.
“Given the financial performance of the group in recent periods, the clear strategy and targets outlined with the November 2023 Capital Markets Day and the share price performance, this is a major surprise,” J.P.Morgan said.
The shares were down 1.8% by 1158 GMT.
Schneider had in November 2023 forecast organic revenue growth of between 7% and 10% for the 2024-2027 period, with an organic expansion of the adjusted core profit (EBITA) margin of around 50 basis points.
Last week, it reported organic revenue growth of 8% for the third quarter, above market expectations based on a company-compiled consensus, and confirmed its 2024 outlook.
Herweck will be replaced with immediate effect by Olivier Blum, a company veteran of 30 years and the chief of its key energy management business. The board chose him unanimously to “accelerate the execution of its strategy”, Schneider said.
Blum’s nomination was well received by analysts, with Gael de-Bray from Deutsche Bank pointing to his long career with Schneider, while Jefferies said his previous role “should give investors some confidence” as he knows the company and its main business well.
The energy management business made up nearly 80% of Schneider’s revenues in 2023.
(Reporting by Mathias de Rozario in Gdansk; editing by Milla Nissi)
