Investor confidence in the turnaround progress at consumer goods giant Reckitt Benckiser was shaken this week by the shock departure of its chief executive.

On Thursday morning the Nurofen and Durex maker announced the surprise news its CEO Laxman Narasimhan will step down later this month to return to the US after the former PepsiCo exec was “approached for an opportunity that enables him to live there”. Former British American Tobacco CEO and current Reckitt independent director Nicandro Durante will take over on 30 September on an interim basis.

Reckitt shares sank 4.9% on the news back to 6,320p amid investor concern over the impact a change of leadership will have on its long-term turnaround plan.

Since his appointment in September 2019, Reckitt said Narasimhan “has led a successful rejuvenation of the company’s strategy, execution and foundational capabilities”. He took the helm after Reckitt’s disastrous $16.6bn Mead Johnson acquisition in 2017 had left the group exposed to a slowdown of growth of infant formula in China and led to vast writedowns of the division and ultimately the disposal of the China infant nutrition business last year.

HSBC commented: “Coming three years into a turnaround that is starting to gain traction, there is a sense he is leaving behind a certain amount of unfinished business.” However, the broker suggested “much of the heavy lifting has been done”, having delivered four quarters in a row of above-expectations organic sales growth. The business was “now on a fundamentally firmer footing”.

Bernstein expressed “surprised to see him go given the extent to which investors (and the company) have come to the conclusion that the new team’s strategy is paying off”. It cautioned, though, that “it’s still too early to take the credit for a job well done”, noting: “A source of the debate on the stock is how the underlying business is performing, given the exceptional windfall growth coming from Covid (impacting Lysol and Dettol primarily), and from Abbott’s infant formula recall in the US.”

Top of the new CEO’s in tray will be deciding what to do with Reckitt’s remaining troubled infant nutrition business, given reports it is seeking to sell the rest of the Mead Johnson business it has not already disposed of despite the division returning to growth.

The company’s shares are flat so far this year, but around 18.5% down from their summer 2020 Covid-driven peak.

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