In a surprising move, Schneider Electric (SCHN.PA) has removed CEO Peter Herweck from his position due to differences in how the company’s strategy was being executed. The French industrials giant, known for its expertise in digital transformation and energy management, announced the decision on Monday, just over a year after Herweck assumed the role.
Strategic Divergence Behind Herweck’s Departure
Schneider Electric’s Board of Directors stated that Herweck’s departure was due to “divergences in the execution of the company roadmap at a time of significant opportunities.” While the company did not elaborate on the exact nature of the differences, analysts at J.P. Morgan noted that the board felt Herweck’s approach lacked the decisiveness and collaboration needed to implement the company’s strategy effectively.
Herweck, who became CEO in May 2022, oversaw a period of strong financial performance for Schneider Electric, with the company’s shares rising by more than 50% during his tenure. Despite this, the decision to replace him caught many by surprise. Analysts from J.P. Morgan, Jefferies, and Berenberg all remarked on the unexpected nature of the move, particularly given Schneider’s recent growth trajectory.
Financial Performance and Growth Outlook
Schneider Electric has consistently exceeded market expectations under Herweck’s leadership. The company recently reported 8% organic revenue growth for the third quarter of 2023, beating consensus forecasts. Moreover, in November 2023, the company set ambitious goals, forecasting organic revenue growth between 7% and 10% for the 2024-2027 period, with a targeted adjusted core profit (EBITA) margin expansion of 50 basis points.
Despite these strong financial results, Schneider Electric’s shares fell 1.8% following the announcement of Herweck’s departure, as the market digested the news.
Olivier Blum Takes the Helm
Effective immediately, Olivier Blum, a Schneider Electric veteran of 30 years and former chief of the company’s energy management business, will take over as CEO. Blum’s appointment was met positively by analysts, with Deutsche Bank’s Gael de-Bray highlighting his deep experience within Schneider, particularly in the company’s core energy management division, which accounted for nearly 80% of the company’s revenues in 2023.
Jefferies analysts also expressed confidence in Blum’s ability to accelerate the execution of Schneider’s strategy, citing his familiarity with the company’s operations and key business areas. The board’s unanimous decision to appoint Blum underscores their commitment to ensuring continuity and driving growth in the critical energy management sector.
Looking Ahead
Schneider Electric’s leadership change comes at a crucial time, as the company navigates significant opportunities in the digital transformation and energy management industries. With Blum now at the helm, investors and analysts will be closely watching how the company’s strategy evolves and how Schneider leverages its leadership in the energy sector to maintain its growth trajectory.
While the unexpected departure of Herweck has raised questions, the appointment of a seasoned insider like Blum provides reassurance that Schneider’s future remains on a stable course.
