On Wednesday, British consumer goods multinational Reckitt Benckiser named Laxman Narasimhan as Chief Executive Officer of PepsiCo to succeed Rakesh Kapoor. Narasimhan, the worldwide Chief Commercial Officer of PepsiCo, will join Reckitt as designated CEO on July 16.
On September 1, he will be the group CEO, the firm said in a declaration. The original priorities of Narasimhan will be to concentrate on providing outperformance, particularly in the health business unit, and drive the strategy of the Lysol maker to divide the company into two business units under the same company, Reckitt said.
The 52-year-old grew up in India, where he finished a degree in engineering and set up a start-up before shifting to company college in the US. He spent 19 years working as a consultant at McKinsey before entering Pepsi in 2012, where he advised big retail, healthcare and consumer products firms on activities, strategies and deal-making. Chairman of Reckitt Chris Sinclair said the board had considered about 60 applicants for the top position before choosing the first external leader of the business since it was established in 1999 from the merger of UK Reckitt & Colman and the Netherlands business Benckiser.
“The board believed Laxman was perfectly suited unanimously,” Mr Sinclair said. “He’s demonstrated to be able to function on a scale at Pepsi while at McKinsey he’s been dealing with a lot of changes and M&A that’s essential to us as we look at our next chapter. But mostly he’s steeped in the consumer industry and that’s the aspect that really matters. “Mr Narasimhan comes for Reckitt at a sensitive moment as he attempts to revive sales development in his health division— his most lucrative arm, accounting for approximately two-thirds of group income.
At the health unit last year, the manufacturer of Nurofen painkillers and Mucinex cold medicines managed 3 percent of the initial sales development, instead of the up to 5 percent it had anticipated. Another task will be to deal with a case against a former Reckitt subsidiary in the U.S. Department of Justice, charged with using a fraudulent advertising system to increase prescription sales of opioid therapy. While Reckitt spun the business into a distinct company called Indivior in 2014, shareholders are worried that it might have to pay some of the $3bn in penalties that Indivior is seeking from the justice department.
According to Capital IQ, Reckitt’s stocks have this year underperformed the MSCI Europe Consumer Staples index, trading at a peer discount. It is valued at a forward price-to-earnings ratio of 18.3 times, compared to 23.2 times for Procter & Gamble and 21.3 times for Unilever.
Mr. Narasimhan said he enjoyed leading Reckitt, who had “world-leading products” with a broad appeal to South Africa from China. “From a distance, I respected RB and admired its performance-oriented culture and DNA development,” he said in an interview. “But we will have to develop our capacities and culture in a rapidly changing world and with the increase of digital commerce.”