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Avon Rubber – CEO ‘steps down’ with immediate effect, a cause for concern?

By Steve Moore | Wednesday 15 February 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Shares in Avon Rubber (AVON) are currently down approaching 4% back below 1000p on the back of an announcement including that, having only joined in December 2015, CEO Rob Rennie “has stepped down… with immediate effect”. A cause for concern?

On Rennie’s ‘stepping down’, the announcement just adds that he has “left the group to pursue other interests”. This follows the announcement of his appointment stating that he “joins Avon having held a number of senior positions at Invensys… The appointment follows an in depth external search process” and from Rennie that “I am joining Avon refreshed and ready for a new challenge”.

Hmmm. Now Paul McDonald, a member of the executive management team who joined the group in 2003 and assumed responsibility for the Dairy division in 2007, has been appointed as Chief Executive with immediate effect.

This should though hopefully provide for a smooth transition, though I also note “the process to appoint a permanent Group Finance Director is underway and this will be an early priority for Paul McDonald”. This follows FD of eight years, Andrew Lewis, stepping down on 30th November 2016.

The company seeks to reassure that it “has every confidence that the group will continue to deliver a strong performance… against the background of positive current trading reported to shareholders earlier this month”, but with a prospective change of FD and abrupt change of CEO it seems prudent to be cautious here at present. At best, for now, on the watchlist.

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