The incoming CEO of Charlotte-based Chiquita Brands International comes from an industrial cleaning products company where he oversaw a multiyear restructuring plan and job cuts. He also has experience turning around business units in far-flung countries for Procter & Gamble and Gillette.
Now Ed Lonergan faces the challenge of reversing years of falling revenue and profits at Chiquita. The company has seen sales fall from $3.5 billion in 2009 to $3.1 billion last year. Profits have fallen from $91 million to $57 million.
Lonergan said Wednesday much of Chiquitas cost-cutting has already been done, as the company previously announced a restructuring plan designed to extract $60 million in annual savings.
Were going to go back to the basics, shift back to focus on the core banana business, the core salad business, Lonergan, 52, told the Observer. He was packing up boxes at his house in Wisconsin, where he currently lives, in preparation for moving to Charlotte with his wife in the next few days.
Lonergan, who has two grown daughters, said it will be his familys 16th move for his job. He assumes his new role in Charlotte on Monday.
He said he is committed to Charlotte as the headquarters city. The company was lured to Charlotte from Cincinnati with the help of more than $22 million in state and local incentives. The company promised to bring about 400 well-paying jobs, about half of them local hires. Much of that incentive money depends on Chiquita meeting hiring targets.
According to the companys agreement, the headquarters must remain in Charlotte for 10 years, the average salary must be more than $100,000, and the company needs to keep 90 percent of its jobs in the city for 10 years to receive the full value of the incentives.
My objective is to create a long-term, sustainable company, Lonergan said. Thats the commitment. He said he understood that the company remains on track to meet hiring goals, but didnt yet have all the details.
At Diversey Holdings, an industrial cleaning products company that Lonergan headed for six years until 2011, Lonergan oversaw a restructuring plan that cut costs. The Diversey plan involved reducing the companys workforce by 15 percent, outsourcing some technical support and financial services, and closing some manufacturing and other facilities.
Chiquita is in the midst of its own restructuring effort announced earlier this year. The company has cut about 310 jobs including 15 at its new uptown headquarters in an attempt to reduce annual expenses by $60 million.
The company also has said it is sharply cutting its research and development budget, and has begun selling lower-cost private label salad in addition to its premium Fresh Express salad.
Most of Chiquitas 21,000 employees work outside the U.S., on its Central American banana plantations.
Lonergan said Chiquita already has gone through much of its needed cost-cutting. The good news is, it was relatively fast, Lonergan said. Certainly not painless.
Some analysts surprised
The companys choice of Lonergan caught some analysts off-guard. Mary Gilbert of Los Angeles-based Imperial Capital said she was initially surprised to read of Lonergans appointment.
After I read further, that he had significant experience at Gillette and Procter & Gamble, hes had extensive experience both in the U.S. and overseas with branded consumer goods then I thought, OK, I see the relevance, said Gilbert, who has an Outperform rating on the stock.
Gilbert said she was happy to see a new CEO selected. Missteps during outgoing CEO Fernando Aguirres tenure, such as a long delay in starting to sell private label salads, have hurt Chiquita, she said.
Theyve had execution issues, she said. Thats why weve seen (Chiquita) suffer more than other companies in the same space, such as Dole and Fresh Del Monte, from low banana prices that have been hurting the whole industry.
One of Chiquitas major strengths going forward will be its iconic brand, Lonergan said.
Lonergan said hes experienced in turnaround situations, which he first learned to handle while working with Procter & Gamble. I ended up doing a lot of turnarounds in countries and businesses where we had problems, he said.
He said he worked in Turkey after that countrys financial crisis in the 1990s, changing the companys pricing and marketing. After 21 years at Procter & Gamble, Lonergan left in 2002 to head Gillettes European division. He joined Diversey in 2006, and left in 2011, after the company was acquired.
Lonergan also said he hasnt met many business leaders in Charlotte yet, something he plans to do next week.
Theres many people that want to know who I am, what the heck am I about, and what am I going to do with this company, Lonergan said.
Lonergan and Chiquitas outgoing CEO occasionally crossed paths at Procter & Gamble, where Aguirre also rose through the ranks.
We knew one another, Lonergan said. Every once in awhile, we talked to one another. The great news is were familiar, and its actually led to an easy transition. Aguirre has agreed to serve as a consultant for a year, with a salary of $40,000 per month.
Lonergans employment agreement includes options to purchase more than 1.4 million shares of stock at a price to be determined later. The agreement also includes an award of 231,065 restricted stock units.
One thing Aguirre quickly made a splash with in Charlotte was his use of Twitter. He would frequently tweet about everything from his love of bowties to his trouble sleeping, and even interacted with job seekers on the short-form social media website. Lonergan said he doesnt currently use Twitter or Facebook, however.
Theres a huge debate on CEOs and Facebook and Twitter right now, Lonergan said. One hundred forty characters can hurt your company, and you.
Chiquitas stock closed down 21 cents, or 2.6 percent, at $7.63 a share on Tuesday.