According to his former boss at food group Heinz, incoming Unilever CEO Hein Schumacher gets seasick, but that hasn’t stopped him from joining and sticking with executive sailing trips.
“Every year, I’d bring nine of our most promising executives to Florida – just me and them, not their bosses. One year, we were on a catamaran on Naples Bay and Hein started turning green,” ex-Heinz chief Bill Johnson told Reuters in an interview. “The water was only four feet deep and 30 feet away from the shore and he was hung over the side of the boat.”
“But even though he knew he was going to be miserable he got on. He was willing to go anywhere and work any hours. Just the most adaptable person who has ever worked for me.”
When Schumacher, 51, takes over Unilever from Alan Jope in July, he will most likely need all of his determination, as well as the experience he gained in food at Heinz and retailing at Dutch grocer Ahold.
The Dove soap to Hellmann’s mayonnaise behemoth must revitalize its underperforming food business while also navigating tricky price negotiations with retailers feeling the pinch of inflationary pressures and a cost-of-living crisis.
Encouragingly for Schumacher, who worked as a finance manager at Unilever before joining Ahold, he was warmly welcomed by activist investor and Unilever board member Nelson Peltz, who has a long track record of shaking up consumer goods companies such as Heinz.
“I first met Hein when I served as a director at the H.J. Heinz Company from 2006 to 2013 and was impressed by his leadership skills and business acumen,” Peltz said.
“I was delighted to learn that he was among the top candidates to become the next CEO of Unilever.”
Peltz and Schumacher “get along pretty well,” according to Johnson, and Peltz reached out to Johnson last year, around the time Schumacher joined Unilever’s board.
“Hein gets to the heart of issues very quickly – which is like Nelson. They’ll get along really well, I have no doubt. Nelson respects capability, honesty, objectivity and results,” Johnson said.
Allan Leighton, a British businessman who also worked with Schumacher, described him as “very calm, certain, clear, and a great listener.”
“He’s ideal for Unilever,” said Leighton, a former CEO of British grocer Asda who has served on the boards of several retailers and consumer companies.
Unilever, one of the world’s largest consumer companies with over 400 brands ranging from detergent to ice cream, has been trying to regain investor trust after its stock has underperformed rivals for years and a failed attempt to buy GSK’s consumer health business a year ago.
Analysts said Schumacher’s appointment indicated that Unilever was unlikely to spin off its food business, which makes Colman’s condiments and Knorr stock cubes, for the time being, given his experience at Heinz and dairy firm FrieslandCampina.
“Why hire a food exec if you are planning to sell the food business?” asked Bernstein’s Bruno Monteyne, adding time would tell whether Schumacher was the right choice.
“Is he in a good position to turn around the food business? Let’s give him a chance. But I am not sure that his past experience of running a dairy commodity trading business, with additional brands, is the best place. The average margin in his last business was 3 to 4% EBIT margins … that is not what Unilever is aiming for.”
Art Winkleblack, another former Schumacher colleague and former Heinz finance chief, was unconcerned about Schumacher’s lack of experience in personal care.
“That wouldn’t worry me a bit. The similarities between food and personal care are more than the dissimilarities – it’ll take him a little while to understand all the products and categories but he’ll come up to speed on that quickly.”
According to Unilever’s most recent annual report, the food business is worth 20 billion euros ($22 billion), is growing at a slower rate than other divisions, and has lower margins than beauty and personal care.
In 2021, the operating profit margin for the food unit was 14.7% versus 20.4% for the beauty and personal care unit. According to Tineke Frikee, a fund manager at Waverton Asset Management, food sales have historically grown at a rate of 1-3% versus 3-5% for personal care.
“Unilever’s valuation multiples would rise if food was sold,” Frikee said.
Schumacher’s experience at Ahold, now Ahold Delhaize, and more than a decade at Heinz, now Kraft Heinz, may also aid Unilever in price negotiations with grocers such as Walmart, Tesco, and Ahold.
“He’s been given a very tough assignment but I have every confidence that if anyone could get Unilever moving in right direction, it’s Hein,” Johnson said.
(Adapted from Reuters.com)