CHARLOTTE, N.C. -- Charlotte-based Chiquita Brands International said late Tuesday that it has selected a veteran consumer goods and industrial cleaning executive to replace CEO Fernando Aguirre, as the company attempts to reverse falling profits.
Edward Lonergan, who was CEO of industrial cleaning products company Diversey Holdings until last year, said he plans to work to improve the company’s cash flow and profitability. “I am committed to working closely with the board, management team and talented employees to continue the company’s financial and strategic turnaround aimed at refocusing and re-energizing the core business and driving down costs,” Lonergan said in a statement.
“At Diversey, Mr. Lonergan led the strategic and financial turnaround of the company, significantly improving efficiency, market competitiveness and shareholder value,” Chiquita said in a statement. Before working at Diversey, Lonergan was an executive for Gillette’s European division and Procter & Gamble, the company where Aguirre rose through the ranks.
Kerrii Anderson, who is currently a director, was named chairwoman of the company. Both she and Lonergan’s new roles take effect Monday.
Chiquita announced Aug. 7 that chief executive Fernando Aguirre, the public face of the company and the architect of its move to Charlotte, would leave the company as soon as a replacement was found. That announcement came as the company reported its second-quarter earnings fell 4 percent compared with a year ago, and profits plunged 92 percent compared with the same quarter last year. The company’s banana sales were hurt in part by declining demand in Europe.
Soon after his departure was announced, Aguirre told the Observer the company needed someone with experience in turning around troubled companies.
“We need to make sure we bring a leader with experience managing a turnaround situation,” Aguirre said. “If you talk to people who look at the stock price, they’d say yes, this is a turnaround.” Chiquita stock closed at $7.84 Tuesday, off about 70 percent from its five-year high of $25.77 a share.
Revenues and earnings have been declining at Chiquita for several years. Sales fell from $3.5 billion in fiscal 2009 to $3.1 billion in 2011, and profits fell from $91 million to $57 million.
The turnaround plan Lonergan will be charged with executing involves cutting $60 million from the company’s annual operating expenses. Chiquita is cutting about 310 positions as part of the plan, but only 15 of those will be at the Charlotte headquarters, the company has said. Chiquita will still employ almost 400 workers locally, which would be enough to qualify for its more than $22 million worth of state and local incentives.
Also as part of the turnaround plan, Chiquita will move away from investing in higher profit margin, costlier items, such as its new fruit chips and premium brand-name salad. The company will focus on paying down some $550 million in debt and revitalizing its core banana business, which accounts for most of Chiquita’s revenue.
The company has said it will run that business as a high-volume, low-margin commodity operation.
Lonergan’s 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.
Aguirre’s transition agreement with the company specified that he would remain employed as a consultant with Chiquita for 12 months after the new CEO was found, earning $40,000 a month. His employment agreement shows he could also be eligible for a $4.7 million severance payment.
Aguirre, who made a splash during his brief tenure with his frequent use of Twitter and numerous bow tie-clad public appearances, has said he and his wife plan to remain in Charlotte. The couple are building a house in the city. Aguirre also has said that he might write a book about leadership and seek to teach at a university.