Why Unilever CEO Paul Polman doesn’t like to worry…

01 Nov,2013


By A  Correspondent


Paul Polman’s Unilever has announced a profit warning and is battling slowing growth in emerging markets, but the CEO of the world’s biggest consumer goods company says he doesn’t worry about anything. “You can write that Mr Polman doesn’t like to worry about anything and you will be pretty close to the truth,” he told a meeting of select journalists in the Hindustan Unilever house in Mumbai. “If I sleep then at least I come to work with little bit more energy and think about what to do versus the others who worry too much and don’t sleep enough.”


Mr Polman may not have much to worry about Hindustan Unilever whose second quarter profit and sales growth beat estimates, but a slowdown in emerging markets, combined with uncertainties in Europe and the US, is likely to occupy his attention for quite some time. HUL, the Indian unit of the Anglo-Dutch giant, has trebled its rural network, accelerated sales growth, developed new products and has consistently grown ahead of the consumer market.


Mr Polman, who took over as CEO in 2009, has combined an unconventional approach with some plain-speaking in an attempt to refurbish the image of multinational giants tarnished by charges of corruption and heavy-handedness in the run-up to the global financial meltdown of 2008.


He has abolished quarterly results, urged his company to invest for the long term and championed a business model built on sustainability and healthy living. In Mumbai he said that capitalism needs to evolve and that companies can no longer allow forests to be burned down and children to die of hunger. On Thursday, he said “there will always be bumps on the road to development,” adopting a measured stance on the governance crisis which has pitted businessmen and politicians against each other. Mr Polman said that politicians and businessmen are not against each other and that countries such as India and Brazil have similar problems.


“In two weeks time, we are in Brazil to discuss the same issues with Dilma (Roussef, Brazilian president). My point with them is it is not politicians against business… (there are) so many major issues that this world faces… (it’s about) what we can do together,” Mr Polman said.


Emerging market countries like Brazil and India have been rattled by a severe crisis of investor confidence after a dramatic slide in the value of their currencies felled stocks during the July-September period after the government fumbled on key reforms. India, along with other emerging market economies, contributes nearly 60% to Unilever revenues.


India is facing a slump in corporate investment and Polman tried to assuage concerns by saying that the road to development is not always smooth. “We don’t run business on the basis of short-term concerns or financial markets. We run it on the basis of opportunities. Nothing has changed there. As I said to the PM, any road to development has some bumps. It is same in every business. Every quarter is never a straight line,” he added. Unilever, he added, has shown confidence in India by investing ¤2.5 billion to increase its stake to 67.35 from 52.5%. Over the past three years, HUL added about Rs 8,000 crore – bigger than the size of some mid-sized rivals – to its top line.


However, what may seem like an achievement is also perhaps Mr Polman’s biggest worry. “The only worry is that if we become so big, we could become internally focused versus externally focused and might lose passion about the consumer.” “You have to think about how to make the company more agile, how to think of new opportunities to grow, how to reach more people in the bottom of the pyramid when governments don’t,” he added.


Polman’s ambition of doubling Unilever’s 2009 size by 2020 by following a business model built on sustainable development has some lessons for India as well.


“Yes, you create billionaires here, but there is one out of 20 children not making it to the age of five,” said Polman, who once wanted to be a doctor or a priest.


Harish Manwani, HUL chairman, said that the company should focus relentlessly on costs and in increasing market share. “Business as usual in the long term and business unusual on cost.”


Messrs Polman and Manwani together have around 70 years of experience in selling consumer products across markets.


“The growth may have slowed down but people are still buying more premium products. We have multiple portfolios and brands and we must stay at top of the game in both urban and rural and across price-points,” said Mr Manwani.


While a section of analysts and investors consider stocks of consumer goods companies, including HUL, fairly overvalued given the current slowdown, MR Polman isn’t perturbed. “HUL is a very attractive stock in India and when people have the opportunity to invest in Indian equity, HUL is among the top five choices,” said Polman referring to HUL’s stock price that has almost doubled since 2009 when he became the first-ever chief executive officer from outside Unilever.


Source:The Economic Times

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