Unlike some of the characters in the movie of the same name, Unilever CFO Jim Lawrence finds himself cheered by a matrix.
In a speech at last month’s CFO Rising conference in Orlando, Fla., Lawrence, the finance chief of the Anglo-Dutch consumer products company that owns such household-name brands as Hellmann’s mayonnaise, Lipton tea, Dove lotion, and Lifebuoy soap, trotted out a simple diagram that showed his company to its best advantage. The horizontal axis represented Market Demand, while the vertical one represented Balance Sheet strength. The resulting rectangle was divided into quadrants, so that a company could be slotted as either weak or strong in terms of the demand for its wares or the strength of its assets.
During an interview after his presentation, Lawrence, who was CFO and vice chairman of General Mills before he joined Unilever on August 1, 2007, said that his matrix-in which his company fell in the strong category according to both metrics-made him feel less gloomy than a lot of his compatriots. After all, he had just read that General Motors sales were down 55%, in contrast to Unilever’s 1.7% negative volume growth. “So in terms of demand, we are relatively high and cars are ultimately low,” he told CFO editors Scott Leibs and David M. Katz.
In terms of the availability of credit-as good a good a measure of a company’s balance sheet-strength as you can find-Lawrence says he was “struck by the fact that I was able to borrow at 3 % after tax for seven and a half years. You should be able to make some money for your shareholders if you have to beat a 3 % hurdle rate, right?” Everything’s relative.
Besides enjoying the pleasures of his matrix, Lawrence was still basking in the glow of Unilever’s $1.5 billion two-part U.S. bond offering (one 5-year offering of $750 million at 3.65%, and one 10-year offering of the same amount at 4.80% in February). The borrowing will help the company shake off an over-reliance on short-term debt that was making the CFO a tad edgy.
That ability to raise capital likely has something to do with the multinational’s aversion to excessive leverage. Indeed, his company’s ability to maintain a high credit rating has been something of a career gauge for Lawrence, who wouldn’t set foot in a company whose ratings have sunk below junk status.
Still, he sees the upcoming year as one when CFOs should keep close watch on there cash. Indeed, as he said during his presentation, it’s the “year of treasury.”An edited version of the interview follows.
“I think that nobody’s focused on when times get better. I think everyone is focused on the bad times now.”
Unilever CFO Jim Lawrence
Looking back both at Unilever and General Mills, what have been your greatest leadership challenges as a CFO?