Improvement areas for Swedish IR – Targeting and treating investors as VIP-clients

Yesterday, Regi hosted their Annual IR Nordic Market Awards in Stockholm, awarding the top ranked IR-professionals in Sweden. Many congratulations to Nobia, and Autoliv, winning the awards for best mid and large cap company.

For me it was striking that several speakers as Jenny Rosberg, Nasdaq OMX Nordic and Carina Lundberg Markow at Folksam stressed the need for Swedish companies to:

1. Put more effort into identifying and targeting relevant funds and investors that might be interested in their sector and industry as long term partners.

2. Spend more time getting to know your existing institutional investors, identifying their agenda and what perceptions they have about your company.

Why do investor targeting?

After meeting around 30 Swedish IROs the latest years, my experience is that very few have a strategy for their shareholder composition and even fewer target investors on a regular basis. These assumptions were also confirmed in IR Insight 2009, a survey with 270 Nordic IROs, conducted by Sculptor IR and Regi. When attending a round table with SIRA about a year ago, some of the discussions were if it is the IR-team that should be responsible for developing a strategy for shareholder composition or if it is a question for senior management or the board?

I see no obstacles to why the initiative can’t come from the IRO. While a majority of the IR-team’s are struggling to have CFO and CEO attending roadshows, they would be more keen to attend these events if you can say that they are meeting investors that:

A) Have invested in your peers and having great insight and interest in your industry leading to more qualitative discussions and better odds for an investment.

B) Have a long-term approach and commitment to their investments.

Do you know your investors’ agenda and perceptions about your company?

Jan Carlsson, CEO of Autoliv that was awarded for Best CEO and Best Company in the large cap category delivered the most useful advice from the event:

“We see IR as a customer relations function, servicing one of our most important customer group; our investors. Our main objective is to deliver information and service that makes it easier for them to do a good job.”

So if you define your investors as a very important client wouldn’t you would like to know:

A) More about how they view the strengths and weaknesses in your company’s investment case?

B) Their agenda for their investment?

Without capital from your long-term investors, it is difficult or almost a mission impossible to grow and expand the company’s business and execute by strategy. By listen and constantly receive feedback from your investors you might be able to have their confidence in a down-turn, or during a hostile bidding process.

The lesson learnt from the credit crunch is that building relations with investors is an ongoing process; it is to late to start when the crisis already has hit.

For me it is still a surprise that very few companies have Autoliv’s approach to IR, treating their investors as VIP-clients.  Which sales manager wouldn’t spend time building relations with their largest clients, and on a continuous basis doing customer satisfaction surveys identifying areas of improvement ?

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How social media help increase coverage from your Q3 presentation

As usual with the Nordic earnings period, Investor was first in line to give their Q3 presentation earlier this week. Next week approximately 130 Nordic companies will be fighting to get the market’s and business media’s attention about their results (at least if it is positive). This can be a mission impossible, especially if your company not are included in the OMX Nordic 40 index.

By using a cross media approach i.e combining printed and online media as press releases and webcasts with social media channels the odds are quite big that your report will reach a larger audience, especially if you are a small or mid cap company.

This is what you can do:

Twitter: Send a tweet with an  invitation to your web or audiocast, linking to the IR website, follow up with a reminder 1-2 days before the presentation starts. Then write a tweet highlighting keypoints linking to the published report or presentation. A more advanced approach is to send live-tweets (maximum 10) during the presentation, using #, invite users to send questions and tweet the Q&A session.

Below you will find some examples of earning tweets:

SecoTools_Q2_2010_Webcast

Raisio_Results_Q2_2010

Metso_Higlights_Q2_2010

Slideshare: By publishing the presentation on SlideShare you can reach millions of users. After just one day 400 viewers could have seen your presentation. A very smart function with SlideShare is “related presentations”. If you for example have tagged your presentation ”pulp and paper” or with the name of your peers, your presentation will be suggested to the viewer if they have been viewing another company in your industry.

Nordnet is one example that has published their Q1 presentation on Slideshare:

YouTube: If you webcast the presentation or have a CEO/CFO interview published on the company’s website, the interview will attract more viewers if published on YouTube. Webcasts and video interviews are costly and therefore it is important that you use and re-use material to get the best value. Watching a video with the CEO or CFO explaining the highlights in the report will generate higher trust than reading a PDF about the results.

Ericsson use their YouTube channel frequently to publish videos with CEO and management.


How to handle the legal risks?

The same risks as using print or online media exists in social media; sending out a release to early, having a CEO not answering “unpleasant” questions in a live webcasts etc. But as long as you reuse already published material, linking to the IR website, the risks are quite limited.

You should also measure the outcome of your social media activities. Analyse if you are driving more traffic to the IR web and from which channels the traffic is coming, (Twitter, YouTube etc.)

And if you have a good investment story there is a greater chance that you will be published in printed business media as 80 % of journalists use social media to source stories (Cision’s 2010 Social Journalism Study)

Posted in Earnings Period, Investor Relations, IR and Social Media | Tagged , , , , , , , , , , , , , , | 4 Comments

How to gain and keep the markets confidence

Earlier this week I published a column for CFO World on the theme “How to win the markets confidence” (In Swedish). In this week’s post I will give you a summary of the most important key points from the column.

Regardless if your investors are very short term oriented as Wall Street’s Gordon Gecko or have long term ambitions with their investment, be prepared for that you as a CFO or IRO always will have to answer tricky questions. But if you where about to invest 100 million in a company, wouldn’t you also be quite critical and cross-examine the company’s financials as well as management’s competence?

Telling sunshine stories about success does not create acknowledged and trustful communication with the stock market, but transparency and confidence does. Here follows some tips and advices on how not just to gain the markets confidence in an upturn, but also how you can keep it a downturn.

1. Transparency creates trust. Silence generates chaos.

When the credit crunch hit the market, investors made their decisions by heart, not by using rational analysis. There was a never-ending need for more information. The winners of the crises where companies that where very transparent with how the crisis would effect their business and financial results. The losers were companies that choose silence, acting as normal while the global financial market collapsed.

Answers as “No comments” from a company make analysts and investors depend on external sources. This often ends with a very pessimistic analysis about your company as an investment case. To communicate risks and keep transparency in a downturn is a challenge, but it will create trust. A proactive communication always gives you the opportunity to be one-step ahead of the market, while reactive communication means that you constantly are running behind.

2. Discuss market drivers and risks

How do you explain that it is possible to upgrade the company’s growth targets to 10 % when your industry only is estimated to grow by 5 %? Your growth targets will be considered as unrealistic and a weak link in your strategy, unless if you further explain the most important market drivers and where the company see growth opportunities.

The success factor is to explain and educate the market about macro financial triggers and statistic that has an impact on your business. Trustful financial communication demands that you discuss both opportunities as well as risks.

3. Tell the market that you execute by your strategy

Many Nordic companies have revised their long-term strategies during the year. But most often the strategy consists of a graphic illustration in the Annual Report.

Tell the market that you execute by the company’s strategy. This is easily done by continuously referring to development in strategy during quarterly presentations or if the company does organisational changes or acquisitions, end each statement with “as in line with our strategy…”

A management that execute by strategy is considered trustworthy and competent.

4. A trustworthy strategy must include measurable financial goals

A vast majority of the companies I meet are very reluctant to give guidance or estimates about growth targets and turnover. “We will be punished if we can’t deliver as promised”.

My argument is instead that a strategy or cost savings program with no measurable goals has very low credibility. Milestones and financial targets make it easier for investors and analysts to understand and follow your long-term targets.

5. Fast and accurate internal reporting procedures are a must

Malfunctioning internal reporting processes can cause tremendous consequences for a company and it’s management. Swedish HQ Bank is just one example. Ericsson’s profit warning three years ago is another case of worst practice. That the company partly blamed their internal reporting process for causing the profit warning did not help to restore the crash of confidence.

The market has an exaggerated tendency to misinterpret negative as well as positive statements about profits and losses. Make sure that any quotes about turnover originate from the company’s internal analysis and figures. Fast and accurate internal reporting procedures are a must.

6. Make the CFO and IRO visible

Since Lehman Brothers got erased from the financial map CFOs and in many cases also IROs have become a safe harbour for investors; explaining any deviations on financial results and margins.

That IROs have been rewarded for their efforts and advanced to more strategic positions was mention in an earlier post “Nordic IROs on the move – advances in to strategic positions”.

That several Nordic CFOs have been appointed top positions is another trend confirming their growing importance as a “safe harbour”. For example Ericsson’s former CFO Hans Vestberg succeeded Carl-Henric Svanberg as CEO in January this year. Danske Bank recently appointed CFO Tonny Thierry Andersen head of Danske Bank Denmark.

The market will continue to be sceptical and information demanding as long as there is an imminent threat of a double dip. Numbers will be analysed and interpreted different depending on the recipient’s knowledge about your company and industry.

The importance of CFOs and IROs skills and knowledge will continue to grow in the aftermath of credit crunch and will be crucial to win and gain the markets confidence. To succeed you need to increase transparency and most important of all, prioritise to educate the market when it comes to macro financial triggers and how this statistics affect your financial results as well as long-term strategies.

Posted in Investor Relations, Macro Economy, Profit Warnings | Tagged , , , , , , , , , , , , , , , , , | Leave a comment

How to organise a successful Investor Day

September and the following months in the fourth quarter is a very popular period for Nordic companies to organise Investor Days and Capital Markets Days.

These activities are often very time and capital consuming for IR-teams and senior management. But investors and analysts are more and more prioritising these events, as it is a rare opportunity for them to meet and mingle with senior management. As Ben Maslen, Research Analyst, Bank of America, Merrill Lynch said at the Nordic IR Conference in June:

“Quality face time with management i.e. one-to-ones, CMD’s and other investor activities will be more important in the near future as electronic “noise” increases.”

The issue of best practice were discussed at #irchat a couple of weeks ago (#irchat is a weekly one-hour event held every Thursday at 17.00 CET on Twitter for IR professionals. Sheryl Joyce at Q4 Web Systems has summarised the discussions in a great blog post: Best Practices for Organizing an Investor Day

Below you will find an excerpt of her advices updated with my own thoughts.

1. What do you want to say?

– Just a general update, review a specific business area, site visit or launch a new strategy?

– Specify your purpose with the event in an agenda.

– Set an internal target and objective for your investor day.

2. Decide timing

– Avoid earnings seasons and if possible, the same date or week as your peers.

3. Train and prepare the speakers

– Prepare your speakers for the Q&A session.

– Give them a basic introduction of investor relations and frequently asked questions.

4. Broaden your audience

– Webcasts or audiocasts is a great way for non-attendees to be able to catch up.

– Another less costly alternative is to live-tweet the CMD, but do not forget to use hashtags# as it enables the audience to follow a conversation.

– If your company has a blog, why not summarise the highlights and the Q&A session in a post. It will most probably generate fewer questions from your investors and are also very time efficient for those that don’t have the time to look through the recorded webcast.

5. Do not forget do to a follow up

– A follow up survey conducted by an objective third party supplier will provide strategic feedback about your company as an investment case.

– Information from a feedback survey will enable you to act more proactively; identifying weaknesses and strengths in your investment case.

– Even more important is the fact that the results can be used internally when discussing and planning future IR-activities with management or the board making them prioritising the importance of engaging in dialogue with your investors!

Is there anything you would like to add? Look forward to your feedback.

Posted in Capital Markets Day, Investor Relations | Tagged , , , , , , , | 1 Comment

IR and Social Media in the Nordics – Part 4: Corporate/IR blogs, a disclosure risk or context provider and time saver?

As reported earlier in Advice from Swedish IR pioneers in Social Media: ”Keep it simple” Sculptor IR’s and Box IR’s mapping of 374 Nordic mid and large cap companies use of social media for IR revealed that Twitter and Facebook were the most popular social media channels. That only 6 % of the companies have corporate blogs is not that surprising as mostly IROs often are fraught by the disclosure risk.

Mapping IRSM_Nordic_incl_blog

When analysing the content of these blogs we only found one blog that also provided IR-content. Veidekke’s, (a Norwegian construction company) blog Terjes Tanker (Terje’s thoughts) is named after the CEO Terje Venold and he is also one of the most frequent authors. The blog is very easy to find as it has a direct link from the corporate website. The blog started in February 2009 and includes posts where the CEO comments the Annual Report, the development of the housing market, the Q2 results etc.

Veidekke_Blog_Q2_2010

At an initial stage I agree that a corporate blog dedicated to IR demands both time and commitment. You need to set up a blog team and educate the persons that are going to be authors, decide content etc. By creating a social media policy that includes guidelines for disclosures you will address the legal issues.

But, once the education is done and the blog has started your IR blog can be a great context provider and time saver for the IR-team by including posts as for example:

  • Macro perspective on the industry
  • Summarising the most frequently asked question from the latest Quarterly Presentation
  • Providing a greater context about business areas and key metrics
  • CEO commenting in the Annual Report
  • Summarising the latest roadshow from a industry perspective

The main purpose with the IR blog is not to publish or say anything that you would not say in an investor meeting or in an interview. A blog should instead be used to explain published figures and strategies, helping the analysts and investors to understand your business and financial triggers. With this approach the IR blog will be a great context provider and time saver for the IR-team, providing low legal risk.

Posted in Investor Relations, IR and Social Media | Tagged , , , | 2 Comments

Summarising highlights from NIRC 2010

Thursday June 18, I attended the 12th Nordic IR Conference, NIRC 2010, held in Stockholm and hosted by SIRA. IR professionals from seven countries participated and listened to presentations on the theme “Investor Relations – taking a strategic role”.

Arne Karlsson, CEO at Ratos was the first keynote speaker. Ratos is a dream case in terms of working strategically with IR and interaction between IRO and top management; IRO and CEO speak at least 15 times a day! As Arne explained:

“IR is a integrated part of Ratos everyday life”.

One advice from Arne Karlsson to other IROs and companies is to set at business plan and vision for Investor Relations including long-term strategic targets.

Ylva Gnosse from Regi presented a new survey, Investor Insight revealing that 40% of Nordic investors want IRO to be more proactive i.e. initiating more contact. Other facts from the survey were that 49% of investors get information from press releases, 1% from Social Media. Ylva Gnosse’s conclusion was that the IRO could replace contact with CEO if IR is the source of information, instead of being an information channel.

According to my standpoint the panel discussion with capital market representatives from Brummer & Partners, 4th Swedish National Pension Fund (AP4), Cevian Capital, Bank of America / Merrill Lynch and SEB Enskilda was one of the highlights from the conference.

These are according to the panel, crucial key factors to a successful Investor Relations function:

  • IR must be fully integrated with the management team, providing a consistent message to the market.
  • Availability – meaning 24/7.
  • Analysts want partnership and trust with IR.
  • IRO needs to understand the company’s value drivers.
  • Quality face time with management i.e. one-to-ones, CMD’s and other investor. activities will be more important in the near future as electronic “noise” increases.

Another highlight was the participation from Dave Hogan, IR Director at First Financial Bankshares Inc. Dave explained the basics about IR and social media to the Nordic IR professionals. Dave mentioned Garmin Stock, Dell Shares, Microvision and Cisco as best practice cases. No one in the audience raised their hand when asked if using social media for IR…although a poll done a couple of ours later, 21 % claimed that they did…

Christan Brosstad, Director Corporate Communication at Norwegian Sparebank 1 Gruppen gave a very fresh and proactive view on how companies can use social media for corporate communication and investor relations.

I already look forward to the 13th Edition of the Nordic IR conference that will be held in Oslo, June 14th 2011!

Posted in Investor Relations, IR and Social Media | Tagged , , , , , , , , , , , , , , , , , , | 1 Comment

Advice from Swedish IR pioneers in Social Media: ”Keep it simple"

Tuesday June 8, I hosted a breakfast seminar in Stockholm on the theme “IR and Social media”. The seminar was organised in cooperation with Mikael Zillén from Box IR.

View presentation (in Swedish)

30 Swedish IR professionals attended the seminar and several of the presentations created multifaceted discussions about the challenges and benefits of using social media platforms as Twitter, YouTube and Facebook for investor relations

During the seminar Sculptor IR and Box IR presented our mapping of Nordic companies use of new media for IR. From an IR perspective, Twitter is the most popular social media platform. Twitter is also the easiest channel to learn and is also less resource demanding than for example starting up a corporate blog.

A quarter (26 %) of the 374 Nordic mid and large cap companies included in the survey had a Twitter account, one third  (27 %) had a Facebook fan page (often used as an intranet), another 24 % had an YouTube channel, often packed with commercials or product videos.

Mapping IRSM_Nordic_exc_blog

Åsa Wesshagen and Maria Stoetzer from the The Swedish Shareholders’ Association have been live tweeting from 30 Swedish AGMs during the spring. Åsa and Maria explained the importance of educating the “live-tweeters” and setting up policies. For example, only official company representative as CEO or chairman is identified by name in the tweets, they never disclose names of private shareholders asking questions.

Next speaker was Sandra Lundberg, web manager at SSAB. The company use Twitter, Facebook and YouTube for search engine optimising. Sandra killed the myth about social media demanding a lot of time and resources:

“Since we recycle existing company information that automatically is published in our new channels, we save time and can work more effective.”

Adrian Westman, IR Manager at Nordnet, a Swedish Internet broker in the mid cap segment stated that using social media is a part of the company’s corner stones: “keep it simple, be modern, stay active”. Nordnet is a pioneer in using new media for corporate and IR communication. The CEO is twittering at ViggoNordnet, they have Nordnetbloggen and the IR team has been live tweeting from the Q4 and Q1 presentations at twitter.com/Nordnet. Adrian finished his presentation by giving the audience some useful advices on how to start using social media for corporate communication and IR:

  • Identify and use in-house i.e. colleagues knowledge about new media
  • When live tweeting, introduce the person behind the tweets
  • Keep it simple

A transcript of all live-tweets #irse #ir from the presentations and Q&A session is available here (in Swedish): Transcript Breakfast Seminar

Posted in Investor Relations, IR and Social Media | Tagged , , , , , , | 4 Comments