As in any field, investor relations is littered with war stories of brave officers fighting to keep the share price steady or entertaining tales on how they capitalized on the most opportune moments. Below we recount some stories of just a few of the swings and roundabouts which kept these investor relations officers on their toes.
Rebecca Iveson
Head of investor relations
Norwich Union – UK life assurer
I started work here the day the London & Edinburgh deal was closed. The market was surprised as well as disappointed by our acquisition of a life company, even though the development of that area within our life insurance business was clearly stated in our long-term objectives. Analysts were much more negative than institutions and I had to meet with several to talk them through our rationale and reassure them that the company fitted in with our strategy. We also had the whole insurance team meet with both analysts and institutions.
Although the numbers after six weeks showed what we had promised – the company was growing and the consolidation had gone smoothly – we wanted to reinforce our message. In March, we held a site visit to our Solus accident repair center in London where analysts were able to kick the tires as well as meet the head of the general insurance business and 15 line managers.
We also had eight presentations, again, explaining the overall life insurance group strategy; and we demonstrated how London & Edinburgh slotted into that. It took at least two months to organize and was certainly an administration hellfire and damnation but it was definitely worth it. Straight after the visit, we received upgrades from two analysts.
Alan Oshiki
Investor relations director
Citizens Utilities – US-based
My worst experience was in my first job as investor relations officer for Magma Copper, which had spun off from Newmont Mining in 1987. It was a baptism by fire because the company had bet the wrong way on copper prices in the future markets so immediately after the IPO, I had to explain to investors why we, a copper company, were losing money when copper prices were rising. To make matters worse, the stock market crashed and then the chief executive died – the annual report carried his obituary. That was my first year in investor relations.
In 1990, I joined Tuscon Power Company, which was in the process of being restructured. However, the company was not turning around and, in fact, things got worse. It was a combination of not being able to cover purchase power agreements coupled with unregulated investments made by the prior management that went sour. The new management team decided to restructure the company’s $2.3 bn in obligations out of court instead of filing for bankruptcy. They called all their creditors into one room and laid it on the line. They said, We cannot pay you but if you work with us, we will put the right controls in place and will emerge healthier and intact. And they did. We managed to convince them that this was the best way forward. After that I was able to handle anything.
Kiran Bhojani
Investor relations director
Veba – German diversified utility group
For me, the best and most challenging time was mixed into one single event – our profit warning last summer saying that 1998 earnings per share would be about 15-16 percent below the previous year. It was the first time, after four to five years of growth, that we were going to be down. The bad news came out during a casual conversation our CEO had with journalists about the company’s and industry’s general problems and tensions. He let it slip that our US silicon wafer and semiconductor unit was showing losses. When the news hit the wires, we lost about DM6 bn in about six minutes.
The market was surprised and we had to act very quickly. We immediately issued a press release and organized a conference call where our management spoke to 150 analysts from Europe and the US. We then held extra roadshows in Germany and London to address the problems and discuss the company’s future strategy. I have always enjoyed a challenge but I must admit I was waking up in the middle of the night thinking of ways to handle this situation. We have always had an open door policy with shareholders and are always on hand to answer any questions, which I think helped.
Jessica Fisher
Investor relations director
Mattel – US-based toy company
I have just joined Mattel, but I had an interesting time as IRO of Allegiance Corp, a manufacturer and distributor, which was spun off from Baxter Labs in 1996. My job was to convince the investor community that the company would perform better as a separate entity than as part of the Baxter group. It was not an easy task, but it was definitely a good experience. Baxter, a high-tech medical company, had not focused or invested in Allegiance, which was more of a distribution and commodity type of company. We spent a great deal of time meeting with analysts and investors, explaining that on its own it could enhance its product mix and generate higher margins. In the end we were successful – it was a classic case of good management working with analysts and being upfront. The key, though, was that the company met analysts’ expectations.
My worst experience was in the late 1980s when I was working at Baxter and the company put out an announcement saying EPS were going to be $1.30 and not the projected $1.50 for the year. The problem actually was tied to poor accounting systems rather than a missed forecast. This was before the days of the conference call and I had to call everyone individually. It was a nightmare. Today, you can stem the panic much more quickly and easily by using technology. But the lesson I learned still applies today – never surprise the financial community.
Manuela Muller
Investor relations manager
Unicredito Italiano – Italian bank
To me the most challenging times are also the most exciting. The Italian banking sector has been characterized of late by a trend of privatization – Credito Italiano was the first to be privatized in December 1993 – and domestic consolidation. We’ve also gone through a merger between Credito Italiano Group and Unicredito (a holding company controlling three regional banks) a few regional acquisitions and the launch of a tender offer on Banca Commerciale Italiana.
Explaining this complex development to institutional investors in Italy and abroad has increasingly become more important and strategic. The key challenge for me is keeping up-to-date in a rapidly changing sector and maintaining credibility in the market with transparent and consistent communication. This means we’re constantly travelling in Europe and to the US, talking to analysts and investors, keeping in direct touch with the market.We once tried using a teleconference, but decided we preferred meeting people individually so we can get to know them personally.
William T Drury Jr
VP of investor relations and public affairs
Hercules – US-based specialty chemicals
For me the best of times is the lull after a good job done. This is typically three weeks after the earnings announcements. You go through all the efforts, stay late at night, work on the script, the last minute changes and come in in the morning fully prepared for the conference call. If you have met analysts expectations and all the information is dispersed in the marketplace, then there is a lull during which you can catch up with the rest of your work.
The worst times are when you don’t meet analysts expectations and stub your toe on market conditions. This has happened to me twice, the last time being December when we were well below expectations because of poor trading in our industry. It was right before Christmas, never a good time to issue an earnings warning because people are in a good mood. We were not alone; we were suffering along with other specialty chemical firms, but shareholders still won’t cut you slack. We spent a lot of time on the phone with fund managers and investors and talked through their concerns. The share price has bounced back and I’m now enjoying my three week lull again.
Mari Thjømøe
Investor relations director
Norsk Hydro – Norwegian-based oil and natural gas producers
I can tell you the best and worst things generally about IR. The best is that you’re in the middle of everything at a senior level both from the market view of things and from what’s going on at your company.
The worst thing is that you are not an active participant. You are in a position of influence because you’re very close to both sides. You’re very close to the decision-making but in the end those decisions are taken by management and the market.
Charles Richardson
Director of corporate affairs
3i Group – UK-based venture capitalist
One of the most challenging and best experiences for me was when the company floated in 1994. I had worked as an investor for the company for twelve years and was thrown in at the IR deep end. It was a steep learning curve where I had to meet a lot of people including our banks and brokers in order to understand the different processes of the job. This also involved spending a great deal of time getting to know how the City works and the different specializations involved. For example, I did not know what a buy or sell-side analyst was.
It was not just an unknown world, but a real cultural change. Here we were asking fund managers and analysts to invest £10 mn in the company, and they would get back to us later in the day. At 3i, it would take six months to make a decision about investing £1 mn in a project.
Harjeet Drubra
Investor relations officer
Tesco – UK-based food retailer
Overall, I think the worst times are without a doubt the run-up to year end results announcements and the annual report. April is an extremely busy time for us with the report coming out right after the results. We have had good results lately, but the process is still the same, whether the numbers are good, bad or indifferent. You have to think just as hard and make sure that the messages you convey are consistent with the company’s strategy. It is a balancing act between giving shareholders information on where the company is going and not compromising your competitive edge. As a result, the presentations and material we prepare go through several incarnations.
The best time for me was last summer when we took about 30 analysts on a site visit to the Republic of Ireland, where we’d bought a food retailing business a couple of years ago. It was a very high profile trip, since we wanted to show them where the money we had spent (the acquisition was about £630 mn) had gone and why we felt the deal had been worth doing. At the time, there had been some question marks over the deal. The trip was a huge undertaking because we had to sort out an itinerary, book accommodation, arrange meetings and prepare the presentations. It was worth it in the end because I felt the analysts came back with a better understanding of our strategy in Ireland.
Peter Dietz
Investor relations manager
Metallgesellschaft – German-based metals and chemicals company
My worst time is easy. In June 1997, when I was at SGL Carbon, we were searched by anti-trust authorities investigating price-fixing allegations. It was a nightmare experience as the share price collapsed. I had to sleep on the floor of the office after calling a list of 50 people to try and explain the situation. I then woke up and continued answering the phones.
I have had several highlights in my IR career. Certainly successful meetings and roadshows are among them. They can be tough to prepare for and can give a powerful feeling if it all goes according to plan and you get positive feedback. Other highlights were with my former company when we won IR prizes for the best IR work in Germany.
Katarina Lybeck
Senior vice president of corporate communications
Outokumpu – Finnish base metals group
The bad times are when you are in a cyclical industry on the downside of a cycle. When you’re stuck with no different story to tell but you still have to go out there and tell it. The basic message is that you should wait and see and not do anything. It’s very difficult to start pushing things with such a story. That’s the basic metals industry at the moment.
But things are definitely looking up because they can’t go further down. It helps knowing that we are at the bottom of the cycle and I always believe in the good times. They come around when you really have a new story to tell. Then the CEO and CFO want to go out and tell the story. They’re saying, We’ve made a major decision and this is what we’re going to be doing. Then you have something new and refreshing to say. They are the best times.
And finally…
Anonymous European IR director
The brief of my first IR job was to bring some US and Canadian investors on board. I spent three months preparing presentations, slideshows, questions and answers, and other documentation. On the flight over to North America, the chief executive died and my first thought was, Oh no this has really messed up my plans. Then I came to my senses.
