Frankfurt isn’t renowned as the party capital of Germany. Or even the runner up. Munich pulls in the punters with its famous Oktoberfest, while Berlin still has enough ‘We used to have a wall here’ draw to attract tourists.
Frankfurt has simply been seen as Germany’s financial hub rather than a European mecca of fun. But not anymore. In October, that reputation was blown out of the water. From now on the world will look upon Frankfurt as ‘that city where they held the second Investor Relations Magazine Eurozone Awards’.
While Frankfurt must be delighted to have secured the kudos of hosting such an event, the real winners were the companies that scooped the awards. Last year’s big success was undoubtedly Vivendi, winning four awards including the ultra-prestigious Grand Prix for best overall IR. But that achievement was easily overshadowed by the triumph of Nokia this year. In 1999, the Finland-based telco was snapping at the heels of Vivendi with four awards. But this year it moved up a gear and administered a proper thrashing. Nokia won nine awards.
‘We’ve put a lot of effort into IR this year,’ says IR director Antti Raikkonen, with a touch of understatement. ‘We see it as important for the development of the firm to get the right message to the markets.’
The investment community in the eurozone would certainly vouch for that as much of it has enjoyed direct contact with the firm, thus awarding Nokia the prize for best roadshow. Nokia outscored Vivendi, due to what one survey respondent described as its ‘extensive’ roadshows: ‘They pitch it at the right level and they are good at getting their point across.’
‘It involves a hell of a lot of legwork,’ concedes Raikkonen. ‘We’re very systematic and go round doing different types of roadshows, meeting our main investors at least twice a year.’
But Nokia doesn’t just excel at traditional IR. As you’d expect from a company that deals with high-tech communication, it performed well in the categories of best IR web site and best use of teleconferencing, winning both.
In the latter category, Nokia saw off the challenge of Alcatel, last year’s winner, and scored 181 points with respondents praising its ‘timely notification’. Alcatel – tying with German electronics firm SAP for second place – managed just 55 points, a margin of victory that surely merits the term ‘drubbing’.
Nokia’s success in the best web site category repeated its victory in 1999 and represented another trouncing of its rivals, thanks to its ‘clearly set out’, ‘well designed’ and ‘user-friendly’ web site. It scored 157 points compared with the 44 of runner-up, Vivendi. The secret of Nokia’s success, it seems, is that it’s constantly striving to improve. ‘We’re still working on our web site now. We see it as a very important part of our IR program – it’s the channel by which we can reach people most effectively,’ Raikkonen says, before adding a caveat: ‘I think face-to-face contact is most important. Technology will never replace that.’
Again, just as last year, Nokia won the award for best annual report, edging past Vivendi by 7 points.
Raikkonen is keen to stress that quality IR comes from the top and that ‘senior management’s commitment to IR’ has been a key part of the company’s success. It also explains why Nokia won the award for best board communications by a hefty margin. It scored 131 points while Royal Philips Electronics was runner-up with 57. One respondent stated that, ‘The top management knows exactly what is going on within the company.’ Which is reassuring.
Nokia again walloped the opposition in the categories of best use of financial media and best management of disclosure policy, romping home with winning margins of 98 and 113 points over Vivendi and Alcatel respectively. The company also won for best communication of shareholder value because, said one respondent, ‘they exactly understand investor sentiment.’
Just when you thought that Raikkonen couldn’t possibly come up with another variation on his acceptance speech, he was asked to do precisely that as Nokia predictably claimed the Grand Prix for best overall IR by a large cap, ahead of Vivendi in second place and Alcatel in third. Despite giving the impression that it was routinely sauntering to victory, Raikkonen says that Nokia’s IR program is founded on hard work. ‘There’s more demand than we can deal with,’ he says, but states that there are no plans to extend the ten-person IR team. ‘We won’t do that, but we will continue to try to improve our efficiency. Anyway, I enjoy investor relations. That’s the important thing.’
And the rest…
But the night wasn’t just an event to test the physical fitness of Raikkonen as he trooped back and forth between the stage and his trophy-laden table. Other IR professionals were faced with the responsibility of collecting an award on behalf of their companies’ investor relations efforts.
Take Wolfram Schmitt for example. As deputy head of IR for Deutsche Bank, he picked up the prize for best financial advertising. The company’s efforts were described as ‘striking, direct and frank.’ Deutsche Bank was just ahead of Nokia – obviously – and Siemens, suggesting that German financial advertising is a cut above the rest.
One company that is clearly aiming to be a cut above the rest of the IR pack is Alcatel. It walked away with the award for most progress in IR to round off a two-year period of improvement. One respondent says, ‘They were seen as a conglomerate firm but have now emerged as a high-tech firm.’ And Alcatel’s Claire Pedini recalls that the shift presented the company with something of an IR challenge. ‘We went through a difficult time with the financial markets,’ she says. ‘But we’ve changed significantly and developed our IR program.’ Indeed, while Alcatel was runner-up last year – trailing Siemens – the roles were reversed this year with the two companies battling it out in a clear-cut two horse race. The news that Siemens and Alcatel have topped the pile in this category for two years is refreshing evidence that progress is ongoing and that neither company is resting on laurels.
Alcatel also won the award for best crisis management. It was rewarded for clear depiction of its strategic activity after its move towards high-tech status, including the $3 bn purchase of troubled DSC Communications in 1998 which led to charges of deceit in a nasty lawsuit and the worst one-day stock plunge in French history.
Outside involvement
The awards evening is not just a cosy introspective bash for the eurozone. One award goes to a company from outside the region which has impressed its fund managers and analysts. This year’s winner for best IR in the eurozone by a non-eurozone company was Vodafone AirTouch, beating General Electric and Nestle. As John Earl, IR manager at Vodafone AirTouch, comments, ‘We endeavor to keep our channels of communication open.’
In 1999, TotalFina won the award for best communication during a takeover. The company has continued its M&A rampage and collected this year’s award in the process. Now TotalFinaElf, the company was praised for its ‘clear explanations of strategy’ and the fact that ‘the IR people were always available, which is rare.’
There is one award in which the institutional investment community isn’t the greatest authority – the prize for best communication to the retail shareholder. Instead, World Investor Link asked the region’s private investors to respond to an online survey. LVMH was judged to be the winner in this category ahead of France Telecom and Vivendi (which would surely have won the award for best runner-up, if one existed).
The awards aren’t just shared among the big guns, though. At least four awards go to small companies. For example, the award for best IR by a loss-making company which went to Eurotunnel. ‘Despite their situation over the last five years, they continue with their communication,’ enthused one respondent. United Pan-Europe Communications was runner-up.
The award for Best IR Leading to an IPO, meanwhile, went to Infineon Technologies, with respondents praising the ‘very good information flow from the mother company about the product that’s behind the name. The investor knows what he’s buying.’ Intershop Communications received the award for best IR by a new market company. ‘Good access to management’ was one phrase that cropped up among respondents.
The blue riband award for smaller companies is the Grand Prix for best overall IR by a small-cap company, defined in the survey as a firm with a market capitalization under US$2 bn. Intershop found itself beaten into second place by Aixtron. The latter won the prize because respondents felt ‘they always provide the latest update on their product development and their market position.’
Claus Ehrenbeck, investor relations manager at Aixtron, puts its success down to the customer-service mentality it has adopted. ‘I think investor relations for Aixtron is an integral part of the corporate strategy – and senior management certainly see it so,’ he says. ‘We treat investors in the same way as we treat our customers.
One man show
There is one award in which team effort, senior management involvement and corporate culture count for little. The best IRO award is a contest among individuals, won this year by Alessandro Brenna, IR director for Europe at STMicroelectronics. ‘He has always kept his cool,’ said a respondent.
Brenna himself has his own views on the secrets of success. ‘I’d say what’s most important in good investor relations is to be extremely knowledgeable and prepared – about products, technology, numbers, market data and market sources – and able to analyze the competition and the company’s relative positioning. Networking is the second most important item – both inside and outside the company – in order to collect day-to-day information. Then you also need to understand the financials and be very good at analyzing the numbers. Finally, you also need to be able to present well and be capable of holding the interest of your audience; it’s not true that people are less interested in semiconductors than other more visible products, but at the end of the day, they have to decide whether or not to buy your company’s shares, not just enjoy your presentation,’ he says, before adding the proviso ‘Being nice and friendly is all very well, but it’s not enough.’
And that’s all there is to it.
