The good news: almost 80 percent of the investment professionals surveyed for the inaugural Investor Relations Magazine Nordic Awards say the quality of IR in the region has improved over the last year. The bad news: some say the improvement was from a very low base.
It’s true that many of the top-ranked companies have overhauled IR over the last year or two. Tomra Systems’ Fredrik Witte, named best IRO in Norway, has only been on the job for half a year. Denmark’s number one IRO, former analyst Peter Haahr, has been in his position for one year, as has Maria Bernström at Sweden’s Ericsson. Though Ericsson missed winning any awards, it ranked number four in terms of overall points. Skandia, another Swedish company that didn’t win though it ranked just behind Ericsson overall, installed Harry Vos in the IR slot in January 2000. And another former analyst, Ilkka Salonen, who helped Comptel win best IR by a small or mid-cap Finnish company, joined in early 2000. Tobias Lennér at Swedish number one Telia joined at the beginning of 2000 in time for the telco’s IPO.
With this kind of fresh talent, no wonder the164 portfolio managers, buy-side analysts and sell-side analysts identified by Citigate Dewe Rogerson and surveyed by Mary Maude Research declared a state of improvement in the Nordic countries, commenting on increased professionalism and responsiveness, better investor awareness, and greater attention to shareholder value.
Nokia rules
Despite improvement all around it, Nokia still stands out from the pack. Led by veteran IRO Ulla James, Nokia’s IR team won five out of the 17 awards at Stockholm’s Grand Hotel on December 4, including the Grand Prix for best overall IR.
Nokia may have helped Finland win the most awards, but four out of five survey respondents say Sweden boasts the region’s best IR, and there are interesting contrasts to be found. Ericsson’s Bernström has been at the company since 1985 in various finance positions, and Skandia’s Vos has over two decades of in-house experience. But Sweden’s top IRO, Telia’s Lennér, is a former TV journalist who joined the company with no IR experience.
‘I was surprised when I was recruited,’ Lennér confesses. ‘But then I realized that very important skills for IR are to be able to grasp the story out of an enormous amount of internal information, identify the message fast, and explain it to an external audience. As a financial journalist I was good at extracting the red line – a very useful skill for IR.’
Marianne Nivert, Telia’s CEO since October 2000, was cited by respondents who voted the company ‘most improved’ in the region. What impresses so? ‘She enjoys meeting with investors,’ Lennér states simply. ‘And I think investors like meeting her because she’s extremely knowledgeable after 40 years in the business.’
Some observers question Telia’s top ranking, recalling its rocky IPO in June 2000. It was one of the world’s top IPOs ever and the Nordic region’s largest, but the price plunged in the days after trading began. ‘It was a tough time to come out with an IPO,’ Lennér remembers. ‘It was right at the beginning of the new economy decline, so the price range was set with prices sinking every day. But the stock was heavily oversubscribed, and especially considering the way the telecoms sector has been since, our IPO went pretty well.’
Telecoms fever
Telecoms were well represented in the awards, with Nokia, Telia and Ericsson ranking in the top five most mentioned companies. No wonder, considering this was the survey sample’s most widely covered sector. But another reason for telecoms’ popularity is that with the industry in turmoil, IR has come to the fore.
‘We have sometimes delivered messages that have not been what investors and analysts wanted to hear,’ admits Bernström at Ericsson. ‘And as a market leader in our field, we are often the first to tell the audience what’s going on and sometimes the first one indicating changes in trends. On the other hand, we have tried to balance the short-term bleak financial outlook with long-term great opportunities.’
Ericsson has been focusing on combining a ‘lean’ IR function with access to senior management and a small network of business and financial specialists. Lean only by mega-company standards, the department was beefed up in fall 2000 with Berström’s promotion, the arrival of Lotta Lundin in London and Glenn Sapadin to join Gary Pinkham in New York.
Bernström emphasizes the importance of her internal contacts who keep her informed about Ericsson’s various businesses and new technologies. But she also stays in touch with other Nordic IROs. In fact, Nordic telecoms IROs seem to have a sort of informal club for comparing notes. Bernström recalls Ericsson and Nokia scheduling earnings releases on the same day and close to the same time, so they reshuffled to avoid analyst overload. ‘It’s always interesting to compare things that are neutral, like how they arrange IR,’ she says. Bernström also notes that the investment community often approaches Telia for information about Ericsson, or vice versa, making it beneficial for the IR departments to keep in touch.
Tech times
Comptel won best IR by a small or mid-cap Finnish company. The telecoms software firm was spun out of the Helsinki Telephone Corporation, now called Elisa, in 1999.
Going public meant a change in culture. ‘The IPO was a big transition. We had to put a lot more effort into information gathering and sharing, formulating our story around our quarterly reports,’ recalls Jari Annala, executive VP of R&D and a key player in the company’s IR program. In early 2000 he brought in former Handelsbanken analyst Ilkka Salonen to lead IR efforts. ‘It’s a great help that he’s from the finance world,’ Annala says. ‘He knows how it works from the other side.’
There are heavy communications demands on Annala and Salonen considering Comptel’s place in the industry. The company’s mediation and provisioning software fits between telecoms networks and their business support systems. ‘We connect these two worlds,’ Annala explains. ‘We see what’s happening around us, and people who may not be following Comptel specifically are interested in hearing our views on the industry.’
In a departure from the telecoms trend, recycler Tomra Systems won best IR by a Norwegian large-cap, with IRO Fredrik Witte named Norway’s best IRO. As a newcomer, the choice of Witte raised some eyebrows, but the investment community is clearly impressed: ‘He is turning out to be one of the best,’ says one analyst.
According to Helge Nerland, Tomra’s CFO, the company has been an IR pioneer since the early 1990s, and senior management have visited the London investment community every quarter since 1992. But in the last year it’s been a lot more difficult to talk about expected performance. Tomra makes ‘reverse vending machines’ for the return of empty beverage containers, with 45,000 of them installed worldwide. A long delayed decision by Germany could mean 80,000 new machines in that country alone. ‘It’s a challenge for IR to handle these types of processes that we’re not in control of ourselves,’ Nerland says. But while that delay has hampered Tomra in 2001, the concurrent growth in socially responsible investment is benefiting it. Nerland says there’s increased interest in the company since its inclusion in the DJ Stoxx Sustainability Index.
The fix
Novo Nordisk has obviously never heard the advice, ‘If it ain’t broke, don’t fix it.’
As a pharmaceuticals analyst stationed in London and elsewhere, Peter Haahr viewed the company as one of the top two or three ‘most far-seeing’ in Denmark. Then he became Novo Nordisk’s IRO in late 2000 and started revamping an already successful IR program. He recruited another former analyst who had been working in Novo Nordisk’s competitive intelligence department, an IR coordinator and a New York-based IRO with in-house experience.
‘We set IR up as internationally as possible,’ Haahr reports. ‘We have increased coverage by about 50 percent in the past year, and all outside of Denmark. Most of our new analysts are from the UK and Germany with more in the pipeline.’
His team had 5,000 phone calls and 500 meetings with analysts in 2001, and about 20 percent of the meetings included senior management. ‘After being analysts, we thought we would be able to relax now. But we’ve never worked so hard.’
One comment from the survey was that Novo Nordisk’s IROs ‘explain well; they don’t forecast.’ Haahr admits that compared to US companies, they don’t do much forecasting. ‘It’s crucial that we understand our own equity story, then tell the story to analysts so they can put it into numbers themselves. We give them our view of the sales drivers and cost drivers over the horizon, and some long-term targets for the P&L, then let them do their work.’
Leading the Danish small and mid-cap pack is TopDanmark. You hardly need to look beyond the IR web site to recognize a winner. The site has interactive share price and revenue simulation models, for example. But the IR focus predates the web. Steffen Heegaard, COO, joined in 1989, four years after TopDanmark became one of Europe’s first insurers to demutualize. Untimely diversification in the early 1990s nearly killed the company, and Heegaard found himself part of a new management team in 1994. ‘We changed our philosophy to be very open, and that openness and the trust that came with it actually saved us at a time when most other Nordic banks and insurance companies were taken over by government or forced to merge.’ But, as Heegaard admits, ‘It’s getting tougher and tougher to gain recognition as a smaller company and it’s also a challenge to be a Danish company because Danish institutions are net sellers as they diversify internationally. The only way for a company like ours to get new shareholders is to go abroad.’ TopDanmark has increased its international ownership from 10 to 28 percent in recent years: ‘Being in competition with every other listed company in the world means we have focused on our level of information. That’s one way we can differentiate ourselves from our competitors.’
Looking abroad
Another company with a strong international outlook is Modern Times Group, which led the small and mid-cap field in Sweden. CFO Mia Brunell handles IR with the help of London-based IR specialist Shared Value, which does IR for many of the Kinnevik group’s progeny. Shared Value partner Matthew Hooper says that since MTG demerged from Kinnevik in 1997, it has attracted major shareholders in continental Europe and the US, and a Nasdaq listing makes it easier for US investors to find the stock. Now 73 percent of the shares are held in Sweden, 17 percent elsewhere in Europe, and 10 percent in the US. Hooper helps coordinate a constant stream of roadshows that regularly bring management to London, Paris, Frankfurt, Switzerland and other markets around Europe. They also make it to the US at least twice a year. Last year MTG spun-off Metro International, the free newspaper group, but Hooper believes it was more a ‘big storytelling job, particularly in the European market,’ that won MTG its award. With pay and free TV assets as well as publishing and radio, MTG’s IR goal is to communicate the value of each of these businesses. ‘With the spin-out of Metro, we were able to turn investors’ attention back to the core broadcasting business and our successful migration to the digital environment.’
Fund managers and analysts surveyed for the awards praise MTG’s ‘stylish communications’. That comment, along with the predominance of battered telecoms companies, shows that the Nordic investment community loves equities stories well told.
Click here to see the winners.
