It was a fitting atmosphere for this year’s Eurozone awards. The Palais Brongniart, former home to the Paris Bourse, was built in the early 19th century and until the 1990s it resonated with trading activity. Recognizing the Eurozone companies that had excelled in their IR efforts certainly merited the use of its hallowed hall.
Although IR in Europe does not have a long history, this year certainly marked a turning point. A difficult market meant IROs had to double their efforts to catch or retain the interests of investors. As one respondent in our 2003 Eurozone research report comments, ‘All companies seem to have geared up their IR efforts, as the share price is no longer talking for them’.
Companies now see proactive communication with investors and analysts as a necessity and many are embracing IR, adopting a top-down approach with management involvement from the outset.
Total, which picked up four awards including best investor relations officer and best investor relations by a CEO, fully grasps the importance of having senior management’s full support in order to have a tenable IR program. ‘We have a strong commitment from top management to participate,’ confirms Ladislas Paszkiewicz, Total’s head of IR.
He says this commitment and support from management extends to the near 150 one-on-one sessions the CEO, CFO and head of strategy hold during roadshows.
Nokia was another big winner, with five awards including the grand prix for best overall investor relations – top 50, best use of virtual conferencing and best use of the internet for investor relations. Ulla James, vice president of investor relations, also attributes Nokia’s success to top management commitment and support. ‘As corporate image is increasingly personified in top management, top management’s involvement, high level of availability and visibility is paramount,’ she stresses.
Sure-fire strategies
Being more open and proactive are among the myriad improvements in IR made by Eurozone companies. Roadshows, for example, seem to underpin many IR programs, with IROs racking up airmiles in order to have invaluable face-time with investors.
Valerie Magloire, head of IR at PSA Peugeot Citroën, rolls off a list of places she visits throughout the year, including all the major financial cities in Europe, Japan and the US. ‘We try to go at least once a year to each key place,’ she says. ‘Italy, Spain, Dublin – everywhere.’ PSA Peugeot Citroën won best investment community meetings and/or roadshows for a non-top 50 company.
Nokia also makes use of the internet and other technologies to provide simultaneous fair disclosure to all its investors. As one survey respondent notes, ‘Nokia uses technology like no other company – its understanding is so superior.’
Even so, Nokia doesn’t underestimate the power of one-on-one meetings. ‘One of the important roles of IR is to act as an efficient information conduit between financial markets and company management by encouraging active fund manager and analyst feedback on the company’s strategy, performance, competitors and investor relations process,’ says James.
Transparency abounds
Redoubling efforts to disclose information that is transparent and detailed appears to be a winning strategy. ‘We have made a noticeable effort to provide much more information than before on important issues such as general business, business segments, like-for-like bases and forex impacts for the group,’ says Olivier Mougeot of France Telecom.
Paszkiewicz believes that transparency is a top priority for analysts and investors. ‘I think they need more transparency and we have provided it,’ he says. ‘We started in 2001 to provide quarterly results and we have provided more and more information on a quarterly basis so the level of information which has been provided has improved significantly.’
This type of effort is in line with what investors demand: consistency, honesty and openness from companies about problems that may affect the balance sheet. France Telecom ensured that it was open in its communications during difficulties earlier this year – and witnessed a quick turnaround in sentiment as a result. It also helped the company to garner an award for best crisis management.
France Telecom’s IR department was given an overhaul partly because of the turbulence in the telecoms sector and partly due to internal changes. Director of investor relations Walter Vejdovsky says the primary factors driving change were the need to restore confidence and the 2002 liquidity crisis. The firm found that providing a clear message on issues and solutions with a detailed action plan, frequent updating on results of those actions, clear benchmarks and targets for margin and cash generation were all significantly helpful.
Masterful solutions
IROs who know their company inside-out and have a real depth of understanding about their industry will continue to win plaudits. Paszkiewicz suggests that those able to address shareholders’ expectations and anticipate their questions are on the right track. His global IR team works to develop strong relationships with investors to ensure that shareholders feel more comfortable about asking specific questions and know that they will be answered. But relationship building is just one element of a successful IR program, reminds Pasckiewicz, who also cites ‘the dedication of management’ to one-on-one meetings and ‘an increased level of transparency’ as vital.
Nokia, a winner several years running at the Eurozone awards, is a standard setter. James says the company’s IR philosophy realizes ‘the thorough business of understanding investor relations plus real-time knowledge of a firm’s financial position combined with unrestricted access to senior management and internal experts enables IROs to build credibility and act as company spokespeople in lieu of management.’
Nokia’s global IR team and its spokespeople all follow the same guidelines to ensure consistent messages are transmitted. It also focuses on strategy and industry drivers rather than historical financial data to divine not only strengths and opportunities, but also the weaknesses of the company.
Ultimately, as James points out, ‘investor relations cannot – and should not – just spin the company message.’
