Neither donuts nor double drams are the regimen for the IR roadshow warrior, suggests Philip Morris International’s (PMI) head of IR Nick Rolli. ‘I think eating right is critical, and sleeping, and all those normal things you would do just to take care of your own personal health,’ he says. ‘So you try to stay away from the late-night bars. That doesn’t always work, but you do try. And you have to enjoy traveling and being able to pace yourself.’
A hardened roadshow warrior is always ready for the ride to the airport – and not just with a toothbrush and clean clothes. Rolli is readier than most, as befits the IRO of a firm with operations in more than 180 countries. Most of its investors are in the US, the one country PMI doesn’t operate in.
Nick Rolli, Philip Morris International’s head of IR
‘I don’t think there’s going to be a substitute for meeting people one-on-one’
‘A key point is not just packing your personal things, but also if you’re going to bring handouts, for example, or product samples, you want to ensure they are ready and packed,’ says Rolli. ‘We have an investor information deck we bring with us, and we have now started to use a secure file transfer to send it in advance of the meeting.
‘That saves wear and tear on us carrying the paper, not to mention shipping costs. It’s worked out very, very well: investors like to get it in advance, especially new investors that may not be up to speed on the company. They can transfer it to their iPads or to their laptops when they come into the meetings – or even print it out.’
His experience suggests experience pays: he says you should always try to have someone with you who has been to the city and venue before. ‘We were in Boston and were going to visit two large institutions, and it was the first time I’d been,’ he recalls ruefully. ‘We left the cars in a carport between two connected buildings and when we finished, the whole team piled back into the waiting cars, and I asked the driver, Where’s the next meeting? He sheepishly said, It’s right there, pointing to the entrance across the carport.
‘Things like that happen all the time when you’re new to it, but by now we know where a lot of these places are. We know the routes, and which meetings we can walk to. Those kinds of logistical things really affect the day; in Manhattan for example, you arrange the route so you are not ricocheting between uptown and downtown.’
Far and wide
Rolli explains some of the reasons for PMI’s intensive roadshow experience. After the company’s spin-off from Altria in 2008, one of the main objectives was to expand the company’s shareholder base and increase international ownership, which even now is heavily US-dominated. ‘We embarked on a fairly robust roadshow program, visiting many cities,’ he says. ‘We use different people – either the IR team alone, or the IR team with the CFO, or the CFO and me.’
Last year Rolli calculates that PMI’s CFO participated in about half of the 172 meetings the tobacco firm conducted. ‘In the US we visited 12 cities,’ he says. ‘We visited 65 of our top 100 institutional investors. These are one-on-one or group meetings.
On international roadshows, we visited 15 cities in 13 countries – in Europe, Asia and Canada – and we met nearly 70 percent of our identified foreign shareholders.’
Most of the preparatory work is done in-house, explains Rolli. ‘But I know the investors: I’ve been doing this for a long period of time, so I have a good investor contact base where I can reach out pretty quickly to schedule meetings and go from there,’ he adds. ‘You obviously need to do your homework when you’re going to a place that might be exotic.’
A consummate IR professional, Rolli was manager of IR for Colgate-Palmolive from 1979 to 1987. He joined the then Philip Morris as manager of financial communications and later became director of financial communications before being promoted to vice president of IR and financial communications in 1998. When PMI split from Altria, he moved to the new company’s headquarters in Lausanne, Switzerland.
Breaking new ground
With its diversity of operations, in addition to roadshows taking the company to investors, PMI has to arrange field trips to take them to the investments. ‘Recently, we did an inaugural Asia investor trip, where we took buy-side investors to Singapore to meet our management there,’ reports Rolli. ‘Then we went to Surabaya in Indonesia, which is one of our key markets.
‘It was not to make a presentation and meet the management, but to see how Kretek cigarettes, for example, are made. We take investors to the factory, take them to the retail outlets, and they get a sense of how the products are merchandised, sold, purchased and so on. Those visits have been very, very successful.’
This was virgin territory for PMI. ‘We actually [brought forward] that trip by a few days for a site visit walk-through,’ Rolli explains. ‘It was a very special trip where we had to make sure all the logistics worked out, because it was going back and forth between Singapore and Indonesia.’
For the uninitiated, Kretek cigarettes are a clove-flavored Indonesian specialty, whose local popularity is matched only by complete market indifference outside the region. One has to smell them to believe them, but investors get more than just a whiff of cloves on a site visit.
‘What they get when they see you in person is the ability to evaluate your personality, your confidence,’ says Rolli. ‘They get to meet you in person and look you in the eye, and I think that’s what investors want to do – they want to look at the management, get a sense of confidence, an understanding of the business. You certainly get it over a telepresence or virtual [meeting], but there’s a missing element there. And I think you just get that credibility much more from meeting in person.’
That doesn’t stop technology supplementing the main ring of the circus, however. In addition to the electronic information packs, PMI is looking for ways to cut back on travel, including using telepresence suites. ‘We’re starting to use really high-quality, high-definition technology to reach investors where – possibly – we can’t travel on a certain date,’ says Rolli. ‘And I think we’ll certainly increase that in future, but I don’t think there’s going to be a substitute for meeting people one-on-one. As such, roadshows will continue to be very important for our IR in order to reach global investors.’
Despite the shift of the globe’s center of economic gravity, PMI finds the English language suffices across the investment universe, although being based in Switzerland, the company’s management can often add IR grace notes in French and German. Rolli suggests IROs need not rush to learn Mandarin or Japanese just yet.
And apart from subjective gauges like the sweat on the brow of your interlocutor, Rolli has measurable metrics: ‘We’ve gone from 6 percent to roughly 12 percent [international ownership] – we’ve pretty much doubled our foreign ownership.’
