Sculptor Investor Relations

Sculptor IR is a research and consulting firm specialised in Nordic IR, focusing on tailored analysis and in-depth perception studies that help companies to shape and improve their financial communication.

Follow Annica Strahner, CEO at Sculptor IR, as she comments on trends within the Nordic Investor Community and identifies challenges for Nordic IR Professionals.

May 2nd, 2011

Annica Strahner joins the Swedish PR-firm Springtime

When I started Sculptor IR two years ago, I mainly focused on tailored perception studies. After about six months I recognised a growing interest in how to use social media to reach out to investors. I then started to map Scandinavian companies presence and activity in those channels from an IR and Corporate Communications perspective.

During 2010, the overall consensus of social media among Scandinavian IROs has slowly shifted from fear to curiosity in how to use these channels to communicate their investment case.

As a result of this growing interest in IR and social media I will as of today, May 2nd, take up a new position as senior consultant at the Swedish PR and IR firm Springtime.

I have been recruited to one of the most competent and largest IR-teams in Scandinavia. Springtime also has great technical knowledge about social media; a perfect match for me as I will continue to focus on how IR professionals can use new media for investor relations. I will also help Springtime develop their offer in this area i.e. identifying both opportunities as well as challenges when reaching out to investors in a changing financial landscape.

Springtime started their IR-team just a year ago and has during these months received more than 20 Swedish companies as clients. During next week, Springtime is expected to become a member of AMO Global – the leading global network of strategic and financial communications consultancies.

Starting up Sculptor IR in the midst of the financial crisis has been a great experience. I have been given the opportunity to work with some of the largest Scandinavian companies. I am also humbled by the international recognition my blog Sculptor IR has received.  I have also been given the opportunity to be a contributor to IR Web Report and a monthly columnist at CFO World, commitments I look forward to continue with.

I would like to thank all clients, cooperation partners, blog readers and twitter friends for two amazing years!

I hope that you will continue to follow my reports on the development of Scandinavian companies use of social media and investor relations on my new blog IR Insights and on Twitter @AnnicaStrahner

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March 31st, 2011

NASDAQ OMX Nordic surveillance head discusses social media

The following post is a 1:1 duplicate that I originally wrote for IR Web Report:

COMPLIANCE risk is the most common reason given by IR professionals in Scandinavia to explain why they do not use social media for investor relations, and various discussions and events that have tackled the topic haven’t helped to give them more comfort.Annika von Haartman

To further explore the compliance risks of using social media in IR, I met up with Annika von Haartman,Head of Surveillance at NASDAQ OMX Nordic, to discuss her views on social media and the possibilities as well as challenges for IR professionals. The surveillance function monitors 800 listed companies in Sweden, Denmark, Finland, Iceland and the Baltics.

Blogs and chat rooms screened on a regular basis

Printed media and press releases are still the primary channels for surveillance and are screened on a regular basis. If the committee does not find any information in these channels that explain share price development, they screen new media channels:

“We consider blogs as established information sources, we also screen investor chat rooms as Avanza and Nordnet on a regular basis. Quite often we discover rumors and leaks in these chat rooms,” says Haartman.

Social media platforms such as Twitter, Facebook and YouTube are screened on a more ad hoc basis, only if content from an article or blog prompt Surveillance to review those channels.

Companies still obliged to use news wire services

The current disclosure rules require that companies have a website to publish press releases and financial results on them. But the rules do not consider the website to be a recognized distribution channel. According to Haartman, this is because company websites cannot ensure the market has simultaneous access to price sensitive information:

”The website is a great platform for providing an overview of news and financial information, but since timing is crucial for investors and they can’t follow each company individually, a news release still must be distributed via a news wire service before it’s published on the website to meet the disclosure rules,” she says.

Scandinavian regulators have no plans to adopt US Securities and Exchange Commission (SEC) guidance on web disclosures (no news wire service needed if the company’s IR site is a recognized information channel) in the near future. Although, Haartman agree that it is a very practical solution, especially considering that Scandinavia has some of the highest rates of Internet adoption in the world (85 %). She is also convinced that companies’ investor websites will become an even more essential communications platform for the market:

“As social media and news wire services provides a very fragmented flow of information, that only covers bits and pieces of a company’s investment story, the company’s website will become more important, giving investors a more in-depth view of financials as well as strategy,” she says.

Presence in social media a must to reach the next generation of investors

That online presence in social media will be required in future regulations is quite unlikely. But Haartman points out that it is very plausible that clients and other stakeholders will expect companies to interact in social media. She clearly sees opportunities with the new media platforms as Twitter and blogs, but when communicating financial disclosures, companies still must do that the traditional way i.e. by press releases distributed by PR wires.

“Companies using social media communicate that they are proactive, modern and adaptable to new technologies,” she says. “As social media is spontaneous it also gives companies the opportunity to be more personal and less conservative in their communication.”

Companies must also be aware of the fact that their analysts and investors are screening online sources for any complementary information they can find. The financial community’s hunt for information and activity in social media will escalate, according to Haartman:

“We can already see how teenagers of today do not read traditional printed media, and are less frequent users of e-mail. They are communicating in social media and if your company wants to reach the next generation of investors, your must expand your online footprint to those platforms.”

Tweet and blog but set guidelines and strategies

The greatest compliance risk is if your company still thinks social media is a fad and does not monitor what is said about you or how personnel use Twitter and Facebook.

Says Haartman: “It makes sense to set up a strategy that either states that your company is active in new media, or not. As social media blur the limit between the private and the professional life, you have to explain to your employees that as a listed company your social media policy will be rather strict.”

According to Haartman it is ok for a listed company to send “live-tweets” from an ongoing webcast or Capital Markets Day, as long as they do not contain any new price sensitive information that has not already been published in a release. She also gives a green light to corporate blogs, as they can be very useful for analysts and investors, providing greater context and helping them understand your business. There is no problem to blog about your latest quarterly results, but a wrap-up from a global industry conference could be considered as a forward looking statement.

“I understand that a CEO wants to have a more personal approach in a blog, but as a public company you must be very cautious,” she says. “The challenge is to balance spontaneity and interaction with disclosure rules and a strict social media strategy. Companies that only tweet press releases are quite boring to follow.”

I’m pleased that Haartman encourages listed companies to engage in social media, even if the disclosure rules mean that the communication has to be more controlled and less impulsive. And the greatest compliance risk is ignorance and lack of control, not engagement and a proactive social media strategy.

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March 2nd, 2011

Nordic firms embracing web optimized annual reports

The following post is a 1:1 duplicate that I originally wrote for IR Web Report:

DESPITE having some of the highest rates of Internet use in the world, Nordic public companies still spend a huge proportion of their investor relations budgets on printed annual reports — even though there is growing evidence that investors seldom read them.

Now, a few pioneering firms are boldly blazing a new trail by focusing their efforts on producing high-end online reports that combine stunning visuals and video with advanced usability features that make it easier for professionals to dig into and analyze their comprehensive financial disclosures.

As I reported last year, Nordic IROs spend 85 % of their IR budgets producing and printing their annual reports each year, even though there is little evidence that investors are actually using them. According to a CA Cheuvreux European Corporate Survey 2010, only one-third of 370 investors in Europe and the US read annual reports in detail, while another third just give them a quick glance. These facts have also been confirmed in several of Sculptor IR’s perception studies.

Spending huge sums to produce, print and distribute a paper annual report to a target group that doesn’t use it seems to be a bad investment and ineffective use of a company’s investor relations budget. This is especially true considering that the region has some of the highest rates of Internet adoption in the world. According to stats compiled by Internet World Stats, Internet penetration rates are consistently above 85% in the region with highs of 92.5% for Sweden and 95% in Norway.

Yet, despite the obvious readiness of the market to move to web reporting and the huge opportunities to cut costs and inefficiencies, Nordic companies have been surprisingly slow to adopt the web as their primary annual reporting channel, or to provide online annual reports that are more than a PDF version of the printed report.

That’s why it is so reassuring to see the latest online annual reports from Danish biotech company Novozymes and Finnish engineering firm Wärtsilä, and to have an opportunity to get their first-hand insights into their practices. These two companies have successfully combined strong corporate messaging through the use of striking visuals and video with detailed disclosure in highly usable formats that will please even the most jaded financial analysts.

At Wärtsilä, bold design with highly usable financials

Finland based Wärtsilä, which won the European Excellence Award 2010 for their first online report last year, is back this year with an even better offering. In their 2010 report, the company makes an immediate powerful impact with a bold, full-screen Flash introduction that gives a brief overview of the company’s values and growth drivers. Flash introductions seldom work and often get in the way of people accomplishing their tasks, but Wärtsilä cleverly only shows the introduction on the user’s first visit, after which they are taken to a static homepage.

Video also features prominently thoughout the report. It is used to complement the Message to Shareholders, in the Business review, and the Sustainablity section. There is also an image gallery called Wärtsilä in Pictures. Overall, the heavy use of eye-candy makes a strong statement about the company.
Wärtsilä_FLASH_IR WEB REPORT

However, it’s not all about image and branding. The report’s financial section has also been given the care and attention it deserves. Wärtsilä enhanced the format by improving the usability of the financial section, giving analysts easy access to notes and the opportunity to download figures to Excel, including individual spreadsheets of each note.

The Financial Targets page is another highlight, reporting on the company’s performance against its prior-year goals and providing fresh targets for the year ahead. It is illustrated by bar graphs that give context for the company’s performance on the target measures over time.

Completing the picture, Wärtsilä’s annual report is also available as an iPad app, a format that seems to please investors, with one noting: “Certainly one of the best corporate publications for investors I have seen so far.”

Wärtsilä_NOTES_IR WEB REPORTFinancial statement notes can be easily navigated and download in spreadsheets.

At Novozymes, mixing video, interactive graphs and solid financials

Novozymes, a Danish biotech company, launched their first integrated online Annual Report in 2007. They have since then constantly developed the concept by adding video introductions and management interviews.

The management interviews in the Novozymes Report 2010 are a best practice for using video to communicate a company’s investment story. Illustrated by metaphors and describing the company’s progress during 2010, the videos capture the core message in the company’s equity story, featuring executives in a relaxed but confident way.

NOVOZYMES_FRONT_IR WEBREPORTThe CEO interview, filmed in a Danish winter landscape, helps communicate the company’s sustainability strategy as well as explain the core business and market drivers.

From the start, Novozymes’ online annual reports have also had a strong focus on the usability of the financials section, as well as allowing users to create and download their own PDF version. This year they are also using Flash to create interactive graphs and charts the illustrate key figures throughout the report.

NOVOZYMES_CEO_WEBREPORTThe Novozymes Annual Report 2010, interview with CEO Steen Riisgaard.

Positive investor feedback

Joséphine Mickwitz, IR Director at Wärtsilä, says the company has received mostly positive feedback about their online annual report, especially from international investors who she says “have been impressed by the extensive data we have managed to produce within a very short time.”

The company now only mails printed PDF versions of its report to shareholders who ask for it prior to the AGM, but the company also is trying to encourage shareholders to use the online version or download and print the PDF version themselves.

At Novozymes, a few retail shareholders missed the printed version, even if they did not necessarily read it. However, they appreciate that with a web-based report they can select and print only the sections of the report they’re interested in, says Tobias Björklund, the company’s Head of Investor Relations

Process improvements and savings

Both Mickwitz and Björklund agree that the production of online annual reports has resulted in a streamlined production process, saving both time and money for their respective IR teams.

“Initially, you have some upfront costs and you might also receive some negative feedback from shareholders, but over the long term the money saved on not having to print and distribute the reports is significant,” says Björklund.

According to Mickwitz, the online report has created many more positive than negative effects: “Since our report is published very early (week 6), we have been forced to streamline the production process. We have for example automated the transfer process of all the financial data. Figures from the financial team’s database are sent directly to the online annual report, minimizing the margin for error as well as saving a great deal of time.“

In addition, Wärtsilä is able to reuse the video material for other purposes. The company shows some of the videos at its AGM and uses the CEO interview for internal employee communications as well.

“We are convinced that an html-version of the Annual Report is a step in the right direction. The global trend is growing online communication,” says Mickwitz.

“In the end, it has to do with how you want to profile your company,” adds Björklund. “By producing an online only annual report you send a clear environmental statement to your shareholders.”

Disclosure: None. Sculptor IR does not provide consultancy within annual reports, has no relationship with any service providers that produce reports, and did not advise either of the companies covered here on the production of their annual reports.

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January 26th, 2011

IR Challenges in 2011: M&A Activities and Management Changes calls for effective communication channels

From a Swedish perspective, 2010 was a great year where many companies exceeded the markets expectations; the same goes for the Swedish economy, ranked as one of the strongest finances in the European Union. The results of restructuring processes finally paid off, strengthening balance sheets even if sales volumes still where halting.

As a result, listed companies during the previous year (just as I predicted in January 2010) ramped up their IR activities and launched ambitions growth strategies. As a consequence Nordic IROs, have been quite busy with Capital Markets Days and roadshows, producing new investor presentations and spending hundreds of hours communicating new strategies and financial targets to investors and analyst. In other words, a quite normal IR year, compared to the turmoil in 2008 and 2009.

Will the day-to-day work for IR professionals go on as usual in 2011? Well, the everyday life for IROs are never normal and I have identified some challenges that I think Nordic IR professionals will be facing in 2011.

1. M&A Activities – 24/7 availability and transparency

Strong balance sheets and growth strategies has set Nordic companies in a shopping mood. M&A activities ramped up already during the second half of 2010, starting with Hexagon’s acquisition of US-based Intergraph in July and continued during the autumn. December 20, Novozymes announced the acquisition of EMD/Merck Crop BioScience. One day later, Alfa Laval acquired Aalborg Industries. 60 analysts attended Alfa Laval’s conference call, held three days before Christmas Eve, which clearly signals the markets interest in M&A activities.

A merger or acquisition always generates several questions:

  • How is it going to be financed?
  • What are the costs for consolidating the two businesses?
  • How does the the activity match the company’s strategy?

To successfully explain your company’s actions, IROs must proactively prepare Q&As as soon as the first discussions have been initiated; which often is months or years before the final announcement.

When communicating their growth strategy the company also must explain why they think growth by acquisitions is needed and what kind of preferences they are looking for.

When announcing an acquisition it has to be followed by a conference call or webcast where senior management attend and can answer questions. IROs have to be prepared to be available 24/7 the coming weeks to continue answer questions.

Best practice is if the company shortly after the announcement can organise a Capital Markets Day or another Q&A session with CEO to further explain the acquisitions from a strategic perspective.

2. Do not underestimate the impact of Management Changes

Many Nordic companies are facing management turmoil in 2011 as several CEOs have resigned or changed company, for example Hans Stråberg at Electrolux, Olof Faxander are leaving SSAB to start at Sandvik, Leif Johansson at Volvo, and Stine Bosse at Tryg.

Companies have a tendency to underestimate the impact management changes (CFO, CEO etc) have on the market. The company is often in no hurry of recruiting a new CEO, while investors start to get quite nervous about whose running the business pretty quickly.

For the IRO, management changes increase their workload as they are losing key persons in their IR-team and need to educate a new CFO or CEO about the importance of investor relations.

The appointment of a new, internally recruited CEO or CFO is has advantages, as the person will know the company as well as the industry. The IR-team is facing greater challenges if the new management member is recruited externally and has no experience of either the company, or the business. As the market has little patient with new CEOs, this person has to learn the company’s strategy, business fundamentals, the industry and market growth drivers and how to communicate successfully with the financial market within a couple of months.

In the midst of the education process the IRO tries to get them to prioritise IR activities including quarterly presentations, road shows and one-to-one meetings.

To ease the transition process for the IR-team, I often recommend my clients to conduct a perception study and to use the analysis get the management’s attention on compulsory IR priorities during the year.

  • This allows the new CFO or CEO to get an introduction of weaknesses and strengths in the company’s strategy and key drivers in the industry.
  • Secondly, these key insights help the newcomer to be more prepared for what questions they most likely will receive during a one-to-one meeting, quarterly webcast or road show.

I have stressed the challenges of management changes in an earlier post: Pros and Cons with management changes.

3. Effective communication channels is a must

To successfully handle both M&A activities with 24/7 availability and transparency and coping with management changes, IROs are depended on effective communication channels. The IR-team should serve as a CRM-function for the investors and analysts, answering questions, explain strategies and building confidence and relations.

To be able to do this and act proactively the IR-function need to have effective communication channels. I have for example suggested that a blog post summarising Q&As from the latest quarterly presentation would save the IR-team hours. Or if a blog is to revolutionary, why not at least categorise questions from the webcast in chapters?

And to my liking, IR-professionals have recognised the growing importance of IR websites and are planning to update their on-line communication in 2011. When doing so, it is essential to assess the value social media can bring into a new on-line communications strategy. If you are searching for IR Website Best Practices, I strongly recommend that you download Q4 Web Systems free Whitepaper:

Q4 Whitepaper: IR Website Best Practices – Winter 2011

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December 21st, 2010

Season’s Greetings 2010

Sculptor IR thanks all customers, partners and friends for an amazing year.

We wish you a Merry Christmas and a Happy New Year!

Please enjoy our video greetings.


Create your own video slideshow at animoto.com.

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December 9th, 2010

New stats: Scandinavian companies using Twitter for IR

The following post is a 1:1 duplicate that I originally wrote for IR Web Report:

SCULPTOR IR has just completed a major survey of 760 Scandinavian companies to see how many are using Twitter for investor relations information and to identify country differences and best practices at specific companies.

The latest survey is a substantial expansion of one Sculptor IR published in April 2010 covering 130 companies listed on Nasdaq OMX Nordic and the Oslo Børs –see IR and Social Media in the Nordics – Part 3: Q1 Earnings presentations versus Tweets – which found that 23% of the surveyed companies had Twitter accounts, and of those 40% posted tweets about their earnings results.

During the most recent Q3 earnings period, the results show that only 16% of the 760 Nordic companies have active Twitter accounts. However, there are large differences by country, with Finnish companies being most active on Twitter (25%), followed by Swedish companies (19%). See the chart below:

Nordic Listed Cos Use of Twitter_1012

When analyzing tweets from a corporate communications and IR perspective, 65% of the Norwegian companies tweeted their third-quarter earnings results, while in Finland it is a more modest 25%. Half of the Swedish companies (49%) used Twitter to increase awareness of their Q3 reports. See the chart below:

Twitter_Q3_2010

IR pioneers on Twitter improving

While the total number of companies tweeting results remained at the same level as in April (41%), the IR Twitter pioneers are adding more valuable information for their followers.

Another positive trend is that newly listed companies as Danish ingredients group Chr. Hansen and Swedish Oasmia Pharmaceutical are adopting Twitter to directly communicate with shareholders and investors.

The following three companies stand out for their practices:

1. Veidekke, Construction, Norway, (market cap 6.591 MNOK)

http://twitter.com/Veidekke_ASA

Company blog Terje’s Thoughts

Veikedde_Blog_Resultatframgång_Q3_101104

Veikedde_Blog_Broad profit_Q3_101104

Veidekke is one of the most prominent users of social media for IR and corporate communications in the Nordic Region. They tweet earnings releases and invitations to webcasts. They have managed to get 400 followers even if they only tweet in Norwegian. Extraordinary for Veidekke is their blog Terje’s Thoughts (Norwegian) that has been running since 2009. The blog is one of very few IR/corporate communication blogs in Scandinavia. After each earnings release the CEO comments on the results in a post.

2. Vestas Wind, Wind Power, Denmark (market cap 4.463 MEUR)

http://twitter.com/Vestas
Vestas_Q3_101026_VIDEO_CEO

Vestas Wind started to tweet in August and is a great best practice case of how you can use Twitter for IR. Today they have 650 followers!

Vestas Wind send reminders to attending webcasts, link to the presentation and report and use hashtags as #wind #energy #greentech. Recently they invited followers to send in questions when the Financial Times interviewed their CEO.

3. Metso Group, Industrials, Finland (market cap 6.447 M EUR)

http://twitter.com/MetsoGroup

Metso_Q3_101028_QsMetso live-tweeted from their Capital Markets Day in June. Besides from posting links to earnings releases and quarterly reports they also tweet highlights and questions from their earnings calls. Being a B2B company, Metso’s activity in social media is even more interesting to follow as one common assumption is that the new media channels only is for B2C companies.

Room for improvement and learning

While it is very promising to see how the best practice cases constantly improve their Twitter skills, the vast majority of company tweets are of a poor quality. The most common Twitter mistakes are:

  1. Inviting people to a webcast or to read results without providing a link.
  2. Sending the earnings tweet one day after the release.
  3. Inconsistency, such as tweeting results from first and third quarter, but not the second.
  4. Not using #-tags to track retweets or creating transcripts.

Of course, the IR Twitter pioneers have the benefit of being able to make mistakes and learn from them while social media channels are not yet being fully embraced by Nordic region institutional investors or retail shareholders.

However, when the investors do join in, the early adopter companies will have a great competitive advantage over their skeptical counterparts who have adopted a “wait and see approach” towards using social media for investor relations.


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November 26th, 2010

Swedish IROs still skeptical about social media: risks bigger than opportunities, ROI

The following post is a 1:1 duplicate that I originally wrote for IR Web Report:

Earlier this week I attended a lunch seminar ”IR Excellence: Risks and opportunities in a digital world”, hosted by the Swedish IR association (SIRA), in cooperation with Cision, Grayling and Setterwalls.

IROs from the internet bank Nordnet and the mobile operator Tele2 where invited to share their experiences of using social media for IR. Sculptor IR wrote about Nordnet in an earlier post: Advice from Swedish IR pioneers in Social Media: ”Keep it simple”

Nordnet: reaching out to retail investors

Nordnet is a mid-cap company with a market cap of 4 Billion SEK that is listed on NASDAQ OMX Nordic. The company has four Twitter accounts, three with a personal approach and @Nordnet as their official corporate account. They are active in other social media channels like Facebook and Slideshare, and they have a corporate blog called Nordnetbloggen

The company has been “live-tweeting” their quarterly presentations for the past year, and they have invited followers to send in questions through twitter or the blog.

Nordnet_Q3_Live_201010Adrian Westman, IR manager at Nordnet, said that new media channels improve and strengthen the company’s financial communication as they are more user-friendly, available and transparent.

Nordnet’s followers are mostly private individuals, IR/PR consultants and journalists. Nordnet’s main purpose with using social media channels is not to reach their analysts because they “talk to them frequently”.

Instead, Nordnet wants to improve their relations with their retail shareholders, which they communicate with less frequently. They also want to strengthen the company’s brand by reaching a larger audience.


Tele2: blog-inspired IR website

Tele2, which has a market-cap of 63 Billion SEK, launched their blog-inspired IR website “Explore our financials” earlier this year and are active in almost all social media channels.

Tele2_Explore our financials

Lars Torstensson, Group Director, Corporate Communications at Tele2, explained that their main purpose with social media is to reach and communicate with customers. Tele2 considers social media great tools for PR and internal communications.

When it comes to investor relations, social media has potential to be an effective communications tool in the future, but not at the moment, according to Lars. Lars’ advice to other IROs is to make sure that disinformation doesn’t go unanswered.


Regulatory environment leads to caution

Anders Ackebo, senior consultant at law firm Setterwalls stressed the legal constraints of using social media for IR purposes. He could see a risk that companies are stretching compliance rules when communicating in social media.

On the other hand, said Anders, European compliance rules need to be updated to include new media channels, but that process that will take some time.

The final discussion was about the risks of new media. Nordnet explained that they apply the same information policy in social media as for traditional communication so they don’t see new threats or risks.

In summary, Swedish IROs still are skeptical about social media as the compliance risks seems bigger than the opportunities these new channels create. But if they are going to be active, their main purpose would be to reach out to their retail shareholders.

Of course, this focus could change if, as Adrian Westman from Nordnet suggested, we see Scandinavian versions of Seeking Alpha or StockTwits, which would bring institutional investors to the audience.

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November 17th, 2010

Improvement areas for Swedish IR – Targeting and treating investors as VIP-clients

Yesterday, Regi hosted their Annual IR Nordic Market Awards in Stockholm, awarding the top ranked IR-professionals in Sweden. Many congratulations to Nobia, and Autoliv, winning the awards for best mid and large cap company.

For me it was striking that several speakers as Jenny Rosberg, Nasdaq OMX Nordic and Carina Lundberg Markow at Folksam stressed the need for Swedish companies to:

1. Put more effort into identifying and targeting relevant funds and investors that might be interested in their sector and industry as long term partners.

2. Spend more time getting to know your existing institutional investors, identifying their agenda and what perceptions they have about your company.

Why do investor targeting?

After meeting around 30 Swedish IROs the latest years, my experience is that very few have a strategy for their shareholder composition and even fewer target investors on a regular basis. These assumptions were also confirmed in IR Insight 2009, a survey with 270 Nordic IROs, conducted by Sculptor IR and Regi. When attending a round table with SIRA about a year ago, some of the discussions were if it is the IR-team that should be responsible for developing a strategy for shareholder composition or if it is a question for senior management or the board?

I see no obstacles to why the initiative can’t come from the IRO. While a majority of the IR-team’s are struggling to have CFO and CEO attending roadshows, they would be more keen to attend these events if you can say that they are meeting investors that:

A) Have invested in your peers and having great insight and interest in your industry leading to more qualitative discussions and better odds for an investment.

B) Have a long-term approach and commitment to their investments.

Do you know your investors’ agenda and perceptions about your company?

Jan Carlsson, CEO of Autoliv that was awarded for Best CEO and Best Company in the large cap category delivered the most useful advice from the event:

“We see IR as a customer relations function, servicing one of our most important customer group; our investors. Our main objective is to deliver information and service that makes it easier for them to do a good job.”

So if you define your investors as a very important client wouldn’t you would like to know:

A) More about how they view the strengths and weaknesses in your company’s investment case?

B) Their agenda for their investment?

Without capital from your long-term investors, it is difficult or almost a mission impossible to grow and expand the company’s business and execute by strategy. By listen and constantly receive feedback from your investors you might be able to have their confidence in a down-turn, or during a hostile bidding process.

The lesson learnt from the credit crunch is that building relations with investors is an ongoing process; it is to late to start when the crisis already has hit.

For me it is still a surprise that very few companies have Autoliv’s approach to IR, treating their investors as VIP-clients.  Which sales manager wouldn’t spend time building relations with their largest clients, and on a continuous basis doing customer satisfaction surveys identifying areas of improvement ?

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October 15th, 2010

How social media help increase coverage from your Q3 presentation

As usual with the Nordic earnings period, Investor was first in line to give their Q3 presentation earlier this week. Next week approximately 130 Nordic companies will be fighting to get the market’s and business media’s attention about their results (at least if it is positive). This can be a mission impossible, especially if your company not are included in the OMX Nordic 40 index.

By using a cross media approach i.e combining printed and online media as press releases and webcasts with social media channels the odds are quite big that your report will reach a larger audience, especially if you are a small or mid cap company.

This is what you can do:

Twitter: Send a tweet with an  invitation to your web or audiocast, linking to the IR website, follow up with a reminder 1-2 days before the presentation starts. Then write a tweet highlighting keypoints linking to the published report or presentation. A more advanced approach is to send live-tweets (maximum 10) during the presentation, using #, invite users to send questions and tweet the Q&A session.

Below you will find some examples of earning tweets:

SecoTools_Q2_2010_Webcast

Raisio_Results_Q2_2010

Metso_Higlights_Q2_2010

Slideshare: By publishing the presentation on SlideShare you can reach millions of users. After just one day 400 viewers could have seen your presentation. A very smart function with SlideShare is “related presentations”. If you for example have tagged your presentation ”pulp and paper” or with the name of your peers, your presentation will be suggested to the viewer if they have been viewing another company in your industry.

Nordnet is one example that has published their Q1 presentation on Slideshare:

Nordnet Q1 2010 report

View more presentations from Nordnet.

YouTube: If you webcast the presentation or have a CEO/CFO interview published on the company’s website, the interview will attract more viewers if published on YouTube. Webcasts and video interviews are costly and therefore it is important that you use and re-use material to get the best value. Watching a video with the CEO or CFO explaining the highlights in the report will generate higher trust than reading a PDF about the results.

Ericsson use their YouTube channel frequently to publish videos with CEO and management.


How to handle the legal risks?

The same risks as using print or online media exists in social media; sending out a release to early, having a CEO not answering “unpleasant” questions in a live webcasts etc. But as long as you reuse already published material, linking to the IR website, the risks are quite limited.

You should also measure the outcome of your social media activities. Analyse if you are driving more traffic to the IR web and from which channels the traffic is coming, (Twitter, YouTube etc.)

And if you have a good investment story there is a greater chance that you will be published in printed business media as 80 % of journalists use social media to source stories (Cision’s 2010 Social Journalism Study)

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September 24th, 2010

How to gain and keep the markets confidence

Earlier this week I published a column for CFO World on the theme “How to win the markets confidence” (In Swedish). In this week’s post I will give you a summary of the most important key points from the column.

Regardless if your investors are very short term oriented as Wall Street’s Gordon Gecko or have long term ambitions with their investment, be prepared for that you as a CFO or IRO always will have to answer tricky questions. But if you where about to invest 100 million in a company, wouldn’t you also be quite critical and cross-examine the company’s financials as well as management’s competence?

Telling sunshine stories about success does not create acknowledged and trustful communication with the stock market, but transparency and confidence does. Here follows some tips and advices on how not just to gain the markets confidence in an upturn, but also how you can keep it a downturn.

1. Transparency creates trust. Silence generates chaos.

When the credit crunch hit the market, investors made their decisions by heart, not by using rational analysis. There was a never-ending need for more information. The winners of the crises where companies that where very transparent with how the crisis would effect their business and financial results. The losers were companies that choose silence, acting as normal while the global financial market collapsed.

Answers as “No comments” from a company make analysts and investors depend on external sources. This often ends with a very pessimistic analysis about your company as an investment case. To communicate risks and keep transparency in a downturn is a challenge, but it will create trust. A proactive communication always gives you the opportunity to be one-step ahead of the market, while reactive communication means that you constantly are running behind.

2. Discuss market drivers and risks

How do you explain that it is possible to upgrade the company’s growth targets to 10 % when your industry only is estimated to grow by 5 %? Your growth targets will be considered as unrealistic and a weak link in your strategy, unless if you further explain the most important market drivers and where the company see growth opportunities.

The success factor is to explain and educate the market about macro financial triggers and statistic that has an impact on your business. Trustful financial communication demands that you discuss both opportunities as well as risks.

3. Tell the market that you execute by your strategy

Many Nordic companies have revised their long-term strategies during the year. But most often the strategy consists of a graphic illustration in the Annual Report.

Tell the market that you execute by the company’s strategy. This is easily done by continuously referring to development in strategy during quarterly presentations or if the company does organisational changes or acquisitions, end each statement with “as in line with our strategy…”

A management that execute by strategy is considered trustworthy and competent.

4. A trustworthy strategy must include measurable financial goals

A vast majority of the companies I meet are very reluctant to give guidance or estimates about growth targets and turnover. “We will be punished if we can’t deliver as promised”.

My argument is instead that a strategy or cost savings program with no measurable goals has very low credibility. Milestones and financial targets make it easier for investors and analysts to understand and follow your long-term targets.

5. Fast and accurate internal reporting procedures are a must

Malfunctioning internal reporting processes can cause tremendous consequences for a company and it’s management. Swedish HQ Bank is just one example. Ericsson’s profit warning three years ago is another case of worst practice. That the company partly blamed their internal reporting process for causing the profit warning did not help to restore the crash of confidence.

The market has an exaggerated tendency to misinterpret negative as well as positive statements about profits and losses. Make sure that any quotes about turnover originate from the company’s internal analysis and figures. Fast and accurate internal reporting procedures are a must.

6. Make the CFO and IRO visible

Since Lehman Brothers got erased from the financial map CFOs and in many cases also IROs have become a safe harbour for investors; explaining any deviations on financial results and margins.

That IROs have been rewarded for their efforts and advanced to more strategic positions was mention in an earlier post “Nordic IROs on the move – advances in to strategic positions”.

That several Nordic CFOs have been appointed top positions is another trend confirming their growing importance as a “safe harbour”. For example Ericsson’s former CFO Hans Vestberg succeeded Carl-Henric Svanberg as CEO in January this year. Danske Bank recently appointed CFO Tonny Thierry Andersen head of Danske Bank Denmark.

The market will continue to be sceptical and information demanding as long as there is an imminent threat of a double dip. Numbers will be analysed and interpreted different depending on the recipient’s knowledge about your company and industry.

The importance of CFOs and IROs skills and knowledge will continue to grow in the aftermath of credit crunch and will be crucial to win and gain the markets confidence. To succeed you need to increase transparency and most important of all, prioritise to educate the market when it comes to macro financial triggers and how this statistics affect your financial results as well as long-term strategies.

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