Mark Hynes - thoughts on corporate disclosure

Opinions on changing rules, changing best practices, and their effect on investor relations officers.

Thursday, October 09, 2008

What a week; how can IR react?

As we start the long climb back to a 6000 FTSE (how’s that for a positive start!) a group of IRO’s gathered in London over the last 2 days to consider their strategy. When most booked to come on the training course that I moderated on Tuesday and Wednesday this week, few could have predicted the turn of events.

IRO's for big cap companies from major companies are finding this hard enough; this group was from more emerging economies such as Poland, Russia, Czech Republic, Estonia, with South Africa, Japan and Germany providing delegates as well.

Inevitably we discussed what IR should look like in times like these, and I thought I would share the conclusions. Clearly there is no silver bullet, but the group identified some things IRO’s can do specifically.

First don’t panic. The scale of the market changes are felt across the board, and are affecting everybody. Rushing out communications on damage control measures is unlikely to be helpful. Start with an internal assessment of how the changes have impacted the company, and any strengths and weaknesses revealed.

For emerging market companies, this assessment is likely to include how the national economy is perceived, as well as the sector. IRO’s from those markets are well used to having to explain their own economy and its challenges as part of their investor presentations.

A next step is to ensure the companies monitoring capabilities are first rate. Stepping up shareholder identification and capital markets insight programmes is vital. Check media monitoring systems, and ensure that the company can respond quickly and broadly through the media to any negative coverage of the sector or company – and of course leverage any thing positive!

“Communicate” will be a key watchword as always. Cash always becomes king in difficult markets and any cash conservation or generation measures should be highlighted. Researching and communicating how well the company is placed relative to its peer group in areas such as exposure to price inflation and the short term effects of downturn are key, and should be exploited.

The non financial value drivers – assets not accounted for on the balance sheet but which nonetheless drive valuations – provide great communications opportunities. Patent and regulatory approvals, licences granted, management experience of difficult times, staff training resulting in improved customer service, market share enhancements, all provide communication opportunities. And simple reaffirmation that the corporate game plan remains on track can help.

All of which for under pressure IRO – especially those in emerging markets – will help sustain value.


Post a Comment

<< Home