Wednesday, July 28, 2010

Culture and Share Value - Is There a Link? BP Case Study For Investor Relations Professionals

Is there a link between share price and a company's culture?

What is the role of the investor relations professional in communicating culture to investors?

Where did BP go wrong?

Why is culture now so important?

What are your thoughts on BP's latest move announced in the media?

*BP's new boss vows 'change of culture'*

BP's new boss Bob Dudley has vowed to "change the culture" of how the company tackles safety issues following the oil spill disaster in the Gulf of Mexico.

Outgoing chief executive Tony Hayward will step down from his job in October, and will be replaced by Mr Dudley, who has been in charge of BP's clean-up operations in the Gulf.

Mr Hayward told a conference call that he has been "demonised and vilified" over the oil spill, and the company cannot move on in the US with him as leader.

White House spokesman Robert Gibbs says the departure of the BP boss does not mean the company is abandoning its responsibilities in the Gulf.

"I don't think a lot of people in any country are feeling overly sorry for the former CEO of BP," he said.

Mr Dudley says the oil spill has been a "wake-up call" for his company.

"Sometimes events like this shake you to the core, the foundation, and you have two responses," Mr Dudley told America's ABC News.

"One is to run away and hide. The other is to respond and really change the culture of the company and make sure all the checks and balances are there, just to make sure this does not happen again."

Mr Dudley says his top priority is to permanently seal the Gulf well, contain the crude spill and to clean up and restore the area's beaches.

"We'll be doing that for a long time and that is my number one focus, particularly over the next month-and-a-half," he said.

Mr Dudley praised Mr Hayward, whose PR gaffes handling the oil spill made him a target of fury in the US, for laying "the foundations for a strong focus on safe and reliable operations" at BP.

US congressman Bart Stupak, one of the leading congressional investigators into the Gulf spill, says he worries that Mr Dudley is not a true reformer.

He says he fears BP board members are "playing a high stakes game of musical chairs and simply rotating top leadership into different high-level posts."

- Source: ABC/AFP

Need help with investor relations and culture? Our specialist skills can help. Enquire now here.

Monday, July 26, 2010

Wesfarmers Results Positive For Investor Relations Message

Investor relations tips are hard to come by.

But if you're planning an investor relations strategy or looking for investor relations advice or an investor relations consultant, Wesfarmers, a listed Australian company with its head office in Perth, is one Australian company setting high standards.

Investor confidence and a fair price for a stock is a balancing act in terms of how much information you release to investors.

This is called the investor relations balancing act. Yes, you have to be compliant and meet the regulators laws on materiality and continuous disclosure.

Wesfarmers certainly has reached "best practice investor relations" with its latest efforts.

Investor confidence is driven by positive numbers (sales, revenue etc) but also by execution of strategy and quality of strategy.

Wesfarmers has the numbers but its implementation of strategy is the standout from an investor relations perspective.

Wesfarmers results are impressive after increasing sales by 4.3 per cent at its Coles supermarket business over the past year in a turbulent market.

For example, sales at Coles for the 12 months to June 27, 2010 totaled $29.77 billion compared with $28.55 billion a year earlier.

More importantly, Coles' sales for the fourth quarter to June 27 totaled $7.448 billion, up 5.5 per cent.

The company in its investor communications said the retail division's sales performance for the year was solid overall, especially given the positive impact of the government's stimulus payments on sales in the prior corresponding period, which had now worn off.

"Good progress continues to be made on growth strategies across the group's retail businesses, with customers responding well to improvements in product range, value and service," Wesfarmers chief executive Richard Goyder said in the statement.

Great detail on strategy.

"Over the last 12 months, our retail businesses have established or reinforced sound business platforms and have strategies in place to further improve the customer experience."

This is a great example of communicating a message that the results highlight excellent strategy implementation.

Need help with investor relations strategy, advice and implementation? Contact us now.

Friday, July 23, 2010

Tough Times For Investor Relations Professionals At Nokia

Spare a though for investor relations professionals at Nokia trying to implement an investor relations plan.

How do you find a fair price for your stock if your CEO says to the Board "Back me or sack me!".

This is exactly the investor relations challenge at Nokia, the only company outside the US that is consistently listed in the world's Top 10 brands.

What is going wrong at Nokia that has investors in a crisis of confidence?

Well there is speculation about the future of CEO Olli-Pekka Kallasvuo of the Finnish-based company.

Nokia is the world's biggest mobile phone producer but is struggling to compete against the so called "smart phones" of Apple and Google.

Shares in Nokia have falled 66 per cent since Apple launched its iPhone in June 2007.

This is an investor relations nightmare and add to this speculation about the future of the CEO and this creates a very uncertain time for Nokia's fragile investor confidence.

What investors look for is:

1. Execution of strategy
2. Quality of strategy
3. Credibility of management
4. Experience of management

It appears Nokia is failing on all of these fronts.

Want help with your investor relations strategy? Contact us now?

Thursday, July 15, 2010

Investor Relations Professionals Hit By Turn In Investor Sentiment

Investor relations professionals are doing it tough at the moment.

An investor relations professional or investor relations consultant who provides investor relations advice to publicly listed companies is facing multiple challenges because of the volatility in the marketplace at the moment.

This is an ideal time to fine tune your investor relations strategy and invest in investor relations activities.

The more uncertain the market, the more negative the market sentiment the more important it is to reassure and communicate with investors about your vision, mission and business strategy.

Within larger companies the typical investor relations professional provides advice to the CEO and Board. In smaller organisations this may be outsourced to investor relations consultants or the role is taken on by the company secretary.

Their job description is to be responsible for the monitoring, investigation and management of all the company’s current and potential investor relations activities including managing relationships with shareholders, prospective investors and associated entities.

Specific responsibilities may include:

• Analysis of a company’s share registry
• Analysis of trends relating to the industry sector
• Actively develop the company’s corporate profile
• Establishing and maintaining a clear line of communication with investors and stakeholder enquiries
• Management of investor relations activities including developing and maintaining relationships with shareholders, stock exchange, media, regulatory bodies, industry associations and appropriate community organisations
• Oversee the distribution of company reports, analysis and information to investors, prospective investors and stakeholders
• Advisory on and management of investor and ASX compliance issues: and
• Advisory to the CEO of trends, significant changes and analysis of the broader market.

So a recent survey has found investor sentiment has turned negative and this is a big challenge for investor relations professionals.

Here's the full release.

Australian investor sentiment turns negative as investment returns drop sharply

· Appetite for Australian shares hardest hit

· Investors continue to view US economic recovery with caution

Australian investor sentiment has plummeted according to the quarterly ING Investor Dashboard Sentiment Index released today, as investors reel from poor investment performance and look for safe haven assets. The shift sees Australia fall to second-last of 12 countries in the Asia Pacific region in June 2010 - a stark contrast from its equal second positive sentiment position held in March.

The survey measures investor sentiment across 12 countries in the Asia Pacific region, focusing on changes in market sentiment, investment attitudes, investment performance and the financial situation of 3,792 investors. These factors are quantified and averaged resulting in a sentiment score. The Australian portion of the survey was conducted amongst 307 investors with liquid assets of US$100,000 or above.

Expectations for poor investment returns weighed heavily on sentiment with only 46% of Australian investors expecting higher returns over the coming quarter, compared to three months ago when 75% of investors expected positive performance. This outlook reflects immediate past experience with only 35% of investors reporting positive returns for Q2, compared to Q1 when 72% of investors achieved a positive performance from their investments.

Investors believe higher interest rates are bad for the economy

The outlook for higher interest rates also contributed to falling sentiment with 82% of investors expecting domestic interest rates to rise further during 2010 and 70% believing any rate hike would have a negative impact on the economy.

"Clearly the expectation of further rate rises is a concern to investors and this is likely to impact their future investment decisions," said Martin Donnelly, Head of Distribution and Deputy CEO of INGIM.

Fears of ongoing troubles in global markets remain. The majority of Australian investors continued to view a US economic recovery with caution and 88% are not anticipating a return to pre-GFC levels for another two or three years. However, Mr Donnelly warned of the downside of being too cautious. "Investors with an overly bearish outlook for the US economy run the risk of missing out on return upside from Australian companies which are leveraged to a US recovery which is our expectation," said Mr Donnelly.

INGIM expect that US economic recovery will take centre stage and be the biggest positive in the world this year. US productivity is improving; corporate profits are up; industrial production is growing; and US manufacturing is expanding. Consumption is also strong and restocking is also beginning to take place while interest rates remain low. The stimulus packages of last year coupled with a resumption in the flow of credit has begun to translate into economic growth and the cost cutting story of 2009 is translating into a positive earnings story for 2010.

Europe was less of a concern in the short term with 64% of Australian investors believing the European debt crisis will not affect their investment strategy. However 57% expect Europe's ongoing woes will have some impact on global economic growth in the long term.

Australian investors, along with those in Indonesia, were the most upbeat about China's future prospects with the rest of the surveyed countries believing there is a higher chance China's economy will overheat. "Interestingly, Australia and Indonesia are the two countries that would be most affected by a slowdown and so have a vested interest in its continued economic boom," Mr Donnelly added.

Safety reigns as appetite for riskier assets drops

Australian investors are flocking to cash deposits, gold and bonds with bonds at their most popular level since the GFC. This flight to safety is further reinforced by over a third (35%) of investors expecting further share market falls and looking ahead six months, only 33% of investors considering investing in high growth stocks - down from 54% last quarter.

"The ongoing volatility in the Australian equity market has had a big effect on investor confidence and we expect many to retreat to the sidelines for the remainder of the year", Mr Donnelly said. "However, we believe that despite the recent pullback, the upward trajectory of the Australian equity market remains intact driven by fundamental value reflected in the one year forward Price/Earnings of all companies which are at 11 times versus a long run average of 14 times. Last year was a beta year. 2010 is shaping up to be an alpha year where true stock selection will be paramount."

Need investor relations advice, investor relations education, investor relations training for your CEO, Board or Executive leadership team. Contact Thomas Murrell, investor relations business educator and consultant.

Friday, July 09, 2010

The Three R's of Crisis Communications

If you have a crisis how do you handle it? What are the best crisis communication strategies and crisis management tools?

Here's a simple way of communicating:

Regret - The spokesperson should show sincere regret that it has happened. You can release a media statement to apologise, but nothing is more sincere than to the words coming out of a real person as opposed to have the apology coming from a text.

Reason - Your spokesperson should take this opportunity to clarify through the result of the investigation to clarify these questions with reason.

Remedy - What is the solution?

Need help dealing with a crisis? Consider our bespoke crisis management programs and crisis training and consulting services. Enquire here.

Friday, July 02, 2010

Mining Tax Backflip Improves Investor Relations

Prime Minister Julia Gillard's back flip on the super resources mining tax is an effective public relations strategy.

As predicted in this blog weeks ago, there was a 90 per cent chance this tax wasn't going to go ahead because it was a very bad public relations campaign and changed Australian politics in the most dramatic way.

Effective public relations use is a fine art.

In this case investor relations is the winner because share prices have increased and hundreds of millions of dollars worth of stalled investments will be going ahead.

This will bring much joy to investor relations professionals who seek to find a "fair price" for their stock in the investor relations balancing act.

Investor relations professionals with Rio Tinto, Xstrata and BHP Billiton will be delighted as the new policy cuts the headline rate of the tax from 40 per cent to 30 per cent and includes a raft other measures to placate mining bosses.

In a master public relations tactic it has been rebranded as the Minerals Resources Rent Tax.

New name and new message will help in public relations writing and the sell to the Australian public.

It doesn't matter the new tax will only apply to iron ore and coal because this is a public relations strategy winner as the general public don't care about detail.

They're just interested in their investments in the share price and their super portfolio. Again more joy that will add gloss to investor relations strategies for the mining sector.

Need help with public relations, public relations training, public relations writing, public relations strategy, public relations plan, public relations tips, public relations resources, public relations courses, media relations, media influence and investor relations?

Enquire here.

Thursday, July 01, 2010

PR War Hots Up In Kimberley Over Gas Hub

The public relations war is hotting up in the Kimberley region in Western Australia over the proposed multi-billion dollar gas hub.

Premier Colin Barnett (picture ABC) in Perth is pulling out all of his 30 plus years of public relations training when he said he was disappointed the Kimberley Land Council (KLC) was not able to sign the Indigenous land-use agreement by today’s deadline.

His public relations strategy has taken a hard line approach when he added the government would not give an extension for talks.

The public relations plan takes a new twist because a native title lawyer has warned the State Government will have to continue negotiating with opponents of the Kimberley gas hub even if it tries to compulsorily acquire land for the project.

What public relations tips will the Premier use to win public and stakeholder support in planning to take a proposal to resume the land to cabinet within weeks?

He's already on the front foot with this grab on ABC TV last night.

"The core amount of land is very small. Someone said if the whole of the Kimberley where the equivalent of the Melbourne Cricket Ground, we are just taking one seat."

In terms of public relations writing, this is a brilliant metaphor to describe a very complex issue.

In terms of public relations resources and public monies, the State Government has spent $16 million over the past two years funding negotiations and geotechnical studies at the proposed hub site to be located at James Price Point. This is a huge amount in any body's books.

And, this is just in the lead up negotiations.

It had also extended the deadline three times before and this is a key plank in the public relations campaign.

The KLC had failed to reach an agreement with various Aboriginal groups that are claiming native title over the gas hub area.

“I’m disappointed that the Kimberley Land Council has not been able to sign the indigenous land use agreement particularly as agreement has been reached on the site and on the whole detail of the $1.5 billion benefits of economic and social and housing and other matters for people in the area,” Mr Barnett said.

Again, clear messaging in the public relations strategy.

Mr Barnett said he will talk to the KLC before making a decision on what the next step is, and anticipates that a decision will be taken to cabinet in the next few weeks.

He added that compulsory land acquisition is not a long process, saying that it could take 18 months.

Woodside Petroleum is looking to use the Kimberley gas hub for its $20 billion Browse gas project, however a final decision between all the partners in the project has yet to be made.

Watch this space because this is just the beginning a major PR campaign to win public support for a massive resources project.

Need help with your public relations strategy within the resources sector? Contact us for a free initial consultation.