Nordic companies win top marks for openness

Independent research shows Nordic companies are ready and willing to talk

Nearly a quarter of a century ago, a wise old bird who ran the research department of a then leading, now long-gone, London stock broking firm, propounded his theory on the relationship between geographical factors and the approaches of companies to inquiring equity analysts.

‘Take Switzerland,’ he said. ‘Landlocked, no open borders to the sea and with four much bigger immediate neighbors surrounding it. No wonder its companies are so closed and unwilling to talk openly to outsiders.’ Then he described the Nordic countries: ‘Stuck up in the North Sea, at risk of being forgotten by their southern European neighbors and sharing hardly any borders with anyone. It’s hardly surprising they’re so open and welcoming to anyone who wants to visit them or talk to them.’

The world’s changed a lot since then but the openness of Nordic companies has been a constant. Year after year, when the team of researchers at Mary Maude Research calls on analysts and investors who cover the region, they find themselves talking to people who are pretty satisfied with the quality of IR service they get.

‘We talk to people in Nordic countries themselves and to analysts and investors from outside the region who cover Nordic stocks,’ says Mary Maude, CEO of the firm. ‘In general, they’re more satisfied than the people we talk to elsewhere in Europe – and beyond. Even this past year, there’s much less dissatisfaction with information flows here than elsewhere.’

Consistent change, please
For the Investor Perception Study, Nordic 2009/2010, the researchers asked some 125 respondents not just about the quality of individual companies’ IR but also about more general IR issues. They asked, for instance, what single thing the investment community would most like to see change in the typical corporate program.

Most wanted change in the quality of reporting and guidance; within that, a key demand was for consistency, the lack of which can trigger suspicion of duplicity. ‘Information should be consistent from year to year instead of changing shift, which could be an oversight or a deliberate attempt to hide something,’ said one Finnish analyst from the sell side. Or, as one Swedish buy-sider put it: ‘The biggest change would be not to change – be consistent.’

Encouragingly, it seems people covering Nordic stocks value the role of investor relations. ‘There should be more people employed in IR departments,’ averred a Swedish portfolio manager. ‘Sometimes there’s only one person and, for a global company, that’s just not enough.’

But overall there was relatively little dissatisfaction, especially in light of the heavy demands placed on IR of late. ‘In general, IR is as it should be,’ said a Danish buy-side analyst. ‘The large companies provide everything they can and although the smaller ones provide less, that’s usually in line with their budgets.’ And one UK sell-side analyst reckons the region is doing better than its neighbors. ‘Nordic IR compares favorably with that of southern Europe,’ he said.

Bright stars
So much for the general – what about the specifics of corporate IR programs in the region? In the event, there was little between the top three companies in terms of their scores for the best overall IR category, but Novo Nordisk edged into first place ahead of fellow Dane Danske Bank, which in turn was just ahead of Norway’s DnB Nor.

‘Novo Nordisk sets and maintains the IR standard. It is simply excellent at all things investor relations,’ said one respondent. The company did well right across the board in the research, taking top spot for its corporate governance and second place for the quality of its financial and corporate reporting. It was also just ahead of Danske Bank for best Danish company IR, although Danske Bank managed to turn the tables in the category for best IRO.

Martin Gottlob, Danske Bank’s IRO, takes the credit for changing the bank’s investor relations beyond recognition in the five years since he switched from being a banking analyst to running IR for Denmark’s leading bank. After his first year in the post, the company won the 2005 IR Magazine Award for most progress in IR; in 2007, it won the grand prix and best IRO, together with a couple of other awards. Last year, the trophy list was even longer.

One comment about Gottlob in this year’s research probably sums up why he is so good in this role and reflects his background: ‘He knows what we need before we have to ask for it.’

The Danes weren’t the only ones in the running, however. Across the seven categories of IR open to companies across the region, the top places went to three Danes, three Swedes and one Finn. Runner-up positions went to six Norwegian companies, five Finnish companies, four Danes and four Swedes.

Leading companies in Nordic IR

Best overall IR (large cap*)
Novo Nordisk (Denmark)

Best overall IR (small or mid-cap)
Getinge (Sweden)

Best investor relations officer
Martin Gottlob, Danske Bank (Denmark)

Best financial and corporate reporting
Stora Enso (Finland)

Best adaptation to the needs of IR in a downturn
Swedbank (Sweden)

Best corporate governance
Novo Nordisk (Denmark)

Best IR support by a CEO/CFO
Ulf Grunander, CFO & Johan Malmquist, CEO, Getinge (Sweden)

*Large-cap companies are those in the OMXC20, OMXH25, OBX 25 & OMXS30 in June 2009