Best practice: Peter Kruse at Danish wind power company Vestas
His wife pointed to the newspaper ad and said, ‘You could do this.’ Peter Kruse considered it: the world’s largest wind turbine manufacturer, Vestas Wind Systems, generating over $5 bn annual revenue, needed someone to tell its story. Kruse knew he could do the job. At 45, he was among Denmark’s most experienced IR practitioners with stints as analyst, portfolio manager, salesperson and, most recently, IRO at a couple of Danish companies. He just wasn’t entirely sure how to do it.
Since its 1998 listing on the OMX Nordic Exchange with a market cap of $100 mn, Vestas’ stock had been on a sustained roller-coaster ride with a legacy of profit warnings and other surprises. ‘People had become more focused on the stock price than the company,’ recalls Kruse. ‘But to survive on the stock exchange you have to ensure your customers and the market know what’s going on inside your company.’
Kruse admits that this epiphany came several months after his May 2006 appointment as vice president of group communications at Vestas. He has subsequently watched as Vestas’ stock price (aided by a restructuring) has roughly tripled while its corporate reputation has soared. ‘People had this image of Vestas as a bunch of blacksmiths building primitive towers with propellers,’ says Kruse. ‘The fact is that wind turbines conceal some of the most difficult design challenges imaginable and require the talents of a diversity of highly educated people. The world simply did not know what was going on at Vestas.’
Kruse says Vestas has three priorities: overseas, overseas and overseas. ‘That’s where we can influence the global energy agenda,’ he notes. ‘That’s where most of our employees and investors are, and that’s where we will grow a global Vestas brand.’
That brand is largely his brainchild. As head of investor relations, corporate communications and marketing, the entirety of Vestas’ message boils down to Kruse. ‘I have the privilege of having many more tools at my disposal than most IROs,’ he says. ‘That gives me great responsibility, but also a great opportunity to push the message.’
Among Kruse’s first initiatives was the production and publication – in six languages – of two quarterly magazines: VestasInside and Win[d]. ‘They help create more transparency by providing bits of the puzzle so analysts and investors can build the Vestas picture for themselves,’ he says. Another ‘picture building’ scheme was the creation of a web-based news portal in cooperation with The NewsMarket, an online source of video for the media, allowing TV stations access to stock footage and news clips. ‘We have pole position on a green mega-trend,’ Kruse observes. ‘We are using that to get access to major news networks. Wind turbines are big, kinetic and make great TV.’
They also look pretty impressive up close. Accordingly, about once a month, Vestas opens the doors of its Danish facilities to analysts and institutional investors. ‘When they see our production, they can build on that impression,’ explains Kruse. ‘At the same time, seeing hard-working, flesh-and-blood people is more powerful than showing numbers on paper.’
Every second month, Kruse and his CEO, Ditlev Engel, also spend an entire day on the phone in analyst-organized teleconferences and one-on-ones. ‘The idea is to make it easy and profitable for our analysts to work with Vestas,’ says Kruse.
Vestas’ stock had always been liquid but the power of a global brand has accelerated the trend. Today it is Copenhagen’s most traded stock, turning over about 1 percent daily. That kind of liquidity attracts plenty of institutional money and, with more than 60 percent of the company already owned by non-domestic shareholders, there are no plans for an overseas listing. ‘Capital can move freely so it wouldn’t help us much anyway,’ notes Kruse. ‘Besides, being a big fish in a small pond gets us more airtime.’
The quest for airtime does, however, take Kruse away from Denmark four times a year. Vestas began quarterly reporting shortly before he took on the IR job, and the press conferences on the back of those interim figures are held in London and webcast in six languages. ‘It’s a big organizational task to move everything to London,’ Kruse admits. ‘But it’s worth it because we get fast access to CNN, BBC, Bloomberg, the Financial Times, and so on.’
Altogether, Kruse spends about a third of his time on the road. He makes a point of combining both money and media during roadshows. ‘It makes a lot of strategic sense to get our CEO on the front page of major news publications,’ he observes.
Pointing to the likelihood of big order swings from quarter to quarter, Kruse thinks quarterly reporting doesn’t always make much sense from a commercial point of view. ‘But it does make sense in terms of our goal to be more transparent,’ he says. As for what sorts of investors are attracted by all this transparency, Kruse is ambivalent. ‘We would like to see continued liquidity and an ownership that geographically reflects the business,’ he says. ‘Otherwise, I have no preference whatsoever.’
Accordingly, Vestas does no formal investor targeting. ‘We need people with different views,’ explains Kruse. ‘Targeting one set of people means they would have the same opinion on everything and liquidity would dry up.’ At the same time, for reasons not clear to Kruse, almost 90 percent of Vestas’ 80,000 shareholders are registered. That privilege gives Kruse a ‘fantastic line of sight’ into Vestas’ owners.
International investors, however, remain one group very much targeted by Vestas. ‘Demand is very strong,’ says Kruse. Much of that demand has been in the US and Engel and Kruse have become regular visitors to Texan oil and gas country. ‘We make a point of doing a roadshow in Dallas,’ says Kruse. ‘It helps us understand how energy money thinks.’
Indeed, Kruse wants Vestas perceived on a par with traditional energy producers. ‘When we present ourselves, we want to be next to the oil and gas guys,’ he says. ‘We are not promoting Vestas as a left-wing, green alternative but as a mainstream business on a par with oil and gas.’
That said, as the global agenda increasingly focuses on cheaper and more modern energy sources, Vestas is determined to take advantage of its environmental bent. ‘It sounds over-ambitious for a small company like ours but we are well positioned,’ Kruse says.
If not quite messianic, Kruse is definitely passionate about the wind power message. ‘Of course you work to make money but I am lucky also to have a chance to help make history,’ he concludes. ‘Only our imagination limits the size of the global footprint we leave.’
What the analysts say
‘As head of technology strategy research, I have irregular contact with companies and don’t issue individual ratings. Still, I’ve always received helpful comments from Peter and his team. You get a straight story and have a high level of confidence in their response.’
‘Peter has many jobs at Vestas, but is still one of the most available IR managers I know. One of his tasks is to make the industry look more like a traditional energy provider and, increasingly, that’s just how I see it.’
‘There’s no doubt the company has improved communications with the market. Of course, the level it started from wasn’t very high, and there’s still room for improvement. The question for investors has always been costs and the firm could still provide far more disclosure in that area.’