Inside the IR program of award-winning small cap Borregaard
Norwegian small cap Borregaard uses natural, sustainable raw materials to produce advanced and environmentally friendly biochemicals that can replace oil-based products. Earlier this year, the company scooped its first IR Magazine Award for best overall investor relations (small cap). Here, IR director Jørn Syvertsen shares the secrets of the Borregaard team’s success.
What are the most popular investor queries you receive at Borregaard?
In general, investors are keen to understand our rather unique business model, and also how changes in the economic environment influence our short and long-term earnings.
What are your current IR challenges?
We are a small company with a unique business model, and we are active in many different market segments. It is sometimes a challenge for investors to understand the business sufficiently to make an informed decision. In our communications, we target investors that know us well and potential investors that are learning about us for the first time. This means we must communicate in a way that is interesting and meaningful to both groups.
The company is in the middle of an active period with substantial expansion investments. Investors are interested in understanding the effect of these investments on the future development of the company, top line, bottom line, and so on. Our policy is to not guide in numerical terms so we need to find ways to help investors and analysts make their own estimates.
What is the one ‘hot topic’ for the team at the moment – for example, Mifid II or ESG? And is Borregaard doing anything specific around these issues?
It is still too early for us to draw a conclusion on Mifid II in our day-to-day work, but we are watching it closely. Perhaps things will become clearer as we move into next year. So far, it has mostly been business as usual with banks and brokers.
ESG has become an important topic we are focusing on in different ways. We have created an internal group to handle sustainability and governance matters and their communication to investors. We are engaged in active dialogue with investors, analysts and companies offering ESG ratings to investors. The latter is an industry in the making, and different methodologies make it challenging to compare the different ratings.
In your opinion, what is the most important thing IR teams can offer to investors?
We do our best to explain the business model and the dynamics of the markets where we are active, including indirect competition. In-depth knowledge about these factors is very important for IR teams. We try as much as we can to be available at all times, and to respond quickly. Equal treatment of investors and an honest and open communication are also very important.
What, if anything, does the Borregaard team do differently from others? What makes the team so successful?
We probably do the same things as other IR departments, but when we were listed six years ago we decided to give priority to IR. This means many key people and experts in our company contribute actively in preparing our investor communications, and our CEO and CFO are quite often on roadshows, meeting investors at seminars, and so on. We travel a lot and spend quite a lot of time on roadshows and other initiatives where we can meet investors. We are actively looking for feedback, and we try to identify areas where we can improve our performance.
We also participate in the Norwegian Investor Relations Association where we can learn from other companies. The people in our team are quite experienced and have many years of service with the company in various positions and we often hear from investors that this is helpful, as we can answer many questions in an informed way without having to consult too frequently with colleagues. We also have a good relationship with banks and broker houses, and this has been very helpful for us.
What top practical tips would you like to share with other IR teams?
Travel and meet investors, and be patient. Remember that IR is a long-term effort and trust is built over time. Do not hesitate to communicate negative events in an open manner. This was the advice given to us by IR in our former mother company when we were spun off and listed, and we have tried to live by this.
What are you most looking forward to in terms of Borregaard’s future IR activity?
We have just had our capital markets day, which we do every second year; it’s quite an effort involving many people. We now look forward to communicating the completion of our investment projects and reporting on progress made as a result of these initiatives. In general, we very much enjoy the day-to-day contact with analysts and investors and the small and big events that require our attention.
What is your biggest IR success to date at Borregaard?
It is sometimes difficult to judge what is a success. We have had three capital market days where we got very positive feedback, and this is important to us. We have also been complimented for our communications with respect to some complicated and potentially negative events that influenced our business. In addition, there was a long-term effort to build up an investor base in a specific geographical region that turned out quite successful.
We have also been fortunate to receive some prestigious awards for our IR work, both in Norway and abroad, not least our IR Magazine Award – Europe 2018. Winning awards is not a goal for us as such, but we always feel very honored, and it is a great motivator for us to continue to do our best in IR.