IR Monitor – 28 August 2024

In this week’s newsletter:

• IROs sit at a unique intersection within organisations as gatekeepers, advisers, and traffic police. NIRI webinar, hosted by FTI’s Brandon Elliott, on the art of internal collaboration.
• Stock market chief’s float wave is a mere ripple: changing the rules in London is unlikely to open the floodgates, suggests Alastair Osborne in The Times. 
• Middle East firms face $50bn in trapped liquidity, reports Forbes, driving up finance costs. Companies face difficulty in convincing investors that recent improvements in working capital management are sustainable. 
• Investor newsletters remain a useful tool, according to practitioners interviewed by IR Magazine who argue the newsletter is the channel that receives most direct engagement.
• The Wall Street Journal offers up 5 big takeaways from this interim earnings season.
• And finally … Chief Executive Officers embrace selfie videos to talk up earnings and to prove that they’re not robots, warns Bloomberg. 

This week’s news

The art of internal collaboration in IR 

Last week, FTI’s Brandon Elliott moderated an engaging webinar for NIRI titled “The Art of Internal Collaboration: How to Work Effectively with Other Executives to Get Things Done”, where IROs, who often play the roles of advisor, gatekeeper, and peacemaker, were given a fresh playbook on internal collaboration. The session offered tips on transforming high-stakes meetings into harmonious decision-making hubs and highlighted the power of using diplomacy as a subtle yet effective tool. Emphasis was also placed on the critical need for cross-functional teamwork and how to keep everyone rowing in the same direction, underscoring the importance of sharpening leadership skills and of understanding the nuances of being a public company leader, especially when the stakes are high. 

Stock market chief’s float wave is a mere ripple – Alastair Osborne

Alistair Osborne suggests in The Times this week that despite Julia Hoggett, head of the LSE, promising a tidal wave of IPOs, the market has seen barely a ripple, leaving investors increasingly underwhelmed. With just four significant IPOs since February, including a Kazakh airline and a couple of niche tech firms, the wave looks more like a puddle according to the Osborne. Even attempts to “Wild West” the market by loosening listing rules have not been enough to tempt big names to UK shores. If this is Hoggett’s promised big wave, Osborne suggests that investors might want to stay dry as the UK market continues to struggle to lure in big names. 

Middle East firms face $50 bn in trapped liquidity – Forbes

According to a report by PwC, Middle Eastern companies are stuck with $50 billion in trapped liquidity, turning their balance sheets into a financial quagmire and putting an increasing strain on profitability, reports Forbes Middle East.  Despite 54% of companies showing better working capital in 2023, only 9% managed to sustain a positive trajectory for three years straight. As the region’s cost of debt skyrockets as interest expenses ballooned by 37% and debt costs jumped by 120 basis points, business leaders are increasingly honing in on working capital. The road ahead will require strategic financial management and resilience as companies navigate a high cost of capital and uncertain economic conditions.

Investor newsletters: a useful tool

In this IR magazine piece, IR professionals discuss how IR newsletters are still an extremely valuable tool amidst the growth of digital channels and social media. Patrick Kiss, head of investor and public relations at Deutsche EuroShop, argues “the two biggest advantages of an IR email newsletter are the personalization options and the asynchronous nature of the exchange,” with IR managers being able to target their recipients directly and recipients being able to decide for themselves when to read the newsletter – instead of having it get lost on a newsfeed. Whilst not everyone favours newsletters, with some voices pointing to a drain on already limited time and a lack of exciting stories, most professionals remained positive. Andrea Wentscher, BASF’s IR manager for retail investors said for instance “newsletters have a reputation of being an outdated communication tool but, in our experience, they continue to be a valuable supplement with manageable effort on our part and a consistently high number of subscribers.” 

5 big takeaways from this interim earnings season – Wall Street Journal

Corporate earnings have been placed under extra scrutiny this season, states the Wall Street Journal which broke down the five biggest takeaways from the interim earnings season. Whilst profits look strong across the S&P 500, with earnings jumping almost 11% year-on-year and beating analyst estimates, revenue lines have underperformed suggesting profits are being driven by cost-cutting and one-time items. Underwhelming revenue performance can be attributed to people budgeting more. For example, McDonald’s, Starbucks and Chipotle have noticed a decline in sales as low-income customers choose to eat out less & save. In the luxury goods sector, high-end shoppers have also been spending less – with Louis Vuitton and Dior indicating sales only rose 1% from 2023. Another takeaway is that high interest rates appear to be weighing on banks, who are forced to offer higher yields to prevent customers from moving their money elsewhere. Finally, the WSJ adds that big tech firms have not given up on their AI dreams and keep investing billions. However, investors were not fully supportive, which caused stock prices for four of the Magnificent Seven to fall. Meanwhile, analysts remain optimistic that earnings will rise this year. 

And finally…CEOs embrace selfie videos to talk up earnings & prove they’re not robots

Who would have thought we would see some of the world’s biggest CEOs creating TikTok-esque post-earnings videos – with the new trend being spearheaded by Blackstone’s President and Chief Operating Officer Jon Gray. According to Bloomberg, this new experiment aims to capture the attention of employees and customers in a different way. By removing corporate jargon and focusing on the larger brand story, CEOs are thinking about a new way to approach earnings and engage with a wider audience. Cristin Culver, a longtime PR professional, states that the videos are about “connecting with people on a human level” & making corporate chiefs more relatable. Executives who have jumped onto this trend include Spotify’s Daniel Ek, Ralph Lauren’s Patrice Louvet, Barclays’ CS Venkatakrishnan, Diageo’s Debra Crew, Royal Philips’ Roy Jakobs and Walmart’s Doug McMillon. Additionally, the piece highlights that as distrust in politicians and the media continues growing, people are turning to business leaders and their credibility.

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