Equity story, website, IR targeting, etc. - the key components of a successful financial communications strategy

An effective financial communication strategy makes a decisive contribution to a company's success. From maintaining investor relations to clearly communicating business results, various components play an important role. In this contribution, we take a closer look at the various aspects of investor relations (IR) and show how together they form the toolbox for stringent financial communication.

Investor relations is an essential part of communication for listed companies and deals with the relationship between a company and its existing and potential shareholders. Firstly, the aim is to achieve an appropriate company valuation on the stock exchange that can be maintained in the long term. Secondly – or because of this – the company in question also achieves a reduction in its cost of capital.

In our experience, the following instruments and measures have proven effective in achieving this goal:

• Equity story: This argumentation concept summarizes the presentation of a company with a view to the information requirements of investors. This includes the detailed business model (including risks), the markets served and their prospects, the company's own success factors in comparison with competitors, the quantitative and qualitative medium-term targets it has set itself, its long-term vision and the composition of the Board of Directors and Executive Board (including previous experience and other mandates). This information helps potential investors to assess the company independently.
• Reporting: Companies listed on the Swiss Stock Exchange (SIX) must publish at least a semi-annual report and an annual report. Depending on their size and sector, companies may also publish quarterly reports. These reports should be clearly structured and easy to understand. The annual report is often used by listed companies as a marketing tool to address investors or employees. It is now common practice to also include annual sustainability reporting in the annual report.
• Media releases: Stock-listed companies must communicate relevant events and developments promptly, be it the announcement of mergers and acquisitions, important contracts or changes in top management. Accordingly, media releases are important instruments for keeping investors up to date and strengthening confidence in the company.
• Website: A well-designed investor relations website is a central point of contact for investors to find information about the company, financial reports, presentations, and events. In addition, companies should provide regularly updated investor relations materials such as company presentations and factsheets. There is further potential in the form of videos with an IR focus, among other things. SIX also stipulates that interested parties can register for media releases on the website.
• Investor conferences: It is advisable to organize an investor conference in addition to the media release when the half-year report and annual report are published and in the case of important events (merger, change of CEO, etc.). This can take place physically, hybrid or purely virtually. Such conferences offer the opportunity to communicate directly with media representatives, investors, and analysts daily and, above all, to answer their questions promptly.
• Investor Day: Regularly organized investor days offer companies the opportunity to provide detailed insights into their revised business strategy, current projects and current and future financial development (including guidance). Such an investor day can also be organized under a specific (current) motto - for example, a pharmaceutical company can showcase part of its R&D development projects, a real estate company can present a relevant new building, or an industrial group can showcase a newly opened site. A successful investor day can attract the interest of potential investors and encourage existing investors to increase their shareholding.
• IR targeting: An important part of an investor relations team's role is also the strategic process of identifying, approaching, and attracting potential investors who are best suited to the strategic (and financial) direction of their company This creates a stable, supportive shareholder base. Depending on the sector, strategy, or also dividend policy, there are different “desired investors”.
• Thematic discussions: Depending on the current situation, it may be appropriate for a company to seek dialogue on specific topics. This may be the case, for example, if shareholders express concerns about corporate governance or other stakeholder groups have specific requests for information on sustainability activities or the salary model for members of the Board of Directors and Executive Board of the company in question. Direct dialogue with investors is also recommended in the event of a crisis or a transaction – for example, a friendly or hostile takeover of another company.
• CEO dinner: For long-standing shareholders and investors with relevant share packages, we also recommend the CEO dinner format, a kind of roadshow in a small and informal setting. Such an event is suitable, for example, for the introduction of a new CEO or CFO. Of course, the rules of SIX, which stipulate that all shareholders of the company must be treated equally, also apply to such a more personal exchange.
• Digital media: Social media platforms and other digital channels also offer companies the opportunity to publish the latest news and thus increase their reach.

A comprehensive financial communication strategy helps to strengthen investor confidence, promote the company's reputation, and ensure long-term business success as well as ensure an appropriate valuation.