Investor Relations communication priorities and recommendations while COVID-19 remains a threat to business performance
Since COVID-19 began adversely impacting the global equity markets, we have been in close communication with clients, investors and bank analysts. Based on these conversations, we present below communication priorities and high-level recommendations for investor relations teams while COVID-19 remains a threat to a company’s business performance.
Companies can expect to receive questions on many of the subject areas we address from a number of stakeholders. Senior management and IROs should be prepared to answer their questions as thoroughly as possible, based on information that is currently available to them.
In many cases, answers to most questions would include a discussion of material non-public information. Hence, consider widely and simultaneously disclosing the relevant information in the form of a press release, regulatory filing, a posting to your company’s investor relations website, or a publicly-accessible conference call. With regard to the IR website, consider a status update on the landing page, being careful to notify the Market whenever you update its content. As one example, we are, in some cases, encouraging clients to supplement a traditional press release with a letter from the CEO that puts a COVID-19 business update in a controlled context where you can also reinforce your people-centric approach to business or ESG-related messaging as applicable. Such a letter could be posted to your company’s website, leveraged across social media platforms, distributed to media contacts and shared with employees.
Generally, we advise proactively communicating any current material impact or expected impact from COVID-19 as well as subsequent events, such as the sharp decline in oil prices. If you do not “speak”, others will “speak” for you, whether it is the sellside or financial media. Accordingly, proactively communicate, frame your company’s strengths as well as explain measures being implemented to mitigate potential risks associated with the pandemic. Of note, a number of our clients in the travel sector have taken these steps.
We stand ready to provide advice and support, as needed.
Communication priorities and recommendations
- Talk with bank analysts with the aim of ensuring that their research reports will accurately reflect your company’s current situation and outlook;
- Know who your investors are, particularly top shareholders, which will enable you to reach out to them;
- Emphasize any balance sheet strength that will enable your company to weather the impact of COVID-19 and continue meeting any debt obligations. Investors will want to understand how your company is managing its liabilities in order to gauge liquidity;
- Explain any significant currency exposures and related hedging, with respect to the importing of goods and services and to liabilities in foreign currencies that are not offset by revenues in those currencies;
- Highlight precautionary measures that your company is implementing to mitigate risks related to COVID-19, such as lower customer demand levels;
- Offer an assessment of any existing or expected disruptions to your company’s supply chain, and explain related contingencies;
- Be prepared to speak to any scenario analysis and planning that your company has undertaken. This may include sharing best-, most-likely, and worst-case scenarios from the perspective of future demand as well as production and service levels;
- Highlight any cost containment/cash preservation measures that are being implemented, such as hiring, compensation and travel freezes or the renegotiation of payment terms with suppliers;
- Be prepared to discuss the carrying value of assets and the likelihood of needing to write down impaired assets;
- When and if necessary, update performance guidance, which can take the form of suspending or revising guidance;
- Highlight any opportunities arising from COVID-19, such as lower input costs (e.g. airlines benefiting from lower oil prices) or taking advantage of falling interest rates to refinance debt on more favorable terms (assuming that borrowing power has not been diminished);
- Once the equity markets begin to settle, be ready to proactively market your company to investors, many of whom will be seeking opportunities at new price levels. This will necessitate a robust investor marketing strategy.
We are available to discuss a plan of action with you.
Monique Skruzny – CEO, InspIR Group, New York, firstname.lastname@example.org +1 212 661 2243
Fabiane Goldstein – CEO, InspIR Brasil, São Paulo, email@example.com +55 11 98103 0201