Quality Magazine

Manufacturers Don'T Communicate Well with Investors

May 20, 2003
NEW YORK—Manufacturers are not communicating with investors and analysts as effectively as they think they are.

According to a survey by PricewaterhouseCoopers, just 8% of investors and 3% of analysts believe that manufacturers maintain an active dialog with them. Yet at the same time, 50% of manufacturers believe they are proactive in communicating with investors and analysts.

The survey results reveal that with investor cynicism about short-term earnings running high, good communication with the capital markets is more important than ever.

“Communicating more effectively with the markets should be at the top of manufacturing companies' boardroom agendas,“ says Richard W. Ellis, U.S. manufacturing leader for PricewaterhouseCoopers. “Our re-search has shown that at least 80% of investors and analysts think it would enhance management credibility and have a significant impact on price-to-earnings ratios and share prices.

“Those manufacturing companies that actively communicate with the markets...will have a better chance of creating long-term value and maintaining a market capitalization that reflects their true worth.“

Most manufacturing executives believe these companies create long-term value, but 60% believe the markets undervalue their companies.

The reason for this discrepancy may be that manufacturing executives and market analysts do not agree on key performance measures. When the survey asked executives and analysts to rank the importance of 30 key value indicators, the executives agreed on only six, while analysts agreed on 18.