Best practice: Guidance
Presentation, Henryk Deter, Board Member cometis AG – IR conference 2018 (IR2018)
The companies’ future is traded on the stock exchange. Investors and analysts therefore look very closely at the forecast reports of the companies. The requirements for forecast reports are not conclusively regulated in German legislation. Companies should formulate forecast reports carefully and precisely. The effects of publishing a forecast are quite significant:
- Managing expectations on the capital market
- Indicator for planning ability and thus organizational quality of the company
- Premise for a meaningful external company valuation
- External corrective for achieving internal goals
Key takeaways for formulation of the outlook report
1.Underpromise, overdeliver. But don’t exaggerate, or you’ll lose your credibility.
2.Be specific, but give yourself room for manoeuvre, e.g. by thresholds, intervals or qualitative additions.
3.Make sure you are always aware of current market expectations.
4.Make underlying assumptions and scenarios (“if then”).
5.Report each quarter on the state of forecast achievement. Failure to give evidence for insecurity.
6.Be honest about adjustments made during the year. Better to correct in time, to avoid destroying trust in the long term.