I play a little game each
year. It’s called “Recessionate!” and involves spotting the most over-used
words in annual results announcements and matching it to where we are in the
economic cycle. It’s pretty straightforward: “solid” or “resilient” is used for
the middle of a slowdown (as in, “we made solid progress despite a difficult
economic backdrop”) “strong” indicates the middle of a growth period, and
“excellent” usually points to imminent financial Armageddon.
The last time I wrote
about this was in January 2013, when lots of companies had had a bad year:
“solid” was therefore the order of the day. Aviva made “solid
progress”, despite losing £3 billion, and BP even managed to lay a “solid
foundation for growth in the long-term”. There were lots of “difficult economic
backdrops” and “challenging economic conditions”, although most companies were
“well-positioned to deliver future growth”.
This year was a hard one to call. “Strong” featured
prominently in a number of announcements, not least for commercial real estate
companies (Unibail, Land Securities, Hammerson) Technology companies went
off-script. Apple even described its results as “exceptional” – usually a big
no-no for results announcements as it implies they might be unrepeatable.
Elsewhere, “competitive” made a big appearance in any consumer-facing company
(Unilever, Sainsbury’s) and the “challenging” backdrops and markets were still
there. “Well positioned” was another winner, (BP, incidentally, has moved from
its solid foundations to be “well positioned to face challenges”) particularly
for companies with a “clear strategy” who are “focused on growth”.
This semantic analysis matches the real world,
where it’s pretty hard to work out what’s going on economically. However it
still serves to demonstrate the surprisingly strict unwritten code governing
this type of announcement, which I experienced recently during a ‘critical read’
of a client’s announcement. They had used the word “strong” three times on the
same page, and I tried in vain to find direct equivalents. “Good”? Doesn’t
convey the same force, and somehow implies the sales might have been an
accident. “Robust”? Not bad, but perhaps a bit too close to the
slowdown-appropriate “resilient”. “Outstanding”? See comments on “exceptional”
above.
A former boss took this code to its ultimate
conclusion: he said there was no point in
sweating blood over the chairman’s quote for a results announcement as it can almost
always end with the words, “I look forward with confidence to the future”. I
was therefore delighted to read the end of Glencore’s statement :
“As the most diversified
raw material producer and marketer, Glencore is well positioned to react to and
benefit from changes in commodity fundamentals… We look forward to the future
with confidence.”
