OIT Times: Energy-Intensive Industries--What Wall Street Looks For

March 23, 2001

How is heavy industry viewed by analysts and investors? Michael Greenman of the Glass Manufacturing Industry Council put the question to the panel: Robert Clark of the Dow Jones Investment Advisor and Cindy Werneth, Director of Corporate Bond Rating Services at Standard and Poors.

Clark believes that heavy industry needs to communicate better with Wall Street, saying, erception is very much a part of Wall Street reality.He suggests that companies pay attention to cycles in the stock market and avoid talking about technology when trying to raise R&D funds. inancial people and venture capitalists are scared by change, and technology represents change./p>

Clark expects the current energy crisis to make an impact on Wall Street very soon. Rising energy costs re going to make heroes of companies that are energy efficient. It may only be 15 minutes of fame, but it will be your 15 minutes,said Clark.

Werneth explained that bond rating agencies assess the likelihood of full and timely repayment of financial obligations. The ratings, from AAA down to D, are used as a benchmark of credit quality within and outside the debt market.

Werneth used the Forest Products and Chemicals industries as examples of cyclical, capital-intensive industries with low labor costs, global competition, and commodity products. She advises that companies within these cyclical industries position themselves as low-cost providers with some diversity in product lines, a consistent business strategy, and financial flexibility. Werneth says that for the heavy industries R&D investment is not a large part of the ratingsmounts are small relative to the pharmaceuticals industry and others.

Werneth hasn seen investment in energy efficiency affect a company bond rating one way or the other, but Clark suggests that companies position themselves as energy efficiency champions to garner notice from Wall Street.