CEO INSIGHTS – Week Ending 10 May 2019 By NAOS Asset Management
May 10, 2019
"I just want to briefly touch on the phenomenal growth of smart speakers in Australia. 5.7m speakers have been sold – 23% of the population now own one.” Ciaran Davis, CEO, HT&E [National radio station owner]
As part of the NAOS investment process, we pay particular attention to the comments made by company CEOs and business leaders in order to gain a greater understanding of the current investment environment and key trends that may be emerging. Below are quotes from the week which in our view detail some of the most important and prominent industry trends and economic factors impacting their businesses.
“If they [rates] get any lower, then many savers will not see the point in making deposits and seek higher risk alternatives.” Steve Mickenbecker, Group Executive Financial Services, Canstar [A financial comparison site]
“A hard Brexit will be really tough on Britain, and their GDP, employment, real estate values -- but a soft Brexit will be hard, too. They will not be the same center of financial services they are today 10 years from now even under a soft Brexit.” Jamie Dimon, CEO, JP Morgan
“Trading conditions during the last quarter of the year were tough. This has continued into March with the midscale and economy regional market RevPAR [Revenue per available room] where the majority of our business is down by more than – by just more than 4%.” Nicholas Cadbury, Group Finance Director, Whitbread PLC [the UK’s largest hospitality company]
Technology, Media & Telecommunications
“Every place -- whether it's our homes, our offices, factories, stadiums; every industry, from oil and gas to retail to agriculture, to financial services; everything from connected cars to connected refrigerators to smart surgical tools to smart copy machines -- are all being driven by software.” Satya Nadella, CEO, Microsoft Corp
“There is no doubt that podcasting is the next audio platform and will become mainstream once quality and discoverability issues are addressed.” Ciaran Davis, CEO, HT&E [National radio station owner]
“This is not a decision [to leave Australia] we have taken lightly, but with market conditions becoming increasingly challenging, we do not believe that the prospective returns in Australia are enough to justify continued investment.” Vic Darveym CEO, Purplebricks [Online real-estate agent]
“Looking ahead, the recent moderation in housing market conditions is expected to continue, reflecting pressure on lending due to tightening credit conditions, weak wage growth and increased levels of new housing supply.” Georgette Nicholas, CEO, Genworth
“It’s almost a decade since we’ve seen market conditions like these, especially in Sydney where the decline has been the most pronounced." Owen Wilson, CEO, REA Group Ltd
“Our result shows the impact of both lower refiner margins and a challenging retail environment this quarter.” Julian Segal, CEO, Caltex
“The longer-term outlook for refined, battery-grade lithium hydroxide remains compelling. Strong forecast end-market demand growth, particularly from the growing electric vehicle market, is expected to underpin longer-term lithium hydroxide pricing” Martin Donohue, CEO, Kidman Resources
Engineering & Construction
“In Australia, New Zealand we continue to experience some softness [in the Buildings, Infrastructure and Advanced Facilities segment].” Steven Demetriou, CEO, Jacobs Engineering
“The primary drivers for the decline in expected earnings include further softening of demand for construction materials in the residential market, increased competition from cement imports, increased competitive pressures in Queensland and higher costs of key raw materials compared to the prior year.” Adelaide Brighton Ltd ASX Announcement
“[The order book] is incredibly strong at the moment.” Louis Camilleri, CEO, Ferrari N.V.
“East coast Australian grain production was the lowest in over a decade and this has had a significant unfavourable impact on both our Grains and Oilseeds businesses” Mark Palmquist, CEO, Graincorp
“We’re seeing increased softness in parts of the domestic corporate market for May and June, particularly financial services, telecommunications and some areas of construction. Growth is also slowing in the small business market. We’ll have a better sense of how temporary this is after the Federal Election, which always has a dampening impact on travel demand.” Alan Joyce, CEO, Qantas
“Domestically, demand is mixed. The resources sector continues to grow and we’re capitalising on that with a lot of extra flying in Western Australia and Queensland. Leisure demand was very strong over Easter and is holding up well.” Alan Joyce, CEO, Qantas
“Premium rate momentum has continued into 2019 with average premium rates up by around 4% (ex CTP) in the first quarter, consistent with our experience in the first quarter of 2018. We have experienced positive rate in all of our divisions due to a combination of market conditions and our disciplined approach to pricing and risk selection.” Pat Regan, CEO, QBE Insurance Group
Important information: This material has been prepared by NAOS Asset Management Limited (ABN 23 107 624 126, AFSL 273529) (NAOS) for general information purposes only and must not be construed as investment advice. Certain economic, market or company information contained in this material may have been obtained from published sources prepared by third parties. Nothing contained herein should be construed as granting by implication or otherwise, any license or right to use such third party content without the written permission of the owner.