NAOS CEO Insights

CEO INSIGHTS – Week Ending 15 February 2019 By NAOS Asset Management

February 15, 2019
"The Virgin Australia Domestic business is performing at an all-time high notwithstanding the higher fuel price environment"
John Borghetti, CEO, Virgin Australia Group
 
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.
 
 
Retail
 
"In the Christmas quarter and January there has been increased volatility and a bias in customer purchasing towards key promotional periods"
JB Hi-Fi ASX Announcement
 
Global Economy
 
"There is no question that the momentum of growth in the United States has slowed. That said, economic activity in the United States is still chugging along pretty well. I think we're in a position, at the moment, where we should see reasonable growth during the course of the year. The chance of recession in 2019 is quite small and the expansion should probably continue"
David Solomon, CEO, Goldman Sachs
 
Economy
 
"In the context of high household debt, currently weak income growth and falling house prices, the resilience of consumption growth is a key uncertainty for the overall outlook"
Reserve Bank Australia  
 
Finance
 
"I think consumers will be a net beneficiary from that recommendation [on phasing out payments from banks to brokers and replacing them with flat fees to be paid by the borrower]. When you have lenders paying brokers there always is a risk of conflicted advice"
Marnie Baker, MD Bendigo Bank
 
"I have a principal concern that is based on what I saw happen in the UK, that when you raise the cost of these businesses to the point where people who need advice can't get it I think that's unfortunate, but nevertheless we accept the recommendations"
Brian Hartzer, CEO, Westpac
 
"Even though lending markets remain highly competitive and we operate in an uneven playing field, our housing loan growth is tracking towards system, with a 2.7 percent annualised increase in 1H19"
Marnie Baker, MD, Bendigo Bank
 
"Our results for the first half have clearly been impacted by the difficult operating environment we're experiencing, with increased market volatility, industry disruption and political uncertainty playing out across the sector" 
Richard Howes, CEO, Challenger
 
Property
 
“We are seeing first homebuyers re-enter the market, which is pleasing, but second and subsequent buyers are not currently confident to contract prior to selling their existing home, so the transaction chain is slower across the board"
Peter Summers, CEO, AVJennings
 
"Most industries, including e-commerce, traditional retail and third-party logistics, are re-evaluating supply chains, which is driving the evolution of the industrial property sector"
Greg Goodman, CEO, Goodman Group
 
"There is a lot of noise out there at the moment and you can understand how consumers are probably more cautious at the moment and that must flow through - we have 300 stores across the country, we're going to be impacted by general sentiment……The offset to that is [fast-growing categories like] the connected home and connected technology and where technology fits in the household - when people have money they want to spend it"
Richard Murray, CEO, JB Hi-Fi
 
Cosmetics
 
"The market has been particularly buoyant. We believe it grew around plus 5.5%, which makes 2018 the best year in 20 years"
Jean-Paul Agon, CEO, L'Oreal Inc
 
"Trade was consistently strong throughout the half, including over the Christmas period"
Phil Ryan, CEO, City Chic Ltd
 
"The market is also accelerating, thanks to digitalization as beauty and digital are really a perfect match. Beauty, as you know, is a very visual and socially shareable category, which thrives on digital platforms. It is one of the most engaging categories online"
Jean-Paul Agon, CEO, L'Oreal Inc
  
Media
 
"The radio industry remains one of the most resilient sectors of Australian media, both from audience engagement and advertising interest, and I expect it to remain so in the foreseeable future"
Hamish McLennan, Chairman, HT&E
 
Airlines
 
"The Virgin Australia Domestic business is performing at an all-time high notwithstanding the higher fuel price environment"
John Borghetti, CEO, Virgin Australia Group
 
“The leisure sector is yielding strong outcomes based on good consumer confidence"
Geoff Smith, CFO, Virgin Australia
 
Packaging
 
"It has been a challenging start to the year…..Our results reflect significant input cost headwinds and weaker demand conditions in some sectors”
Raphael Geminder, Chairman, Pact Group
 
"We've been in tough economic times for the last couple of years. I don't see any sign of it improving"
Nigel Garrard, CEO, Orora
 
Telecommunications
 
"From our perspective, we're at the early stages of a complete transformation of communications from its legacy based on physical networks to its future based on software"
Jeff Lawson, CEO, Twilio Inc
 
"Demand for telco products and services continues to grow and telecommunications infrastructure is only going to increase in importance over the next decade"
Andy Penn, CEO, Telstra
 
Travel and Leisure
 
"What we’ve seen is that there is a generational shift in spending, where the millennial generation is moving more toward experiences rather than things"
Jim Tisch, CEO, Loews Corp [Fortune 500 Conglomerate]
 
"Roughly 30% of our pipeline is located in Asia Pacific, a region that continues to benefit from powerful long-term secular trends supported by a growing middle class in China"
Chris Nassetta, CEO, Hilton Worldwide Inc
 
Food and Beveridge
 
"Moderation trends continue to create new drinking occasions for our low and no-alcohol brands"
Jean-François Van Boxmeer, CEO, Heineken Inc
 

Why invest with NAOS? 

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.

NAOS Insights CEO Insights

Comments