"We [the guitar industry] don’t have a problem attracting new interest. We have a retention problem. Because the 10% who commit to the instrument have a lifetime value to the industry of about $10,000. They buy, on average, five to seven guitars, a lot of them Fenders. If we were to reduce the abandonment rate of first-time players by just 10%, we have the potential to double the size of the entire industry"
Andy Mooney, CEO, Fender Musical Instruments
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.
China
"Looking into the future, China will expedite its journey to transform from an export-driven economy to a consumption-driven economy. We believe consumption and the service sector will become new benchmarks to bring new growth potential to China."
Daniel Zhang, CEO, Alibaba
Finance
"We see the Australian market as very exciting; it's unserved by domestic banks and we've been welcomed as a new participant in supply-chain financing"
Lex Greenshill, CEO, Greenshill Capital [global provider of supply chain finance]
"Customers continue to experience a reduction in the availability of finance and delayed finance approvals."
Market Announcement, Villa World Ltd
"We expect the economic and interest rate environment to become more demanding."
Kess van Dijkhuizen, CEO, ABN AMRO
Travel
"Demand has weakened in both the corporate and leisure sectors, driven by lower levels of consumer and business confidence, consumer spending and the impact of the Federal Election."
Market Announcement, Virgin Airlines Australia
Environmental, Social and Governance
"In relation to packaging, we’ve heard the community message loud and clear – unnecessary packaging is unacceptable"
Ilana Atlas, Chairman, Coca-Cola Amatil Ltd
Automotive
"External trading conditions in the national automotive retail sector remain challenging with the overall new vehicle sales market declining 8.1% to the end of April 2019."
Martin Ward, CEO, AP Eagers
Resources
"There is a growing disconnect between the location of the supply growth in the oil industry from areas that are consuming that oil."
Craig Stevenson, CEO, Diamond S Shipping Inc
Technology & Media
"We expect the Out Of Home [media] sector to continue to gain market share across media formats."
Brendan Cook, CEO, Ooh! Media
“I believe that there’s going to be people buying it [Samsung's new 5G phone]. We are seeing tens of thousands of customers buying it already. And today is the first day you can actually buy it”
Hans Vestberg, CEO, Verizon Wireless Inc
“The fragmentation of traditional media is the biggest challenge we face. Getting your voice in front of those customers is harder than it’s ever been, especially if you want to avoid the spiral of paying Google more for each click."
John Guscic, CEO, Webjet Ltd
Agriculture & Farming
"Whilst a drier than average autumn is forecast for parts of Eastern and Western Australia, dry sowing winter cropping programs have begun and recent rainfall in certain geographies has been helpful"
Travis Dillon, CEO, Ruralco
Recent rainfall events have encouraged re-stockers to re-enter the cattle market to compete with processor and feedlot buyers, supporting cattle prices in the short term"
Travis Dillon, CEO, Ruralco
"We are in a favorable cycle of protein, favorable supply/demand and a low cost of grains combinedwith the consumption of protein in Asia [which] has been growing for some time."
Gilberto Tomazoni, CEO, JBS [ Australia’s largest meat processor]
Ecommerce
"There's one big world out there and an unabating trend of convenience [e-commerce]."
Greg Goodman, CEO, Goodman Group Ltd
"I don't see any of the young people I know wanting less convenience, whether it's food or whether it's goods."
Greg Goodman, CEO, Goodman Group Ltd
"Over the next 10 years, online penetration of the $500 billion [luxury fashion] industry is expected to grow from 10% to 25%. "
Jose Neves, CEO, Farfetch [UK listed online retailer]
US Property
“The fourth quarter [of 2018] was probably, holistically, the worst quarter we’ve had as an industry since the downturn, and we ended the year with a tremendous amount of inventory. In December, if you were to talk to anybody, there was, potentially, a house was never going to be sold in the U.S. again. It was that bad.”
Sheryl Palmer, CEO, Taylor Morrison Homes
Miscellaneous
"We [the guitar industry] don’t have a problem attracting new interest. We have a retention problem. Because the 10% who commit to the instrument have a lifetime value to the industry of about $10,000. They buy, on average, five to seven guitars, a lot of them Fenders. If we were to reduce the abandonment rate of first-time players by just 10%, we have the potential to double the size of the entire industry"
Andy Mooney, CEO, Fender Musical Instruments
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.
