NAOS CEO Insights

CEO INSIGHTS – Week Ending 18 April 2019 By NAOS Asset Management

April 18, 2019
“The level of ESG focus now from debt investors is growing at such a rate I do think this will flip at some point – the default will become sustainability or green focused bonds.” 
David Marr, CFO, Woolworths 
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.
Auto Finance
“We expect significant disruption in this [car loan] space, driven by regulatory change and technology advancements by both broker firms and dealer groups.”
Daniel Foggo, CEO, RateSetter 
Environmental, Social and Governance (ESG)
“The level of ESG focus now from debt investors is growing at such a rate I do think this will flip at some point – the default will become sustainability or green focused bonds.” 
David Marr, CFO, Woolworths 
“I want to get to a point where sustainable [ethical fashion] is not abnormal. It doesn't need to be in a different area – let's make it part of mainstream fashion.”
Erica Berchtold, CEO, The Iconic  
US Economy
“If you look at the American economy, the consumer is in good shape, balance sheets are in good shape, people are going back to the workforce, companies have plenty of capital. It could go on for years. There’s no law that says it has to stop. We do make lists, and look at all the other things: geopolitical issues, lower liquidity. There may be a confluence of events that somehow causes a recession, but it may not be in 2019, 2020, 2021.”
Jamie Dimon, CEO, JP Morgan 
“We saw a significant slowdown in IPO activity as a direct result of the government shutdown, which weighed on sentiment and kept issuers and investors on the sidelines. Despite the rebound in equity and credit markets, we saw lower client conviction.”
David Solomon, CEO, Goldman Sachs 
“While GDP growth does appear to be slowing somewhat, we still see good consumer and corporate engagement.”
Michael Corbat, CEO, Citigroup Inc 
“We look at a whole host of metrics as you would imagine whether it's days delinquent and all of those important metrics and we're not seeing any signs of significant concern.”
Michael Corbat, CEO, Citigroup Inc  
Chinese Consumer
“As far as watches are concerned, the main driver of the growth, and I take a sort of 10-year view, has been China - and China had some slowdown.”
Jean-Jeaques Guiony, CFO, LVMH 
“If we look at the [vitamin] category in Australia, it is under pressure largely due to some of these small to medium daigous shifting their purchasing behaviour from Australian retailers to other channels.”
Aaron Canning, CFO, Blackmores  
“Previously we didn’t really appreciate the role they [daigous] played in the sales and marketing of our product. They are almost educating the Chinese consumer to our product.”
Marcus Blackmore, CEO, Blackmores 
Health and Beauty
“As we look out, we do see some raw ingredient cost increases coming at us and some commodity ingredient increases.”
Aaron Canning, CFO, Blackmores 
“Despite increased competition in the health and beauty market we held market share.”
Richard Vincent, CEO, Australian Pharmaceutical Industries 
Oil and Gas
“In terms of market tone, regional leadership remains constructive on demand with the caution that was evident last November largely gone. The exception, as I mentioned, was oil and gas. We haven’t seen the weakness in that market deepen, but we have seen it broaden across more of our regions.”
Holden Lewis, CFO, Fastenal [a goods distribution business in the US] 
“This year the drought has been very tricky for most of the East Gippsland wineries.”
Tony Dawkins, Co-Owner, Glenmaggie Wines 
“It's very hard to get occupancy rates higher than [what we have]. Every hotel here is reporting pretty good numbers this financial year.”
Glenn Bourke, CEO, Hamilton Island Global
“Notwithstanding positive volume growth, we saw a moderate slowdown in the growth of like-for-like volumes during the third quarter, particularly in Europe which is consistent with broader macroeconomic conditions in that region.”
Graham Chipchase, CEO, Brambles 
 “But then we have a perfect storm like we’ve seen in the last 18 months in plastics. You’ve seen slowing markets, a huge spike in resin prices, a jump in energy costs and massive fall-off in the Aussie dollar.”
Johnathan Ling, Chairman, Pro-Pac 
Investment Management 
“Annuity sales continue to be impacted by lower Japanese sales and general disruption in the Australian financial advice market.”Richard Howes, CEO, Challenger 
“While [childcare] occupancy challenges driven by supply growth are present in some areas, all States have continued the momentum that was built in the second half of 2018.”
Gary Carrol, CEO, G8 Education 


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.

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