NAOS CEO Insights

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

January 18, 2019
“We’re serious about playing our part in reducing unnecessary plastic packaging.”
Alison Watkins, Managing Director, Coca-Cola Amatil Ltd
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.

Global Economy

"We see the biggest risk in the global economy is one of talking ourselves into the next recession as opposed to the underlying fundamentals taking us there."
Mike Corbat, CEO, Citigroup Inc
"From what we see, economic growth is stronger and more resilient than recent market volatility would indicate."
Mike Corbat, CEO, Citigroup Inc



"So I think the scale element in the end of the day is what drives it [cost efficiency], more than some magic potion we have at Digital Realty to lower our cost."
Andy Power, CFO, Digital Realty [global data centre company]
“Outdated financial and regulatory barriers are still slowing down innovation and growth for online businesses, but it’s no longer an option to make plans to expand internationally in one, two, or five years.”
Mac Wang, Head of Australia and New Zealand, Stripe [payments processing platform]



“One of the primary drivers for the forward market uplift [electricity futures] has been incorporation of increased input costs of both gas and coal.”
Josh Stabler, Managing Director, Energy Edge 
“New data from Queensland’s ports revealed total coal exports of 223 million tonnes (mt) surpassing the last record by 2 mt set in 2016……according to the International Energy Agency (IEA) Australia’s net exports of coal is forecast to increase by 20 percent by 2040 while the Office of the Chief Economist said Australia’s coal earnings are on target to generate more than $67 billion in 2018–19 making it Australia’s largest commodity export.”
Ian Macfarlane, Chief Executive, Queensland Resources Council



"I think that what is happening is that a whole lot more people have gone into business and all those plants have come on line. They're all selling into the market at once and when that happens the price drops dramatically."
Jenny Kompara-Tosio, Owner, Brackenridge Berries [Blueberries]



"Kmart sales growth during the period (November - December) was impacted by, the planned exit from the low margin DVD category, weaker sales in apparel categories particularly womenswear and moderated growth in everyday products compared to the 2018 half-year."
Rob Scott, CEO, Wesfarmers
“There is no doubt when you look back on the last half, when customers are reading about house price issues and seeing cost-of-living pressures in areas like fuel and electricity, that does have some impact……But we still feel that consumer spending is reasonably robust.’’
Rob Scott, CEO, Wesfarmers
"A refined approach to our event and promotional activities resulted in a lift in sales during our two busiest months [Nov & Dec]. This was a good outcome in a challenging retail environment."
Andrew Lowe, CFO, Michael Hill International
“Competition both in local bricks and mortar and online has been fierce in our sector for some time now. While this was to be expected, the directors had been exploring options for funding to enable Ed Harry to continue to compete and grow, however to this point have been unsuccessful.”
David Clarke, Managing Director, Ed Harry [menswear retailer in receivership]


"A lot of the big advertising deals coming through now are including television, digital and print. That's happening already."
Hugh Marks, CEO, Nine



"We're in the business of going out, which is a very powerful sector when so many other sectors are under siege from the internet…..People have always wanted to go out and we're providing superior experiences in our theme parks and movie theatres.”
Graham Burke, CEO, Village Roadshow


"Leisure and corporate demand remain healthy, with strong bookings for the upcoming Martin Luther King and President's Day holidays, as well as the spring break period, and the overall outlook for corporate travel is positive."
Glen Hauenstein, President, Delta Air Lines
"The demand environment is solid."
 Ed Bastian, CEO, Delta Air Lines Inc

Australian Property

"We take market share in [property] downturns."
Jesper Brodin, Global CEO, Ikea


"[In 2015] We stepped back and looked at kind of the major trends that were going to impact this industry not only in the next one or two years, but over a longer period of time. And that's where you saw us make very important investments in autonomous [vehicles]."
Mary Barra, CEO, General Motors Company
"Well, I think, we've said it's [autonomous vehicle market] over a trillion dollar market opportunity and so that's why we think it provides huge opportunity."
 Mary Barra, CEO, General Motors Company

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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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