NAOS CEO Insights

CEO INSIGHTS – Week Ending 2 November 2018 By NAOS Asset Management

November 2, 2018

"Recently, we are seeing a growing level of attention on companies that lack transparency, engage in socially unacceptable behaviour, damage the environment, or are governed in ways not aligned with shareholder or constituent interest. This trend continues to drive and fuel the growth of all our ESG products and services."
Andrew Wiechmann, Head of Strategy, MSCI Inc

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.

Domestic Construction

"Residential construction is holding up at strong levels but moderating in some parts, while infrastructure and commercial activity is strong and growing"
Mike Kane, CEO, Boral

"The infrastructure program in Queensland has not rolled out as quickly as expected"
Wagner, Chairman, Wagners Group

Domestic Economy & Retail

"We have a portfolio of businesses here that are going to give us growth. If the credit cycle slows and margins get depressed it might go lower for a period, but there are still good growth prospects in those portfolio of businesses"
Andrew Thorburn, CEO, NAB

“Mainstream Australian consumers at the moment are being a little bit careful with their spending"
Michael Daly, CEO, Rip Curl

"Overall vet market conditions remain challenging"
Greencross ASX Announcement

Domestic Property

"This decline [in company profits] reflects the moderating housing market conditions, tighter credit standards and increases in mortgage interest rates, which have resulted in a more subdued seasonal uplift than has historically been experienced by our business"
Georgette Nicholas, CEO, Genworth Mortgage Insurance Group

US Economy

“I also want to say that the U.S. consumer is alive and well… the wage rates are up, and people are spending. Consumer confidence is off the charts, new records. So, I think retail sales may have slowed slightly, but it’s not like, all of a sudden, we have a vacuum in the demand"
James M. Loree, CEO, Stanley Black & Decker

"At this point, a couple more interest rate increases are necessary to stabilize growth at a sustainable pace and stabilize the labour market, so it doesn't overheat."
Janet Yellen, Former Federal Reserve Chair

"There's no doubt that, like others, we're currently benefiting from a very strong [US] consumer environment; perhaps the strongest I've seen in my career"
Brian Cornell, CEO, Target

Chinese Economy

"In terms of consumption, at least in our categories ... we don't see any slowdown in China. What we see is a great appetite of Chinese consumers. There is also more and more income that has to be spent"
Jean-Paul Agon, CEO, L'Oreal

Commodities

“Favourable commodity prices, strong economic growth, and the global need for infrastructure will continue to drive strong end user demand across many of our end markets"
Jim Umpleby, CEO, Caterpillar

Health Insurance

“We would like to see any future government work with health insurers and all stakeholders to improve the efficiency of our world class, though not inexpensive, healthcare system.”
Steve Crane, Chairman, NIB

Media

"For as long as I've been in this business, radio has been a very powerful and influential medium. Relative to other media it's very cost effective"
Hamish McLennan, Chairman, Here, There & Everywhere

"More this past quarter, we had more women than men subscribe and we also saw the largest tick up in growth in people under 24, which I think is pretty interesting. I think that group has real willingness to pay, deep interest in news" Meredith Levein, COO, NY Times Inc"
Meredith Levein, COO, NY Times Inc

Travel

“Each month we’re seeing more international travellers visit Melbourne and more Victorians flying overseas, which demonstrates the rising popularity of air travel in and out of Victoria"
Lyell Strambi, CEO, Melbourne Airport

Agriculture

"The pig prices put a lot of people under pressure but it's likely to be the drought that drives some people out of business... We have some of the highest-priced grain in the world at the moment"
Rob van Barneveld, CEO, SunPork

Thank you for reading.

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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.

NAOS Insights CEO Insights

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