NAOS CEO Insights

CEO INSIGHTS – Week Ending 5 October 2018 By NAOS Asset Management

October 5, 2018

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"Now, data is interesting but we're not really interested in it... We look at others' loyalty programs and their big data schemes and we really question the true value that’s delivered to customers...What we'd rather do is keep our business simple, focus on what matters most to customers, because it’s great quality products at the lowest possible price." Tom Daunt, CEO, Aldi Australia

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.

Consumer Behaviour

"Customers are now choosing from a broader range of beers — there's actually now 80 breweries in Queensland alone and more than 500 across Australia and all of these dynamics lead to a gradual decline in the mainstream beer market.” Dan Holland, External Relations Director, Lion Nathan

"These millennials are changing the way everyone eats and drinks. They're turning away from the older brands that the previous generation, their parents, thought were there for granted, and they're reconsidering completely their options.” Emmanuel Faber, CEO, Danone

"Most of our customers come two to three times a week and are spending 20 to 25 minutes at a time. They are using the supermarket primarily as a pantry." Anthony Mellowes, Chief Executive Officer, SCA Property Group

Supermarkets

"Now, data is interesting but we're not really interested in it... We look at others' loyalty programs and their big data schemes and we really question the true value that’s delivered to customers...What we'd rather do is keep our business simple, focus on what matters most to customers, because it’s great quality products at the lowest possible price." Tom Daunt, CEO, Aldi Australia

Retail

"We’ve seen a number of retailers in the last 6 to 12 months getting into financial difficulty. And what every retailer is going to do now is look to reduce their costs - so they will look to reduce staff." Russell Zimmermann, Executive Director, Australian Retailers Association

Property

"It is clear that the property market is undergoing a cyclical correction, impacted further by matters raised during the course of the royal banking commission and the tightening of credit, particularly in off-the-plan contracts executed some time ago across several Australian centres." Amelia Hodge, CEO, Australian Property Institute

Domestic Economy

“Business conditions are positive and non-mining business investment is expected to increase. Higher levels of public infrastructure investment are also supporting the economy, as is growth in resource exports. One continuing source of uncertainty is the outlook for household consumption. Growth in household income remains low and debt levels are high.” Phillip Lowe, RBA Governor, October Monetary Policy Statement

US Economy

“We’re excited about this change [raising Amazon minimum wages] and encourage our competitors and other large employers to join us.” Jeff Bezos, CEO, Amazon Inc

“I am glad to be able to stand here and say that the economy is strong, unemployment is near 50-year lows, and inflation is roughly at our 2 percent objective. The baseline outlook for forecasters inside and outside the Fed is for more of the same.” Jerome Powell, Chairman, US Federal Reserve

Media

“The Audio [market] is hot. We haven't seen an interest in audio like this in 20 years.” Bob Pittman, Chairman, iHeartMedia

Automotive Industry

"This [the Reserve Bank's new payment platform] means the end of that situation where you're standing on your driveway at 10 o'clock at night, about to hand over your keys to someone who says they've paid for your car – but you've got no way of proving that, or whether the cheque they've handed you is going to bounce." Cameron McIntyre, CEO, Carsales.com

Global Energy Supply

“It’s clear that Europe will need more imports, indigenous production in Europe is in decline, we will need to import in Europe from multiplicity of sources. Russia has been a very reliable supplier of gas for many decades ... The cost of supply of Russian gas is probably one of the most competitive.” Ben van Beurden, CEO, Royal Dutch Shell

Financial Services

"Trading services also saw a strong year of revenue growth. This was particularly pleasing as traded equity volume on the exchange was effectively flat year-on-year." Dominic Stevens, CEO, ASX Limited

Insurance

"I hope this [commenting on Freedom Insurance] is the 'royal commission effect' and businesses are realising they are doing the wrong thing by customers and it's not good business, it shows that shareholder interests and consumer interests are not polar opposites.” Susan Quinn, Senior Policy Officer, Consumer Action Law Centre 

Banking

“I strongly believe the more we look after our customers, the more we look after our communities, I think it will be in the interest of the bank in the longer term.” Mike Baird, Chief Customer Officer, NAB

"The economic landscape is changing. Slower housing credit growth, lower house prices and stagnant wage growth will have an impact on revenue across the industry…. We remain in a highly competitive environment." Jon Sutton, CEO, BOQ

Telecommunications

“Telstra has now provided new or improved mobile coverage for more than 55,000 homes and businesses across 4200 kilometres of road and around 160,000 square kilometres of the country through the Federal Government’s Mobile Black Spot Program."  Andy Penn, CEO, Telstra

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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