CEO INSIGHTS – Week Ending 17 November 2017 By NAOS Asset Management

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“I don't see any sign of slowdown in the ability to digitize cash. I think the best description an analyst had coming off of our Investor Day was something like, I like Visa because they have a weak competitor called cash” Vasant Prabhu, CFO, Visa

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.

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Oil

“We expect oil prices to remain in the $55 to $65 per barrel range over the medium term” Pedro Parente, CEO, Petrobras

Media

“Everybody is talking to everybody [about industry consolidation]” Peter Costello, Chairman, Nine Entertainment  

“Our ratings in this financial year are better than they were last year. The CEO has just upgraded profit guidance. It’s been a while since that has happened in the media business — we don’t feel any pressure” Peter Costello, Chairman, Nine Entertainment  

Agriculture

“I am pleased our core traditional businesses have again delivered strong organic growth, and there has been a positive turnaround in live export and water retail sales” Travis Dillon, CEO, Ruralco

“In Fertilisers, the Australian ag sector is well-placed having had good seasonal weather conditions over the last 12 months in many parts of the East Coast. The Australian ag industry is continually innovating to meet global food demand” Jeanne Johns, MD, Incitec Pivot

Beef

“We're seeing increased competitive activity from U.S. exporters. This is exerting downward pressure on commodity beef prices in many of our markets. We've [also] experienced upward pressure on feed prices, a result of the favourable seasonal conditions and this is affecting our cost of production” Donald McGauchie, Chairman, Australian Agricultural

“Consumer demand is growing at double digits for our ‘no antibiotics’ and ‘no added hormones’ natural fresh meats” Tom Hayes, CEO, Tyson Foods

Banking

“In terms of industries that are going through massive transformation from automation, I wouldn't put banking at the top of the list” James Gorman, CEO, Morgan Stanley

Commodities

“The Chinese are trying to upgrade the quality of the product and the types of coal they use, but they are also switching and taking more and more gas” Peter Coleman, CEO, Woodside Petroleum

“They [China] were saying there was a massive push from the government to reduce coal-fired emissions from power stations. Twenty-eight cities have to change over the next two or three years” Philip Byrne, Executive VP of Marketing, Santos

“Coal inventory levels in the U.S. are now below the long-term average, and subject to average weather conditions, the short-term outlook for coal demand looks good” Frankie Micallef, CFO, Incitec Pivot

Supermarkets

“I think we'll trade just as well with them [Amazon] here” Tom Daunt, CEO, Aldi Australia

Fitness

“People are wanting to get fit and get healthy. Australia's underlying problem is we still have six million people over the age of 18 that are considered to be obese, which is a BMI over 25. We are very comfortable in terms of a long-term trend globally in the fitness and wellness industry” Chris Hadley, Executive Chairman, Quadrant Private Equity

Domestic Economy

“What people are short of is cash. Discretionary income is under pressure” Tom Daunt, CEO, Aldi Australia

Housing

“It has been a very strong start to the year. We are delivering growth against the backdrop of favourable conditions for residential in Australia, with an increase in listings in the key markets of Sydney and Melbourne, while challenges remain in the developer, media and Asia markets” Tracey Fellows, CEO, REA Group

“Although housing, particularly multi-residential housing appears to have peaked, there is still a solid pipeline of work” Patrick Houlihan, CEO, Duluxgroup

“The outlook for our core market, the maintenance and improvement of existing homes in Australia and New Zealand remains positive” Patrick Houlihan, CEO, Duluxgroup

“Buyers are back in charge — you’ve seen that in clearances and listing rates” Cameron Judson, CEO, McGrath

 

Thank you for reading.

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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