CEO INSIGHTS – Week Ending 4 November 2022 By NAOS Asset Management

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.  

Housing & Renovations

“Residential remodelling drives the majority of our sales, and customers are deferring purchases and trading down” Jeffrey Lorberbaum, CEO, Mohawk Industries [world's largest flooring company]

“Whilst net [insurance] claims incurred are expected to increase, it may take some time for changes in the economy to flow through to delinquencies and claims paid. 3Q22 delinquencies and claims incurred continue to be very low” Market Statement, Genworth Mortgage Insurance Australia Ltd

Commercial & Industrial Property

“The last 12 months, there has been stupidity with regards to [industrial] land prices” Greg Goodman, CEO, Goodman Group Ltd

“We’ve been running long enough now to see the ways companies are using [workplace] flexibility is not just a passing phase. We can see those mega-trends people are talking about are reflected in the [our] numbers” Balder Tol, Country GM, WeWork Australia.

Semiconductors

“Despite a slight improved chip supply, shortages are proving to be more persistent than we anticipated” Jurgen Rittersberger, CFO, Audi AG

Television & Streaming

“When you talk about scheduling [specialist channels], there’s actually some really good automation to make them happen. I think it comes back to that point that people are sick of searching [for content]” James Warburton, CEO, Seven West Media Ltd

“The marketplace is hungry and willing to pay a premium for live content” Nick Khan, Co-CEO, World Wrestling Entertainment Inc

“What we are seeing now as sports shift into streaming is a duplication of the dual revenue stream cable [TV] model that made traditional sports networks so valuable, a healthy subscription fee, coupled with a mass audience, that is attractive to advertisers” Nick Khan, Co-CEO, World Wrestling Entertainment Inc

Energy & Resources

“But to no doubt, we're in a market that we really haven't seen probably in my career in terms of the overall tightness on supply and demand” Michael Wirth, CEO, Chevron Corp

“But right now [due to having the majority of the world’s rare earth production], the rest of the world can only decarbonise with China’s permission” Tom O’Leary, CEO, Iluka Resources Ltd

Mining Services

“I'd like to be more bullish and certainly say sitting here at high 80s oil prices and the other commodity prices that we would see more activity. But again, it's customer discipline...They're enjoying higher commodity prices, and they're not spending money that we would see historically” Bradley Dodson, CEO, Civeo Corp [multinational mine site accommodation & service provider]

Domestic Economy

“If we don’t put a big dent in our transport emissions, by getting more EVs on the roads, it will put unsustainable pressure on other sectors like farming, manufacturing, construction, mining and energy” Behyad Jafari, CEO, Electric Vehicle Council of Australia

“The labour market remains very tight” Philip Lowe, Governor, Reserve Bank of Australia

Macroeconomic

“I think that environment of those inflationary costs are still going to be with us, that's particularly true in Europe, where we see energy costs going up dramatically as a consequence of the war” Richard Kramer, CEO, Goodyear Tire & Rubber Co.

Travel & Transport

“Travel demand was strong for both commercial and leisure segments, with volume well over 2019 levels” Joseph Ferraro, CEO, Avis Budget Group Inc

Consumer Spending & Behaviours

“We expect some pandemic-related trends that elevated demand to continue to subside…we are seeing a more cautious consumer today, but one that is willing to purchase an offering that provides good value.” Ravichandra Saligram, CEO, Newell Brands Inc [major consumer products conglomerate]

“We now see the effects of rising inflation and growing uncertainty weighing on customer demand” Jurgen Rittersberger, CFO, Audi AG

“Consumer demand is holding up strongly. We've also put in strong price increases in Western Europe, particularly the UK. And so far, we're not seeing any negative price elasticity because of that” Gavin Hattersley, CEO, Molson Coors Beverage Co.

“The last thing I'd say is that Gen Z is much more inclined to buy pre-owned and pre-loved goods, and so we're leaning into that trend” Jamie Iannone, CEO, eBay Inc

Food & Beverage

“Domino’s has seen some softening in delivery and an increase in carry-out, due to value-focused customers’ choices and an increase in more normalised pre-COVID occasions, including carry-out meals ordered during lunch times or after work in the CBD” Market Statement, Domino's Pizza Enterprises Ltd

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. It does not constitute an offer to purchase any security or financial product or service referred to herein. It does not take into account the investment objectives, financial situation or needs of any particular investor. Before making an investment decision, investors should consider obtaining professional investment advice that is tailored to their specific circumstances. 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.