CEO INSIGHTS – Week Ending 17 December 2021 By NAOS Asset Management

“Based on current estimates, to meet the needs of the growing population, we will need to produce more food in the next 40 years than we have in the past 8,000 years sustainably and while matching new consumer expectations. Think about this. This is the challenge of a lifetime” Juan Luciano, CEO, Archer-Daniels-Midland Co.

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.  

Retail

“I talk to the CEOs of almost every major retailer around the world. They are thinking full omni[channel] now. Like how do we engage with consumers digitally, not how do we attract them to our store” Dan Schulman, CEO, PayPal Holdings Inc

Banking & Payments

“I think there's more change going on in our industry today and over the next 3 to 5 years, than we will have seen in the past 10 or 20 years” Dan Schulman, CEO, PayPal Holdings Inc

“From where we sit today, customers have largely paid down their debts, repaired balance sheets, saved money and are now ready to get out there to invest and spend” Shayne Elliott, CEO, ANZ Banking Group Ltd

Labour Markets & Workplace

“Everybody’s still finding their way [back in the office] and then you get the omicron variant, who knows, we’ll have pi, we’ll have theta and epsilon, and we’ll eventually run out of letters of the alphabet. It’s continuing to be an issue” James Gorman, CEO, Morgan Stanley Inc

“We expect the war for talent to be a key theme over the next three-to-five years” Steve Johnston, CEO, Suncorp Group Ltd

Childcare

“There is no doubt that retention of educators is a real issue across the sector” Gary Carroll, CEO, G8 Education Ltd

Commercial Property

“We expect early-cycle rises in interest rates to have limited impacts on commercial asset values because they are associated with a strong economy” Darren Steinberg, CEO, Dexus

Health & Fitness

“2021 has been a challenging year for digital fitness and as I mentioned on our last earnings call, we have seen increasing pressures on CAC [customer acquisition costs] that are impacting the entire industry” Calvin McDonald, CEO, Lululemon Athletica Inc

Domestic Economy

“Car sales are expected to lift next year, home construction should continue to be strong, and already we’ve seen business registrations double since COVID restrictions lifted” Nick Hawkins, CEO, Insurance Australia Group Ltd

“One measure of economic activity is the commitment companies are prepared to make to media advertising, and we are seeing strong demand for TV and digital advertising across late 2021 and into the new year” James Warburton, CEO, Seven West Media Ltd

“The lockdowns have made inner cities very unappealing and prompted tree change and sea change moves. It has also triggered disruptions to the labour market, and induced early retirement decisions” Eliza Owen, Head of Research, CoreLogic

Airlines

“We know that for every dollar spent on a ticket a further $10 gets spent in the economy. It will no doubt take 12 to 24 months, assuming no further big demand shocks, to get demand back in balance” Jayne Hrdlicka, CEO, Virgin Australia

Consumer Behaviour

“There is pent-up demand, and consumers will want to treat themselves as a reward for two years of constrained choices” Amanda Lacaze, CEO, Lynas Rare Earths Ltd

Supply Chain

“I think we'll have a white-knuckle ride [into Christmas] not in consumer demand but in having the stock there for them to buy” Brad Banducci, CEO, Woolworths Group Ltd

Computers & Technology

“This demand momentum is unbelievable” Tarek Robbiati, CFO, Hewlett Packard Enterprise Co

Food & Agriculture

“Based on current estimates, to meet the needs of the growing population, we will need to produce more food in the next 40 years than we have in the past 8,000 years sustainably and while matching new consumer expectations. Think about this. This is the challenge of a lifetime” Juan Luciano, CEO, Archer-Daniels-Midland Co.

Pets

“A lot of us are focused on functional foods and beverages to increase health resiliency and we are extending that view to the pets we own in what is being called the humanisation of pets” Juan Luciano, CEO, Archer-Daniels-Midland Co.

Lithium & Batteries

“After decades of investment by the battery industry, we're starting to see that cost come down, approaching that $100 a kilowatt hour cost which is so pivotal for the tipping point for economics [of electric vehicles] to be on even footing or better as time goes on versus internal combustion engines” Eric Norris, Lithium CEO, Albermarle Corporation [major global lithium producer]

AdBlue / Diesel Exhaust Fluid Supply Crisis

“We’re effectively in a bidding war on an hourly basis” Simon Henry, CEO, DGL Group Ltd [Australia’s largest AdBlue manufacturer]

“Uncertainty can cause more damage than actual shortages, and the recent nervousness around urea and AdBlue is illustrating how vulnerable our supply chains can be” Innes Wilcox, CEO, Australian Industry Group

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.