CEO INSIGHTS – Week Ending 17 March 2023

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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Banking & Lending

“It does seem inevitable that some banks will now need to pull back on lending to shore up their balance sheets, and we’re likely to see stricter capital standards for banks” Larry Fink, CEO, BlackRock

“But generally, what we tend to see is a very high correlation between credit quality, the strength of the consumer and employment, right?...And so generally speaking, our expectation is so long as people keep working that we're going to continue to see a relatively constructive credit environment” John Gamble, CFO, Equifax Inc

Telecommunications & Technology

“In a global world you’re never going to be fully decoupled from an economy like the US, but especially because the links between the US and Australian tech industries are growing, stepping in early to ease [bank run] contagion risks is very welcome” Kate Pounder, CEO, Tech Council of Australia

“The competition NBN faces to win and retain customers is intensifying” Stephen Rue, CEO, NBN Co.

Digital Media

“Since the emergence of digital, Getty Images has always competed against what is essentially an unlimited universe of imagery and there are literally trillions of images out there” Craig Peters, CEO, Getty Images Holdings Inc

“When we look at the macroeconomic situation…whether it's consumers, whether it's small and medium businesses, whether it's enterprises globally, I think the reality is that digital for them is imperative” Shantanu Narayen, CEO, Adobe Inc

Logistics

“The recent departure of a major player in the refrigerated transport market [Scott's Refrigerated Logistics] combined with further industry consolidation has resulted in an unprecedented surge in demand for logistics services” Market Statement, Lindsay Transport Australia Ltd

Building & Construction

“Look, it’s a really tough time for the industry. A lot of the smaller players have taken on a lot of fixed-price work during the peak of the cycle. And then, of course, inflation followed later; some material and labour became constrained, and therefore there’s pricing risk” Tony Lombardo, CEO, Lendlease Group

“For our industry, the combination of weak productivity growth and accelerating wages is not a good one. It risks damaging the industry’s long-term competitiveness” Denita Wawn, CEO, Master Builders Australia

Labour & Employment

“Every state I’ve been in recently and every business I’ve talked to for the last year has said, ‘the one thing holding me back is labour’” Ross McEwan, CEO, National Australia Bank Ltd

Consumer Behaviour

“[During COVID], business books did well as people start to think about starting businesses, as well as self-help and meditation, New Age and all that sort of thing – navel-gazing was really strong…Now all that self-help and New Age, that’s all gone. People have gone back to cooking, so cooking has had a bit of a revival” Nicholas Croydon, CEO, QBD Books Group

Semiconductors & Supply Chain

“Coming to our outlook. Important core economic indicators such as growth prospects in the individual regions, our expected inflation rates [both] remain challenging. On the other hand, we expect that in 2023, the structural shortage of semiconductors will improve and the supply with raw materials and logistics will gradually stabilise” Arno Antlitz, CFO, Volkswagen Group

“[Our] supply chain situation is improving step-by-step and therefore we have a positive outlook for 2023 and remaining still on a high level of order intake” Oliver Blume, CEO, Porsche AG

Agriculture

“I mean it's [fruit] an industry that gets a lot of free publicity from the medical profession…I think as well, the pandemic forced a lot of us to reassess our healthy eating habits. And I think there's very strong health and wellness trends that are underpinning the demand and the growth” Rory Byrne, CEO, Dole plc [major multinational agricultural company]

Commodities & Resources

“Australia has all the minerals in the world you need for batteries, and right now, it’s like selling water in a drought. To put it into perspective we could open one giga factory a month for six years and not meet the current undersupply of batteries” Brian Craighead, CEO, Energy Renaissance Pty Ltd [Australia’s leading lithium-ion battery manufacturer]

Retail

“Overall, we expect the consumer to remain prudent in their spending, wanting to shop but continuing to be very focused on price…Cleaner inventories among retailers should tighten the competitive environment and help to lessen the use of markdowns” Dennis Secor, CFO, Guess? Inc

Domestic Economy

“Australia is in very good shape, and then you lay on to that the very big contracts around the submarines, you lay on all the infrastructure builds that Australia wants to do, you then put 195,000 of immigration coming into the country, and then you say to yourself, ‘well, what’s the impact on housing? It’s going to be positive over time because they’ve got to live somewhere” Ross McEwan, CEO, National Australia Bank Ltd

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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. 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.