CEO INSIGHTS – Week Ending 18 February 2022 By NAOS Asset Management

“The strong trading conditions that we highlighted last year have continued, supported by established global trends such as humanisation of pets and premiumisation of [pet] products” John Cullity, CEO, EBOS Group Ltd

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 & Apparel

“Our tenant sales are now approaching pre-pandemic levels globally while traffic levels are evolving positively“ Jean-Marie Tritant, CEO, Unibail-Rodamco-Westfield SE

“Travel retail has experienced a significant rebound but is still far from the pre-pandemic levels” Nicolas Hieronimus, CEO, L'Oréal S.A.

“Retail trading conditions were subdued in January due to rising cases of the COVID-19 Omicron variant impacting both customer traffic and labour availability, but trading momentum has improved in recent weeks” Market Announcement, Wesfarmers Limited

E-Commerce

“We believe that the COVID-triggered acceleration of ecommerce that spilled into the first half of 2021 in the form of lockdowns and government stimulus will be absent from 2022” Amy Shapero, CFO, Shopify Inc

Health & Beauty

“Obviously, the beauty market has been transformed by the pandemic. Consumers want more health and safety in their products, more transparency, more sustainability, and more science in an ever more digitalised market” Nicolas Hieronimus, CEO, L'Oréal S.A.

Sport & Lifestyle

“I believe that currently, the inventory levels in the channel are probably the healthiest they’ve been [for the sector] in the last decade” Patrik Frisk, CEO, Under Armour Inc

“These structural shifts [behind golf market growth] include what we believe are long-term increases in remote and hybrid work, the increased desire to get out into nature, the momentum behind casual lifestyle apparel brands, the growth of new golfers with waiting lists to get into golf courses, and the growth and positive impact of off-course golf” Chip Brewer, CEO, Callaway Golf Co

Animals & Pets

“The strong trading conditions that we highlighted last year have continued, supported by established global trends such as humanisation of pets and premiumisation of [pet] products” John Cullity, CEO, EBOS Group Ltd

Agriculture & Farming

“When things are good, you’ll find that farmers are looking to increase their assets and they’re buying more land and putting their cash into machinery” Marnie Baker, CEO, Bendigo & Adelaide Bank Ltd

Defence Spending

“The trend is continuing when it comes to the defence budgets [globally], they are increasing all over the place” Micael Johansson, CEO, Saab AB

Macroeconomic

“I do think we need to front-load more of our planned removal of accommodation than we would have previously. We’ve been surprised to the upside on inflation. This is a lot of inflation” James Bullard, Board Member, US Federal Reserve

Domestic Economy

“We certainly haven’t seen the inflation [in Australia] that we’ve seen in North America” Brian Lowe, CEO, Orora Packaging Ltd

“The impact [of Omicron] has moderated in February” Market Announcement, Cleanaway Waste Management Ltd

Infrastructure & Construction

“New major projects remain slow to move into execution, despite the sizeable infrastructure pipeline” Zlatko Todorcevski, CEO, Boral Ltd

“We see now that the boost for our sector will expand longer and higher than just a one-for-one compensation of the [COVID] dip, because of savings redirected to renovation because of stimulus plans” Guillaume Texier, CEO, Rexel S.A. [major multinational electrical supplies distributor]

“This [construction demand] is anecdotally supported by our home builder customers generally now placing orders for their customers 12 to 18 months in advance” Ross Taylor, CEO, Fletcher Building Ltd

Labour & Job Market

“Businesses continued to rehire following COVID-related cuts, and in many cases restarted investment. Whilst candidate activity on our sites remained high, application rates were weaker” Ian Narev, CEO, Seek Ltd

Metals & Resources

“The global decarbonisation of steel making, and electricity generation industries is driving demand for recycled metal” Market Statement, Sims Ltd

“Coal supply is very constrained in all jurisdictions across the world and coal demand is very strong. We see this continuing for some time” Paul Flynn, CEO, Whitehaven Coal Ltd

Cryptocurrency

“Crypto-asset markets are fast evolving and could reach a point where they represent a threat to global financial stability due to their scale, structural vulnerabilities and increasing interconnectedness with the traditional financial system” Market Statement, Financial Stability Board [an international body that monitors/makes recommendations about the global financial system]

Telecommunications

“The last two years have shown us the criticality of communications [and] the demand for network quality has only increased” Andy Penn, CEO, Telstra Corporation 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. 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.