CEO INSIGHTS – Week Ending 19 August 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.  

Inflation & Deflation

“We have seen some ridiculous inflation in the last four or five months. I mean, if you don't think I'm serious, just drive through McDonald's and buy your kid a Quarter Pounder cheese and fries and see what you pay for that” Kevin Williams, CFO, Jack Henry & Associates Inc [U.S. based payments processing software provider]

“While input prices recorded a drastic increase compared to the first half of 2021, dynamics started slowing down month-over-month recently” Carsten Knobel, CEO, Henkel AG & Co [one of the largest home care & laundry products companies in the world]

Ad Spending

“Retail is very strong…We're seeing a lot come back in terms of tourism and travel…Wagering is very strong and a lot of briefs around automotive for the start of 2023 calendar as well” James Warburton, CEO, Seven West Media Ltd

“There is no type of programming more valuable to sponsors than live” Nick Khan, Co-CEO, World Wrestling Entertainment Inc

Recessionary Spending

“A lot of the tech categories like phones, definitely phones, and computers are very much so integrated into our customers' lives these days that they don't fall into that discretionary [category]. They're a must have for a lot of the consumers…So we absolutely see it as becoming less discretionary as time goes on just because it's so integrated into their lives” Terry Smart, CEO, JB Hi-Fi Ltd

“Wine is typically seen as an affordable luxury” Tim Ford, CEO, Treasury Wines Estates Ltd

“Food at home, overall is a category with quite inelastic demand, as seen in previous economic downturns compared to many other categories” Dominik Richter, CEO, HelloFresh

Domestic Economy

“I think the chance of a recession in Australia is extraordinarily low…I think there’s a lot of cotton wool in the system to withstand a shock” Shayne Elliott, CEO, ANZ Banking Group Ltd

Supply Chain

“Supply constraints for various product sets are expected to continue well into FY23” Market Statement, Data#3 Ltd

Mortgages & Housing

“The technology landscape and what our brokers tell us their customers now require has vastly changed since the onset of the pandemic” David Bailey, CEO, Australian Finance Group Ltd

“I also strongly believe that customers are using their homes differently to what they used to…And I think it's likely to continue that people will continue to invest in their home because they're using it differently” David Speirs, CFO, Beacon Lighting Ltd

Banking & Financial

“Cash rate increases from the Reserve Bank are beginning to have an impact on property values in some markets and we can expect credit growth to moderate and competition to remain intense” Marnie Baker, CEO, Bendigo & Adelaide Bank Ltd

Regulation

“In Australia, there's been a pointed lack of EV suppliers as most manufacturers have been shipping their stock to countries with fuel efficiency standards to avoid emission penalties [in Australia]” Robert Blau, CEO, SG Fleet Group Ltd

Travel & Transport

“Our customers are embracing the opportunity to return to face-to-face connectivity in a post-COVID world” Jamie Pherous, Managing Director, Corporate Travel Management Ltd

Healthcare

“The known issues in health can no longer be ignored; our health system is fatigued, and the pace of change is not keeping up with our growing health needs. We are at a critical juncture as we emerge from the pandemic and it’s widely recognised that we all need to move with greater urgency” David Koczkar, CEO, Medibank Private Ltd

Employment & HR

“While we know that flexibility has been a significant driver of employees’ and candidates’ decision-making in the wake of the pandemic, remuneration is now becoming a primary concern as it’s expected to increasingly impact work-life” Robert Half, CEO, David Jones

Renovation & Construction

“Approvals in the residential and commercial renovation and replacement segments remain at historically elevated levels” Urs Meyerhans, CEO, GWA Group Ltd

Commodities

“The sad irony here is that the new technologies that are being talked about in terms of ‘green steel’ actually need more electricity than existing technologies – materially more, significantly more electricity than existing technologies” Mark Vassella, CEO, BlueScope Steel Ltd

“Aggressive interest rate rises to combat rapidly increasing inflation have reduced the demand for steel, copper, and aluminium, and therefore the demand for recycled metal” Market Statement, Sims Group Ltd

Chinese Economy

“The recent [big tech] regulatory direction is actually trending towards more positive tone for the platform economy” Pony Ma, CEO, Tencent Holdings Ltd

“We expect China to emerge as a source of stability for commodity demand in the year ahead with policy support progressively taking hold” Mike Henry, CEO, BHP Group 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.