CEO INSIGHTS – Week Ending 1 April 2022 By NAOS Asset Management

“The Russian invasion of Ukraine has put an end to the globalisation we have experienced over the last three decades” Larry Fink, CEO, BlackRock Inc

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.  

Consumer Behaviour

“Consumer demand continues to be incredibly strong” Matthew Friend, CFO, Nike Inc

“We are going to pass that [price increases] predominantly back to the consumer. We aren't seeing any resistance to date” Jim Holmes, CFO, PVH Corp [retail conglomerate & owner of brands Tommy Hilfiger & Calvin Klein]

Food & Beverage

“QSR [quick service restaurants] is an incredibly resilient category and when household budgets are tight, we do see people opting to trade down from higher-end offerings.” Drew O'Malley, CEO, Collins Foods Ltd

“The predominant trend in pet food now and I think will be going forward is the humanization of pet food” Jeffrey Harmening, CEO, General Mills Inc [major multinational food conglomerate]

Environmental

“I would say the [wind turbine] sector in our assessment is running with overcapacity and thus in our assessment one of the reasons for the low profitability of the sector” José Luis Blanco, CEO, Nordex SE [global manufacturer of wind turbines]

“Environmentally, there’s also a lot of challenges in recycling [electric] batteries” Alistair Field, CEO, Sims Metals Ltd

“A customer wants energy that is reliable, affordable and lower carbon and if we try to race to zero carbon at the expense of either reliability or affordability, we’re going to lose the customer” Meg O’Neill, CEO, Woodside Petroleum Ltd

Transport & Logistics

“When fuel prices surge, carriers absorb the increased cost in the short-term. Ultimately, however, these costs hit retailers’ bottom lines. In the end they’re faced with a lose-lose decision to either absorb the costs themselves or pass them on to their customers, placing more pressure on an already critical cost-of-living-crisis” Rob Hango-Zada, CEO, Shippit

“Little improvement is anticipated in the tense market situation of supply and demand in the first half of 2022 and the market prospect is still cautiously optimistic in the short term…and it is even more difficult to predict the future trend” Market Statement, COSCO Shipping Holdings Co Ltd [world’s second largest shipping company]

Airlines

“If higher commodity prices persist, we will have to see what impact they have but please bear in mind, the industry was able to cope with $100 oil between February 2011 and September 2014…and recent statements from the airlines suggest they are confident that they can pass through higher oil prices as yields remain strong” Aengus Kelly, CEO, AerCap Holdings NV [the world's largest aircraft leasing company]

Global Economy

“The Russian invasion of Ukraine has put an end to the globalisation we have experienced over the last three decades” Larry Fink, CEO, BlackRock Inc

Technology

“We desperately need to support businesses by bolstering their tech capacities to accelerate the momentum brought about by the pandemic, such as in industries like manufacturing that were previously in decline but are now experiencing a huge surge in demand” Angeline Maronese, CEO, Rackspace Technology ANZ [multinational data centre provider]

“Should we fail to make a sustained, prioritised investment [in technology], Australian businesses will face an unsustainable ‘talent war’ and see their productivity clipped” Michael Boyle, CEO, HP Australia & New Zealand

Labour Shortage

“When I can’t recruit drivers for vehicles or some semi-skilled roles in our operations, I think that is a sign that we have hit a tipping point and something has got to change” Zlatko Todorcevski, CEO, Boral Ltd

“Infrastructure Australia analysis found that there will be a peak public infrastructure workforce shortage of 70,000 engineers, scientists and architects out to 2025 relative to the $225 billion spend promised in state and federal budgets over forward estimates” Vicki Thomson, CEO, Group of Eight [association comprised of major Australian universities]

Construction & Housing

“It’s the worst [building cost environment] it’s been in the modern era...the pressure valve needs to come off” Chris Melham, CEO, Civil Contractors Federation

“At the moment the [apartment] market is weak, but rents are strong – they dropped a lot but are back to high levels” Harry Triguboff, CEO, Meriton

Workplace & Offices

“Employers are not pulling back [from their return to office plans]. They're investing in new office experiences that their employees will love. There's a push for premium experiences” Andrea Owen, CEO, MillerKnoll Inc [one of the world’s largest office furniture & equipment manufacturers]

Private Equity

“Look, I think at a high level, I don't think any of us have ever seen the level of evolution within our industry going on in terms of M&A activity and strategic activity across the board” Jon Winkelried, CEO, TPG Capital Inc [one of the world’s largest private equity firms]

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.