CEO INSIGHTS – Week Ending 21 October 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.  

Technology & Cyber

“When it comes to doing more with less, AI [artificial intelligence] is the ultimate amplifier” Satya Nadella, CEO, Microsoft Corp

“I think Australians have been watching the data breaches happening overseas for years, but the last few weeks have really brought home to us that cybersecurity isn’t a response to a problem somewhere else, it’s our problem, too” James Turner, MD, CISO Lens [peak industry body for cyber security]

Households

“And smart TVs now costs less than a mobile phone. It doesn't have a battery. It's got a smaller processor. It's easier to manufacture. So smart TVs are getting ubiquitous and lower cost. There was the supply chain slowdowns. But generally, I think you'll see around the world, smart TV is continuing to get to every home in the world that has a TV” Reed Hastings, Co-CEO, Netflix Inc

“The lagged nature of some housing markets means that we could start to see a recovery in prices across some parts of the country, just as other suburban markets start to see accelerating declines” Eliza Owen, Head of Research, CoreLogic

Semiconductors

“On the demand side, we continue to observe softness in consumer end market segment. Other end market segments such as data center and automotive related remains steady for now” C.C. Wei, CEO, Taiwan Semiconductor Manufacturing Co. Ltd

Retail & Consumer Demand

“I think the retail paper bag is probably a bit softer right now. I think simply footfall in retail shops is probably a bit lower, and you see a bit of that coming through at the moment, not terrible, but it's certainly a bit softer” Andrew King, CEO, Mondi plc [major multinational paper & packaging company]

“And so we've seen a highly promotional sensitive environment” Christian Cocks, CEO, Hasbro Inc

Mining & Commodities

“Commodity prices continued their downward trend during the quarter and there are further downside risks to demand as the global economy slows. Labour markets are holding up relatively well although consumer confidence has waned” Market Statement, Rio Tinto Ltd

“We’re not seeing customers scaling back orders. Customers are really fighting to get products” Richard Adkerson, CEO, Freeport-McMoRan [one of the world’s largest copper producers]

“It [skills shortages] is not turning around in the way we would like it to...Trades are hard to find there is no doubt about that” Paul Flynn, CEO, Whitehaven Coal Ltd

Food, Beverage & Hospitality

“Our hotels are thriving, as Australians embrace both large and small social occasions after years of COVID-19 disruption. There has been a rebound across all hospitality categories, with Bars, Food, Gaming and Accommodation all performing strongly” Steve Donohue, CEO, Endeavour Group

“Demand for Premium and Luxury wine has remained consistent across all of our key markets throughout the first quarter, reflecting ongoing category premiumisation trends” Tim Ford, CEO, Treasury Wine Estates

Global Economy

“There is accumulating evidence of slowing global growth, and we now expect to experience rolling country-level recessions starting this quarter. The severity and timing of these recessions depend where in the world you are, although persistently high inflation is driving a global softening of consumer demand for goods” Jane Fraser, CEO, Citigroup Inc

“Yep, the probabilities in this economy tell you batten down the hatches” Jeff Bezos, Executive Chairman & Founder, Amazon

“While there are signals which point to a slowing global economy, we are yet to see the full impact of cost- of-living pressures and the European energy crisis on both consumer demand patterns and subsequent implications for retailers and manufacturers” Graham Chipchase, CEO, Brambles Ltd

Freight, Logistics & Supply Chain

“Freight rates are falling amid slowing global trade as global supply chains show signs of improvement” Market Statement, Rio Tinto Ltd

Corporate Sector

“Everywhere I go, macro themes dominate. My conversations with CEOs, they tell me that they are rethinking business opportunities and would like to see more certainty before committing to longer-term plans” David Solomon, CEO, Goldman Sachs

“Big business, the amount of money that is being spent is there, but the number of trips is lower” Jayne Hrdlicka, CEO, Virgin Australia

“What we think and what we are experiencing, by the way, is that our clients, despite the challenges they are facing and maybe because of the challenges they are facing, won't stop from investing in their marketing and business transformation. Arthur Sadoun, CEO, Publicis Groupe S.A.

Healthcare

“There remains a significant, unmet and addressable clinical need for cochlear and acoustic implants” Dig Howitt, CEO, Cochlear Ltd

Tourism & Travel

“The total market demand right now feels about what it should be if the music hadn’t stopped [COVID]” Jayne Hrdlicka, CEO, Virgin Australia

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.