CEO INSIGHTS – Week Ending 23 September 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.  

Labour Shortages & Workplace

“I’ve increased compensation to try to attract people, and other companies have too. But it doesn’t matter what I pay, it isn’t enough” Vikesh Ramsunder, CEO, Sigma Healthcare Ltd

“It’s okay when unemployment is 3 per cent, but if we keep having to deal with a lack of productivity and people saying, ‘I want to work from home’, once unemployment rises, I think we will see jobs replaced by robots” David Harrison, CEO, Charter Hall Group

Transport & Supply Chain

“It’s very easy in the transport business to make short-term profit. Whereas if you think about long-term profit, you’ve got to look after your assets, you have to look after your people, you have to look after your customers” Don Braid, CEO, Mainfreight Ltd

“I think what's really interesting right now is it feels like capacity constraint and scarcity of capacity is what's driving price more than the cost of the inputs” William Sperry, CFO, Hubbell Inc [major multinational commercial & industrial electronic products manufacturers]

Energy Markets

“The reality that we face in Australia and globally now means that we actually do need new supply, new investment in gas, and this will play a fundamental role in supporting emissions reductions” Samantha McCulloch, CEO, Australian Petroleum Production and Exploration Association

“I think it [higher coal prices] will continue when you look at the outlook of the supply and demand, the supply response is not going to come on like it has in previous booms and demand looks to be consistent and probably even more so now when people look at the current energy crisis” Rob Bishop, CEO, New Hope Coal Ltd

Commodities & Inflation

“I think on the cost side, we saw a significant downward pressure on things like steel, copper, and aluminium. So actually, it feels like some of that may be bottomed and is inching upward again” William Sperry, CFO, Hubbell Inc [major multinational commercial & industrial electronic products manufacturers]

“We have got to get inflation behind us. I wish there were a painless way to do that. There isn’t” Jerome Powell, Chairman, US Federal Reserve

Automotive

“The OEMs [car makers] made a living out of controlling the internal combustion engine technology with an iron fist and that’s their history. They don’t like that their suppliers know more about batteries than they do” Kent Masters, CEO, Albemarle Corp [US-based global battery minerals giant]

Technology & Research

“China is increasingly regulating or prohibiting the use of software based on Google or Apple products...Should this trend continue, the group may incur additional costs in developing and tailoring technology packages in its vehicles intended for sale in China” Market Statement, Porsche A.G

“We don’t get our venture capital firms to do early-stage research for a reason – they are just not good at it. So why do we try to distract our world-leading researchers from doing research and try to encourage them to commercialise?” Adrian Beer, CEO, METS Ignited [leading industry body for the Australian mining equipment, technology & services sectors]

Crypto & Digital

“We are craftsmen, and we’re not just selling an image. But in 10 years if our clients require NFTs [non fungible tokens] to accompany physical products, so they can have an avatar dressed as they are, we can think about it. I’m not sure we’d ever sell an NFT without a physical product, but in a way, it won’t be up to us to decide. It will be the client.” Axel Dumas, CEO, Hermès International S.A

Payments & Lending

“Buy now, pay later firms are harvesting and leveraging our data to grow revenue outside of their core lending business in ways that we do not see with other lending products. While credit card companies are also doing more with our data, buy now, pay later is at a different level” Rohit Chopra, Director, US Consumer Financial Protection Bureau

Housing & Construction

“We haven’t had the immigrants come in, the immigration’s just starting to pick up and when they arrive, there’ll be even a more acute demand-supply imbalance” Tarun Gupta, CEO Stockland Group

“The building pipeline is still under a lot of pressure” Lindsay Partridge, CEO, Brickworks Ltd

Consumer Behaviour

“What has changed is that when the people were locked down and had no possibility to travel, go on vacation, fly and things like that, they were really focused on their pets and their family…Now, they go on vacation, they travel, they move much more, they go out…and there is probably less money to dedicate on the spending of the dog and cat” Sebastien Huron, CEO, Virbac S.A. [one of the world's largest veterinarian groups]

“I do roundtables with our teams on a regular basis. And I will tell you, citizenship [knowing the origin] and sustainability consistently comes up as the first topic of discussion. In every market, we hear that from our consumers as well, especially the younger ones. And we've transformed...Not because it's trendy, but because it is critical” Patrice Louvet, CEO, Ralph Lauren Corp

Retail

“So online has actually benefited retail landlords because it’s often meant that retailers are taking up more space because they actually need additional inventory to handle the customers who are coming in to collect the goods from their store, or they’re being dispatched from their store” Grant Kelley, CEO, Vicinity Centres

Tourism & Travel

“First of all, in the Las Vegas strip, business has really never been stronger in Las Vegas than it is right now” Jonathan Halkyard, CFO, MGM Resorts International Inc

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.