NAOS CEO Insights

CEO INSIGHTS – Week Ending 29 November 2019 By NAOS Asset Management

Written by NAOS Admin | Nov 28, 2019 11:22:59 PM

“We are encouraged by order intake levels, which have been progressively increasing over the past four months. If this trend continues, the current downturn is likely to be the shortest I have experienced in the past 30 years.” Lindsay Partridge, CEO, Brickworks 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.  
 
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Building & Construction

“We are encouraged by order intake levels, which have been progressively increasing over the past four months. If this trend continues, the current downturn is likely to be the shortest I have experienced in the past 30 years.” Lindsay Partridge, CEO, Brickworks Ltd

“In Australia the combination of the residential market returning to growth from FY21, and increasing levels of infrastructure spend, have resulted in forecasters predicting a relatively strong outlook in the medium term.” Ross Taylor, CEO, Fletcher Building Ltd

Residential Property

“Home loan activity rebounded strongly in the first quarter of FY20, with interest rate cuts and an active property market driving record mortgage volume.” David Bailey, CEO, Australian Finance Group

“While recent above reserve prices, increased [residential] auction clearance rates and buyer engagement levels have all improved sentiment, all of which might improve listing levels, we do not see evidence yet of any sustainable improvement.” Geoff Lucas, CEO, McGrath Ltd

Finance & Lending

“The Federal Government is very supportive of increased competition [in SME lending] and, as the size, strength and attractiveness of the alternative small business lending sector is growing, we are seeing a steady level of competition.” Greg Moshal, Joint CEO, Prospa Group Ltd

“With market fundamentals strong, there is growing evidence that the decline in activity has been caused by the temporary lending restrictions imposed by our banks in response to the Royal Commission.” Lindsay Partridge, CEO, Brickworks Ltd

Domestic Retail

“We’re seeing a growing trend with consumers looking to knock off their Christmas shopping earlier than usual, with November starting to edge out December as the busiest period.” Dominique Lamb, CEO, National Retail Association

“Black Friday has grown in importance for the last three years and is a key promotional event.” Richard Murray, CEO, JB Hi-Fi Ltd

Global Retail

“[We] expect that the macroeconomic and geopolitical volatility we are experiencing globally will remain a headwind.” Emanuel Chirico, CEO, PVH Corp [clothing conglomerate/owner of Calvin Klein & Tommy Hilfiger]

“Our international business faced a number of escalating macro headwinds in our key markets.” Fran Horowitz, CEO, Abercrombie & Fitch Co

Employment

“The rate of annual wage growth eased slightly in September after being stable over the past year, continuing to grow at a slightly faster rate than consumer prices over the past year. The largest contribution to wage growth over the quarter was jobs in the healthcare and social assistance industry.” Statement from Australian Bureau of Statistics

“Macro-economic conditions are weak in a number of SEEK's key markets [ANZ, Asian and China].” Market Announcement, SEEK Ltd

Domestic Economy

“With population continuing to grow in both NZ and Australia, underpinned by continued immigration, we should see a supportive backdrop for ongoing GDP growth in both countries.” Ross Taylor, CEO, Fletcher Building Ltd

Food & Beverage

“Consumer confidence continues to decline and a number of key clients, notably in manufacturing, automotive and financial services, have reduced their headcount in recent months.” Dominic Blakemore, CEO, Compass Group PLC [world's largest contract foodservice company]

“The full year results for the international segment were disappointing as the team encountered numerous challenges, stemming from African swine fever in China, the impact from tariffs and global trade uncertainty.” James Snee, CEO, Hormel Foods Corp [global food company]

Agriculture

“Lingering trade tensions coupled with a year of difficult growing and harvesting conditions have caused many farmers to become cautious about making major investments in new equipment.” John May, CEO, John Deere & Company

“Severe drought conditions, and a more recent softer retail market, have challenged our Australian business.” Nick Pritchard, MD, Gale Pacific Ltd

Technology

“Data has emerged as the strategic asset as more and more enterprises and government agencies around the globe are investing in data-centric digital strategies. We believe data is the answer to many of the world's most pressing problems and its greatest opportunities. It also represents a necessary strategy for all organizations to thrive, let alone survive, in this new paradigm.” Douglas Merritt, CEO, Splunk Inc [NASDAQ listed global software company]

Mining Services

“We are seeing a continual increase in demand for brownfield drilling services relating to most commodities and spanning across most geographies. We are also seeing early signs of more favourable contract terms and conditions including pricing.” Nathan Mitchell, Chairman, Mitchell Services Drilling Ltd

 

 

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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.