CEO INSIGHTS – Week Ending 9 June 2023

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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Consumer Behaviours

“One third of Australian people actually would like to buy some things second hand and not something as new” Mirja Viinanen, CEO, IKEA Australia

Payments & Money Transfers

“What we're seeing from a consumer perspective is a very resilient consumer” Linda Kirkpatrick, President North America, Mastercard Inc

“I think this might be a different environment if unemployment starts to get to be high, a lot of the change in employment has been the more white-collar type jobs where our customer base is more the blue-collar workers [which are in shortage]...So, we're optimistic that we're not going to see any kind of problems as we go into recession, but we're watching and monitoring it very carefully” Matthew Cagwin, CFO, Western Union Company

Retail

“The impact of rising interest rates and higher cost of living has created a more subdued trading environment since April with lower traffic observed both in stores and online” Market Statement, Baby Bunting Group Ltd

“We are seeing inventory levels come in better positioning. So although I'm anticipating further discounting in the marketplace, I don't expect it will be worse than it has been” Calvin McDonald, CEO, Lululemon Athletica Inc

Rental Crisis & Commercial Property

“It’s a structural shortage. And in places like Australia where there is large immigration as a per cent of population you haven’t been building housing at a rate to keep up with that. That is a formula for continued upward pressure on both for sale values and rental values” Jonathan Gray, President, Blackstone Group

“We seem to be able to make deals with landlords at a better pace than we were in the middle of COVID, obviously. Construction seems to be normalising. Equipment and supply definitely is normalising” David Gordon, President, Cheesecake Factory Inc

Domestic Economy

“While goods price inflation is slowing, services price inflation is still very high and is proving to be very persistent overseas. Unit labour costs are also rising briskly, with productivity growth remaining subdued” Philip Lowe, Governor, Reserve Bank of Australia

“Interest rates bite…It’s definitely weakening and the penny’s starting to drop” Avi Gilboa, MD, Spotlight Retail Group

Financial Stress & Financial Markets

“What we are seeing is more customers ringing our hardship line to have a chat...it is not turning into actual hardship arrangements at this point” Peter King, CEO, Westpac Banking Corp

“In fact, there's never been a time when more Australians have been invested in the share market…10.2 million adults or 51% of the adult population now own investments outside of superannuation or the family home, and that's up 46% from early 2020. And this increased interest is being driven by younger Australians aged between 18 and 24” Helen Lofthouse, CEO, ASX Ltd

Manufacturing

“In the first quarter of this year, no one noticed, but we noticed that something monumental happened in our industry where China became the number one exporter of vehicles globally. It had always been the Germans and the Japanese…you can clearly see it's a bit of a new world order” James Farley, CEO, Ford Motor Company

“The total welding market is extremely large…Laser penetration into the equipment side is probably somewhere around 15%, but a laser will do every single welding process that exists out there and it to a better quality and at a higher speed” Timothy Mammen, CFO, IPG Photonics Corp [world’s leading laser manufacturing company]

Travel & Transport

“APAC [Asia-Pacific] is fully open and really kind of booming on all fronts, both in terms of business recovery, the core lodging business and from a development perspective” Anthony Capuano, CFO, Marriott International Inc

Education

“We are underweight in our education system and its ability to generate highly qualified talented people. You can look at China and India and their focus on technology education – it’s clear that they have got incredible results, and they are amplifying that. We [Australia] haven’t done that well” Richard White, CEO, WiseTech Global Ltd

Corporate Spending

“I think for DocuSign, we have a diversified customer base, which really helps us in up and down markets. I would say real estate and pockets of financial services continue to be softer than some of the other verticals like manufacturing or business services, which were stronger” Cynthia Gaylor, CFO, DocuSign Inc

Outdoors & Leisure

“In previous downturns, we've seen strong resilience in our visitation and our lift revenue because of our strategy to get our guests to commit in advance. We have seen some impact historically in downturns on ancillary spend” Kirsten Lynch, CEO, Vail Ski Resorts Inc [world’s largest ski resort operator]

Construction

“I do want to make a point that the inflation pressure is not going away. From our perspective the pressure on price over the next 12 months is not going away” Vik Bansal, CEO, Boral Ltd

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