“The industry faces challenges of low credit growth, low interest rates, regulatory uncertainty, increasing consumer expectations and increased scrutiny of conduct and culture” Jon Sutton, MD, Bank of Queensland
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.
Banking
“We significantly increased the number of questions we ask relating to customer living expenses in December last year. This has been initially been rolled out for home loan applications made direct to ANZ and will be expanded to personal loans and credit cards” ANZ Spokesman
“There has been a notable improvement in lending growth, continuing the positive business momentum that returned in the previous half. This has been delivered through 3% annualised housing loan growth, together with strong commercial loan growth of 6%” Bank of Queensland Market Announcement
Health & Beauty
“You only have to walk into Coles and Woolworths and see some heavy discounts on ranges like Revlon and Maybelline. There are discounts being offered on a daily basis around Australia – everyone is fighting for share of that wallet” Richard Vincent, CEO, Australian Pharmaceuticals Industries
“The worldwide Beauty market is estimated to have grown by approximately 4% [for the year]” Joseph Wolk, VP of Investor Relations, Johnson & Johnson
Construction & Engineering Services
“The outlook for our business is promising and there is a solid pipeline of projects” Marcelino Fernández, Executive Chairman, CIMIC Group
Lithium
“[Lithium is] a commodity and it's a commodity that's growing in demand. No one knows what the demand looks like, but one thing we've been wrong on so far is that the amount of lithium that they need has been more than what we all thought it was” Chris Ellison, MD, Mineral Resources
Agriculture
“Core agricultural trading conditions remain challenging” Pro-Pac Market Announcement
Wine
“China is drinking a lot more of our premium wine, which is fantastic for our brand and Coonawarra in general” Luke Tocaciu, Director, Patrick of Coonawarra
Online Food Service
"There's no reason why [online food ordering] can’t be well in excess of 50% [of total food sales] if we look at other industries such as travel, insurance and careers" Alistair Venn, MD, Menulog
"We have all the right infrastructure for Australia to do far more online transactions when it comes to the food service sector – it's really just a case of newness and the ability to grow into it" Alistair Venn, MD, Menulog
Technology
“The key thing that is changing is that the level of computing density is increasing. Moore's law continues to be true” Craig Scroggie, CEO, NextDC
Housing Renovation Market
“In terms of the Renovation and Replacement (R&R) segment, the age of housing stock and lending for renovation activity continues to increase, both of which drive demand. The level of housing turnover remains reasonably steady, which is a key determinant of R&R activity, as most people decide to start a renovation project either just before selling a house or just before buying one. Taken together, these drivers would indicate that the R&R segment will remain relatively stable going forward” Tim Salt, CEO, GWA Group
Airlines
“You have more seats and more services, as a result of quality airlines competing for market share, and it’s inevitably going to lead to sharp pricing on the Trans-Tasman route” Flight Centre Spokesman
The Global Economy
“Five years ago, global growth was generally improving but is still slow, and we were embarking on a period of unprecedented global central bank stimulus. In contrast, the start to 2018 has been characterised by a healthy backdrop of synchronised global growth and rising interest rates. Better growth prospects are supporting central bank efforts to reduce stimulus, which has been a primary factor driving the below-average market volatility seen in recent years” Ramon Martin Chavez, CFO, Goldman Sachs
US Economy
“Unemployment levels are at historic lows and incomes are rising, while the effects of U.S. tax reform are expected to further strengthen discretionary consumer spending” Mark Frissora, CEO, Caesars Entertainment
Thank you for reading.
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.
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