CEO INSIGHTS – Week Ending 14 June 2024

Ski Resorts

"Australia has had highly variable seasons. Two years ago, a record high season of amazing conditions and then unfortunately, the next year, [the]worst season in decades. So, a tale of two extremes over the course of the two years. I do think that is impacting decision making about an Epic pass [ski pass] in Australia, as well as other unique dynamics happening in Australia related to the economy." Kirsten Lynch, CEO, Vail Resorts Inc [owner of Perisher, Falls Creek and Mt. Hotham]

Milk & Dairy

“In particular, in Australia, there continues to still be a disconnect between the international cheese and dairy ingredient pricing and our local Australia farm gate milk price, although we have seen that gap narrow considerably at the moment with our opening milk price.” Leanne Cutts, COO, Saputo Inc [operations include being the largest dairy processor in Australia]

US, Japan & Chinese Economies

“I really feel like the American consumer just has been incredibly resilient” James Snee, CEO, Hormel Foods Corp [major processed food brand owner including SPAM]

“We're seeing that recovery in China retail is a little slower.” James Snee, CEO, Hormel Foods Corp

“The other area that we're quite constructive on in Asia is Japan. 25-ish years of a deflationary environment, and we're starting to come out of that. We think that poses really interesting investment opportunities for us.” Robert Lewin, CFO, KKR & Co. Inc

Technology & Devices

“Each technological shift from the web to mobile, and even to voice has expanded what's possible with search.” Sundar Pichai, CEO, Alphabet Inc

Private Equity & Private Credit

“The one thing that I always look at as one of the best forward indicators across our space for activity is the health of the leveraged finance markets. And if you look since the beginning of this year really towards the end of 2023 as well, you've had a greater level of sustained strength in the leveraged finance markets than you've had at any point over the past few years.” Robert Lewin, CFO, KKR & Co. Inc

Lending & Regulation

“There is an anomaly in the market, but the returns are sustainable. They are being driven by regulatory interference in the market, which has allowed private credit firms to capture the space. If the regulators said tomorrow they were removing obstacles to bank lending, the opportunities would disappear overnight. But the regulators are doing the opposite: tightening more and more as time goes on.” Russel Pillemer, CEO, Pengana Capital Group Ltd

“Real growth in the non-bank lending sector is starting to happen. Non-banks have become more acceptable. There has been a real shift [in attitude] post the royal commission.” Dan White, CEO, Ray White Group

Cross-Border Payments

“People are telling us it's expensive and painful to pay someone in another country to move money between their family accounts… Businesses are telling us it's impossible to operate internationally because no bank can support their international activities…And finally, banks. Banks themselves are telling us, they know well that their customers deserve better, and they want better. But it's so hard for them to create the same kind of service through the traditional infrastructure.” Kristo Kaarmann, CEO, Wise Plc [previously known as TransferWise]

Equity Capital Markets

“Australia has the fifth largest pension system in the world, which is a key part of a growing Australian capital base and will continue to drive activity across our markets. For example, this capital base is a key differentiator for our listings business as it attracts issuers from other parts of the world to list on ASX.” Helen Lofthouse, CEO, ASX Ltd

Demographics

“Our target consumer is under pressure. These are young women and men earlier in their careers, late 20s, early 30s. Time in your life is just starting a family. It's time in your life that will be more paycheck to paycheck, right? Just typical where you are in your stage of life. That target consumer is under pressure.” Michael Casey, CEO, Carters Inc. [one of the world’s largest baby retail chains]

Industrial Supplies

“I think that the winds are blowing in a similar direction around the globe with an overall tone of caution and it's certainly pretty choppy out there. It's not getting any easier. I wouldn't say it's getting tougher but it's certainly not getting any easier in the near term.” Herbert Nappier, CFO, Genuine Parts Co. [global auto & industrial parts distributor / owner of Repco]

Electricity & Gas

“The recent ISP [Integrated System Plan] has electricity demand growing in the NEM [National Energy Market] by 16% by 2030, and that's driven by electric vehicles, electrification and also AI data centres.” Frank Calabria, CEO, Origin Energy Ltd

“That [gas price] variability has grown. Intraday spreads have grown 3x. In 2018, it was a $90 average intraday spread. Today, it's $290 on an average basis for 2024 year-to-date. And at the same time, in 2023, if you wanted to measure it by negative prices, 25% of all days in 2023 had a negative price.” Frank Calabria, CEO, Origin Energy Ltd

Labour Market

“The employment-to-population ratio and participation rate both continue to be much higher than their pre-pandemic levels. Together with elevated levels of job vacancies, this suggests the labour market remains relatively tight, though less than in late 2022 and early 2023” Bjorn Jarvis, Head of Labour Statistics, Australian Bureau of Statistics

Flowers & Supermarkets

“The Group’s Australian operations has tracked close to expectations across the second half with consumer demand for floral product remaining resilient amidst a period of cautious consumer spending… Demand for supermarket floral product has been stable across the half, whilst supermarket potted and florist demand has been subdued.” Market Statement, Lynch Group Ltd‍