CEO INSIGHTS – Week Ending 7 June 2024

Debt Issuances & Interest Rates

“But as we see that we're going to get back down into a normalised level of interest rates, companies are already starting the issuances into that environment. People are saying, ‘Will companies ever issue debt, expensive debt again?’  Well, now it's not so expensive anymore…I felt like the 10-plus years of zero-interest rates was really the aberration.” Douglas Peterson, CEO, S&P Global Inc

"We decided to cut [interest rates] because overall our confidence in the path ahead has been increasing over the last months” Christine Lagarde, President, European Central Bank

Young Adults

“60% of customers say that they will spend more than they currently spend on athletic leisure and our customer is a young customer. It's a young adult, the 16, 24 years' old. This customer has moved fast. They wear the latest brand. They take on new trend quickly. They want more assortment, more access, more choice, more brand, more head to toe looks that blurs the line of sports and fashion. They are looking at global trends on TikTok social network. They are global. And they are not monobrand.” Régis Schultz, CEO, JD Sports Plc

“At a time when there are record insolvency levels and customers curbing their spending, now is not the time to add more hurdles for businesses with new costs [junior pay rate increases] added to their operations.” Bran Black, CEO, Business Council of Australia

Beauty & Trends

“Beauty is a fantastic market to be in, and many people want to join because if you [exclude] the COVID year, it's been a continuous growth over history and the market’s more than doubled. And it's because beauty is truly an essential human need” Nicolas Hieronimus, CEO, L'Oreal SA

"And even within beauty, if you take a category like makeup, you will see that makeup trends change. There was the no makeup or the nude makeup in 2020, then the return to glamour in 2021 right after COVID...And now, there's a lot of self-expression where everybody is trying to express their individuality.” Nicolas Hieronimus, CEO, L'Oreal SA

Discretionary & Non-Discretionary Spending

“There's still a pretty cautious consumer out there on durable goods. We've seen strength in the market. I'm speaking again as an industry, strength in the market for lower price points. We've also seen the higher price points remain pretty consistent.” Bryan Hughes, CFO, Winnebago Industries.

“If [interest] rates are high [or] rates are low, people still need to eat” Steven Marks, Co-CEO, Guzman Y Gomez‍

Commercial Property & Build-To-Rent

“In every cycle I’ve been through, most of the time there’s a gap between what sellers want and what buyers want. And ultimately, that gap closes as liquidity increases, and that’s what we’re seeing now.” David Harrison, CEO, Charter Hall Group

“People are not going to do build-to-rent if the returns are not there. The dynamics of the Australian residential market is [that] the best yield you can achieve on a pre-tax basis is 2-3 per cent. And that’s not going to be an attractive investment on a large scale unless there are other benefits. It won’t happen unless build-to-rent is more attractive than build to sell" Andrew Pridham, Co-Founder/Vice Chair, MA Financial Ltd

Freight, Shipping & Geopolitics

“On the back of continued strong container market demand and the disruption caused by the ongoing crisis in the Red Sea, A.P. Møller - Mærsk A/S now also sees signs of further port congestions, especially in Asia and the Middle East, and additional increase in container freight rates.” Market Statement, A.P. Møller - Mærsk A/S

Equity Markets & IPOs

“When the markets are closed from a financial standpoint, it doesn’t make a lot of sense to be out telling your story until you know that there’s an endpoint to it” Jayne Hrdlicka, CEO, Virgin Australia Airlines

China

“The Chinese, 150 million travelled outside China back in 2019. Just under 50 million in '23. In other words, 2/3 of them stayed at home. Today, the Chinese rebound is very significant not as significant as expected. Figures from the Chinese authorities, between 80 million and 100 million Chinese will travel during the course of '24. It's not sufficient in terms of the 150 million, but it's far better than the 40 million, 50 million.”  Sébastien Bazin, CEO, Accor Group

Deflationary

“With economy class fares I’ve heard a number of CEOs say pricing is a bit softer, particularly in the leisure market” Willie Walsh, Director General, International Air Transportation Association

Software & Corporate Sector

“And over that period of time [the last 4 years], we saw an incredible surge in the demand and buying environment and in the sales environment, especially during the pandemic. As we entered the post-pandemic reality, we saw companies who had acquired so much software in that time looked to actually rationalise it, ingest it, integrate it, install it, update it. I mean it's just a massive amount of software that was put in. And so every enterprise software company kind of has adjusted during the end of this post-pandemic environment.” Marc Benioff, CEO, Salesforce Inc

Data & Privacy

“If you talk to CIOs and CISOs [Chief Information Officers and Chief Information Security Officers] and heads of ops in corporate America and around the world, you will find that they are increasingly very nervous about a risk related to privacy and as well as sustainability, and anything that's been written too, even printers, they want to have them wiped at this point.” Barry Hytinen, CFO, Iron Mountain Inc.

Transport

“For us as an operator, the electric buses are better to operate” Michael Sewards, Co-CEO, Kinetic [Australasia’s biggest bus network]