CEO INSIGHTS – Week Ending 12 April 2019 By NAOS Asset Management

"We're still facing some headwinds, including anticipated door closures at traditional wholesale customers, unrest in Europe, as well as Brexit, continued uncertainty around China tariffs, and declines in U.S. retail traffic as we exited the quarter."

Chip Bergh, CEO, Levi Strauss & Co

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.

Medical Technology

"Australia has for a long time lagged the OECD in terms of MRI (magnetic resonance imaging) scans utilisation. MRI utilisation is running at about 15 scans per 1000 Australians, compared with OECD nations at 30 scans per 1000 people and over 40 per 1000 in the US."

Dr Ian Kadish, CEO, Integral Diagnostics

Auto

"The [auto] industry is going through change and we believe large scale players will be the best placed to manage those changes that are on us and will be coming."

Martin Ward, CEO, AP Eagers

"It's not a question of uptake for electric vehicles, EVs are happening."

Trevor St Baker, Chairman, Evie Networks and Tritium

"Right now the charging stations that we’re installing are capable of doing a full charge in 15 minutes, but once vehicle technology catches up a bit more, they’ll be able to deliver a full charge in somewhere between eight to ten minutes."

Tim Washington, CEO, JET Charge

Agriculture

"For sheep meat, prices are high and are expected to remain so due to low Australian sheep numbers, which are estimated to grow by about 1 per cent per year from 2020."

Mark Bennett, Head of Agribusiness, ANZ Banking Group Limited

Asset Management

"If anything the Chinese are looking for greater participation of global firms in their asset management space because they also have a growing retirement crisis."

Larry Fink, CEO, BlackRock

Banking

"I don’t like having a bank we own buy another bank…the acquirer usually overpays."

Warren Buffet, CEO, Berkshire Hathaway

"Regulator expectations are also shifting in response to the [royal] commission’s findings. Making the changes necessary to ensure compliance with these new regulatory obligations and expectations will increase costs for all banks."

Anthony Rose, Interim CEO, Bank of Queensland

Global Economy

"I think that the environment at the moment has started to look a little stronger. The actions of the Federal Reserve and other risks in the market have tempered a little since the last time we spoke. If anything, we are a little more positive on the markets."

David Neal, CEO, Future Fund

"We have seen an acceleration of teams being moved to Paris [from London]…there is still uncertainty and people are still waiting (for Brexit decision), but the plans are there, and the first teams have been put in place."

Arnaud de Bresson, CEO, Paris Europlace [The organisation in charge of promoting and developing the Paris financial marketplace.]

Renewable Energy & Resources

"It is clear that the materials we produce will play an absolutely vital role in the transition to a low-carbon economy. Wind, solar and batteries all require the materials we produce. An average onshore wind turbine contains nearly five tonnes of copper, and 160 tonnes of steel, and a typical electric vehicle has 80kg of copper and 36kg of nickel."

Jean-Sebastien Jacques, CEO, Rio Tinto

Telecommunication

"At the same time capex is increasing, industry returns on that capex are reducing. This is unsustainable as ultimately it will hurt the investment capacity of the industry and lead to and a degradation of the network."

Andy Penn, CEO, Telstra

"When I travel to other countries I hear companies and governments say ‘we are no longer comfortable putting our data in Australia."  Brad Smith, Chief Legal Officer, Microsoft [regarding the recently passed Telecommunications Assistance and Access Bill]

Retail

"We're still facing some headwinds, including anticipated door closures at traditional wholesale customers, unrest in Europe, as well as Brexit, continued uncertainty around China tariffs, and declines in U.S. retail traffic as we exited the quarter."

Chip Bergh, CEO, Levi Strauss & Co

"It’s certainly a challenging six months for us, and one of the most challenging we've seen in many years. Economic uncertainties, undermining consumer confidence, and during the period, we saw exceptional levels of discounting, and promotional activity, particularly during Q1."

Nick Beighton, CEO, ASOS Plc

"With automation we are able to take away some of the tasks that associates don’t enjoy doing…at the same time we continue to open up new jobs in other things in the store."

Mark Propes, Senior Operations, Walmart

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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.