NAOS CEO Insights



May 12, 2017

CEO Insights - Week Ending Friday 12/5/17 By NAOS Asset Management

“We're now seeing discussions turn. People are talking about opening mines again that have been shut for some time. People are talking about increasing production from existing mines, opening new pits and so on”

Frankie Micallef, CFO, Incitec Pivot 

As part of the NAOS investment process, we pay particular attention to the comments made by company CEO’s 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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“Given the recent rainfall and in particular, given the water storages they've got on the East Coast of Australia, we'd expect a very positive second half for Australian farmers, with really good demand for both the winter and the summer crops going into the second half”

James Fazzino, MD, Incitec Pivot

“GrainCorp’s strong first half performance benefited from the large Australian grain harvest and higher export volumes”

Mark Palmquist, MD, Graincorp

“In the domestic fertiliser distribution business, volumes are up over 40% on the first half last year. The better weather that we saw in the second half last year has carried forward into this half, and we continue to see strong sales of fertilisers in our domestic market”

Frankie Micallef, CFO, Incitec Pivot 

Domestic Economy

“We'd continue to describe the consumer as fairly watchful, which is not surprising given the economic environment and the global geo-political environment”

Richard Goyder, CEO, Wesfarmers

“The outlook for Australia remains positive overall, with GDP growth expected to be slightly above trend at 3% in 2017. However, growth will remain mixed across the country”

Brian Hartzer, CEO, Westpac

“2017 financial system credit is expected to grow at around 5.5%. Housing credit growth is likely to ease a little as demand slows”

Brian Hartzer, CEO, Westpac

Money Markets

“We've had more subdued trading conditions, notably in equities”

Patrick Upfold, CFO, Macquarie

“In terms of market conditions for the year that just started [Beginning March], which is very fresh, they're really unchanged from that time”

Nicholas Moore, CEO, Macquarie

“We saw continued strong flows into our US pooled funds and it was also pleasing to see a recovery in flows into our UK and European fund range post the Brexit referendum. We also saw strong demand for our Australian cash products”

Emilio Gonzalez, CEO, BT Investment Management

“Q117 cash flows reflect an extraordinarily high level of activity across Australia’s superannuation industry as customers transitioned to MySuper prior to 1 July 2017, consolidate their funds and allocate more investments to SMSFs, amid a changing regulatory environment”

Craig Meller, CEO, AMP Capital


“It is really tough out there”

Richard Umbers, MD, Myer

“It's a tough retail trading environment and it will continue to remain challenging”

Hilton Brett, Co-CEO, RCG

“In Australia, the share of fashion bought online is 10 per cent, in the US and UK it's between 18 and 20 per cent”

Patrick Schmidt, CEO, The Iconic

“I think you have some outstanding Australian retailers who are right at the forefront, and also I think you see those that haven’t been able to keep up on a regular basis really struggling, so I think the answer is Amazon isn’t going to wipe out all Australian retailing”

Holly Kramer, Director, Woolworths

“Consumers continue to shift dollars away from apparel to handbags, accessories and footwear”

Victor Luis, CEO, Coach

“[Retail] prices here [Australia] are amongst the highest in the world”

Olivier Robinet, CEO, Decathlon Australia


“We expect price growth to slow, especially in Sydney and Melbourne, as supply begins to catch up with demand, and regulatory action on investment property and interest-only lending flows through. We don't expect significant price drops in these markets although there will be some pockets where overbuilding, particularly on inner city apartments, may experience falls”

Brian Hartzer, CEO, Westpac

“90+ day delinquencies remain low by historical measures and our home loan book continues to perform well with more than 70% of customers ahead on their repayments”

Brian Hartzer, CEO, Westpac

“The Group’s growth was achieved in a market of lower listing volumes and declining dwelling commencements in Australia. We expect dwelling commencements to continue to trend lower as changes to government policy and lending practices take effect”

REA Market Announcement

“While residential construction markets appear to have peaked from recent record levels of activity, construction currently underway will support demand for CSR’s products in the year ahead”

CSR Market Announcement

“Mortgages continue to grow, but at a more modest 1%, but of course the growth that we've seen of that mortgage book in recent years is part of the reason we're seeing a step-up in underlying earnings coming through”

Nicholas Moore, MD, Macquarie Group

“Detached housing continues its steady growth across key markets in New South Wales, Victoria and Queensland offset by declines in Western Australia. The multi-residential market remains robust with year on year growth of 11% driven by both the medium and high density segments”

CSR Market Announcement

“The non-residential market remains benign. Recent increases in non-residential approvals in Australia point to more supportive medium term activity in this segment. The alterations and additions market is marginally down with some activity being transferred to the “knockdown rebuild” market. The New Zealand market remains strong across all segments”

CSR Market Announcement

Commodities & Mining Services

“Global prices in fertilisers were at the bottom of the cycle in the first half”

James Fazzino, MD, Incitec Pivot 

“In Australia, we're a met coal business, and we'd expect ongoing resilient demand from our customers in the Bowen Basin”

James Fazzino, MD, Incitec Pivot 


“Net interest margin in the Business Bank was constrained due to deposit competition early in the period, but exit margins had been restored”

Brian Hartzer, CEO, Westpac

Data Usage

“Homes connected to services powered by the NBN network are currently downloading around 144GB of data each month which is a 32 per cent year-on-year increase and around 1.2 times the national fixed-line average and 76 times the mobile average”

Sarah Palmer, Executive GM (Product & Pricing), NBN

Advertising & Media

“While print advertising remains volatile, we saw some moderation this quarter. Overall, the segment was a source of growth this quarter – in both revenues and profitability”

Robert Thomson, CEO, Newscorp

Growth Capital Expenditure

“We're now seeing discussions turn. People are talking about opening mines again that have been shut for some time. People are talking about increasing production from existing mines, opening new pits and so on”

Frankie Micallef, CFO, Incitec Pivot 

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