NAOS CEO Insights

CEO INSIGHTS – Week Ending 10 June 2022 By NAOS Asset Management

June 10, 2022

10th June CEO Insights - “The world during the pandemic, where so much was spent on goods and not on services was not a real world” Doug McMillon, CEO, Walmart Inc

CEO INSIGHTS – Week Ending 10 June 2022 By NAOS Asset Management

“The world during the pandemic, where so much was spent on goods and not on services was not a real world” Doug McMillon, CEO, Walmart Inc

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.  
 
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Supply Chain

“2023 and 2024 is what we anticipated would be the recovery back to the 2019 levels, the pre-peak levels. Truthfully, on the demand side, it's gone much faster than that. But on the supply side, it's gone much slower than that” David Calhoun, CEO, The Boeing Co

“The global supply challenges are continuing to significantly limit our ability to transport products to our customers, and our inventory levels remain very high” Don Kayne, CEO, Canfor Corp [major North American timber company]

Semiconductor Shortages

“Semiconductor analysts report that the global supply chain challenge is largely a demand issue more than a supply issue. It’s exacerbated in lower-volume industries like Pro AV [professional audio visual] because chip allocations are being diverted to large volume clients/industries like consumer electronics, automotive and military” Market Statement, Audinate Group Ltd

“I think we can definitely assume that [the semiconductor shortage] continues through the end of this year, probably well into next year. Some people even believe it may extend into 2024 already” James Anderson, CEO, Lattice Semiconductor Corp [US semiconductor manufacturer]

Consumer Behaviour

“The world during the pandemic, where so much was spent on goods and not on services was not a real world” Doug McMillon, CEO, Walmart Inc

“We are aligned to many analysts’ views that these current rate rises will impact department store sales in the first half of [calendar] 2023” Kathy Karabatsas, CFO, David Jones

“We've never seen a revenue environment like this” Robert Isom, CEO, American Airlines Group

Commodities & Energy

“Customers continue to value security of [lithium] supply which is reflected in a fully committed order book for the remainder of the calendar year” Market Statement, Allkem Ltd

“We’re committing economic suicide if we rush and try to do it [the energy transition] too quickly when we haven’t got the alternative supplies in place...I don’t want to come across as the coal guy. I want to come across as the guy quite frankly that is interested in keeping energy affordable and the lights on” Jeff Dimery, CEO, Alinta Energy

Inflation

“Both of us [US Fed Chair Jerome Powell & myself] probably could have used a better term than ‘transitory’” Janet Yellen, US Treasury Secretary

“Now there's greater recognition that inflation is not transitory. It is probably with us for a number of years” Larry Fink, CEO, BlackRock Inc

“We don't view inflation as necessarily a bad thing for us as this creates more discipline across the industry in terms of pricing and asset allocation” Kenny Cheung, CFO, Hertz Inc

China Lockdowns

“But we're certainly starting to see from our footprint on the ground there and our people on the ground, things are starting to open up a little bit more there…So I suspect we'll start hearing more positively about China coming through in the next sort of weeks and months ahead” Janes Fraser, CEO, Citigroup Inc

Labour & Employment

“The harder the market becomes for talent, the more important retention becomes, and [it is getting] harder, frankly, because there are so many options out there” Tom Seymour, CEO, PwC Australia

“[Healthcare and learning] both of those areas, there's just such a high demand at the moment. There's just not the resources to meet that demand” Ross Thompson, CEO, PeopleIN Ltd

Food & Beverages

“The reality is that the consumer habits that were sort of the result of the pandemic that we attribute to the pandemic were trends in the business that were already there…consumers looking for more ease, more digital ordering, more off-premise” David Gibbs, CEO, Yum! Brands Inc

“[Currently] we really don't see any signs of recession at this moment. Consumption continues very strong” Miguel Patricio, CEO, The Kraft Heinz Co

Domestic Economy

“With rising costs of groceries, petrol and other household expenses, Equifax is seeing the first signs of stress for Australian households” Moses Samaha, Exec General Manager, Equifax [multinational consumer credit reporting agency]

“I went out to a restaurant, and it cost 200 bucks. All the tables are full. Don’t tell me there is no discretionary spending. There might be a bit of tightening, but there is no evidence of that right now” Gerry Harvey, Exec. Chairman, Harvey Norman Holdings Ltd

Agriculture

“[Due to shortages from floods] We're using a lettuce and cabbage blend on all products containing lettuce until further notice” Market Statement, KFC Australia

Residential Property

“I think the demise of the property market that’s been called is a little bit premature...We’re getting over 12 million people coming to our site every month looking at property. If you look at the number of potential buyers per property, it is still at five-year highs” Owen Wilson, CEO, REA Group

Buy Now Pay Later [BNPL]

“It is a great win for consumers worldwide that Apple is now embracing a better form of consumer credit [by introducing a BNPL product]. Plagiarism is also the highest form of flattery” Sebastian Siemiatkowski, CEO, Klarna Inc [world’s biggest BNPL provider]

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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.