NAOS CEO Insights

CEO INSIGHTS – Week Ending 10 September 2021 By NAOS Asset Management

September 10, 2021

“Semiconductors will become central to every aspect of innovation and the supply chain for cars. As important as it is today, you ain't seen nothing yet” Patrick Gelsinger, CEO, Intel Corporation

CEO INSIGHTS – Week Ending 10 September 2021 By NAOS Asset Management

“Semiconductors will become central to every aspect of innovation and the supply chain for cars. As important as it is today, you ain't seen nothing yet” Patrick Gelsinger, CEO, Intel Corporation

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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Labour Shortages

“I think there’s no doubt there is high demand for professional talent. I don’t think that it’s just because our borders are shut, because that high demand exists in the US, the UK, China, Hong Kong, Singapore....So, I’m not expecting when international borders open we have this flood of talent that just fixes it. I think it’s a global phenomenon” Tom Seymour, CEO, PwC Australia

“The war for tech talent is definitely on” Tim Fung, CEO, Airtasker Ltd

“At the moment the whole market’s quite challenging. Early childhood teachers are the hardest [to find], then centre managers and other educators” Gary Carroll, CEO, G8 Education Ltd

“We’ve got a massive skills shortage, by 2023, we’ll have 105,000 jobs that can’t be filled if things keep going the way they are, with the massive infrastructure pipeline that Australia has” Gabrielle Trainor, Director, Infrastructure Australia [Australia’s independent infrastructure advisory body]

Transport & Logistics

“We need lower [consumer demand] growth to give the supply chain time to catch up” Morten Engelstoft, CEO, APM Terminals [one of the world’s largest ports & terminal companies]

“Consensus in the industry is we’re unlikely to see a cleaning up of the situation [container shortages] until deep into next year” Brian Sondey, CEO, Triton International [the world’s largest container leasing company]

“There is very strong demand, we’ve effectively been operating at peak capacity for the entire year” Paul Scurrah, CEO, Pacific National [Australia’s largest private rail freight operator]

“Internationally there are no flights coming or going, so we are chartering planes, up to 20 freighters ourselves, to get parcels out and in which has been a real challenge and a significant cost” Rodney Boys, CEO, Australia Post

Macroeconomic, Financial Markets & Cryptocurrency

“Most of the big themes that are going to influence investment markets are in fact headwinds, rather than tailwinds” Peter Costello, Chairman, Future Fund

“In our central scenario, the economy will be growing again in the December quarter and is expected to be back around its pre-Delta path in the second half of next year” Philip Lowe, Governor, Reserve Bank of Australia

“We think a regulated environment [for cryptocurrency investing] is going to reinforce confidence and trust and effectively will be the bridge between what had previously been an unregulated industry and the next phase, which is more maturity, more regulation and more widespread adoption” Alex Vynokur, CEO, BetaShares

Food & Beverage

“We are going to work in a hybrid way…and that has of course, consequences on [home] consumption when you compare with pre-pandemic. So, we are optimistic that we’ll keep a big part of this consumption [growth] when the pandemic is over” Miguel Patricio, CEO, The Kraft Heinz Company

“Managing our portfolio is a constant need, actually is a need for any food company, because the consumer needs in the food industry, they evolved so fast. We eat so different from what we were eating 10 years ago” Miguel Patricio, CEO, The Kraft Heinz Company

Consumer Staples

“I know there were some others in the market saying different, but honestly when they were saying that we were looking at our numbers and saying no, nothing has really changed…we have not seen a significant change between being in lockdown or being out of lockdown” Jeff Adams, CEO, Metcash Ltd

“We needed to think about the manual toothbrush segment really differently. Obviously, we have seen some growth in the electric segment [vs manual] and we need to continue to bring real opportunities to the manual segment. Sustainability [environmentally friendly toothbrushes] afforded us that opportunity” Noel Wallace, CEO, Colgate-Palmolive Company

“Consumption and retail consumer stocking has been kind of tough to predict and I think that is likely to persist, that kind of lumpiness is going to persist” Mike Hsu, CEO, Kimberly-Clark Corporation [personal care brand conglomerate including Kleenex]

Technology & Internet

“What we’re seeing...is headwinds in our mass markets, so these are individual consumers and small businesses, and they are now moving around the world. People are taking vacations again, they’re going to happy hours in person” Kelly Steckelberg, CFO, Zoom Video Communications Inc

“People are not going to go back to pen and paper, once they signed digitally, or once they've been able to do agreements and the different components of agreements digitally” Cynthia Gaylor, CFO, DocuSign Inc

“When we started with 4K [screen resolution] sports and movies the internet definitely couldn’t handle it, and we now think it can” Patrick Delany, CEO, Foxtel Ltd

Semiconductors

“Today, in a premium car, about 4% of the bill of materials is semiconductors. Estimates by 2030 [is it will be] 20% of the bill of materials of the car, and you were worried about the semiconductor shortage today?” Patrick Gelsinger, CEO, Intel Corporation

“Semiconductors will become central to every aspect of innovation and the supply chain for cars. As important as it is today, you ain't seen nothing yet” Patrick Gelsinger, CEO, Intel Corporation

Environmental

“So how to set up an environment that will allow the [EV] users to always be able to charge the cars, charge the vehicles, will be a challenge” Masahiko Maeda, COO, Toyota Motor Corporation

Energy Markets

“The geography of the global energy trade is being redrawn. Political climates and societies are shifting to net zero, at speed” Andrew Forrest, Executive Chairman, Fortescue Metals Group Ltd

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.