NAOS CEO Insights

CEO INSIGHTS – Week Ending 16 April 2021 By NAOS Asset Management

April 16, 2021

“AI [artificial intelligence] is technology’s most important priority, and health care is its most urgent application” Satya Nadella, CEO, Microsoft Corporation

CEO INSIGHTS – Week Ending 16 April 2021 By NAOS Asset Management

“AI [artificial intelligence] is technology’s most important priority, and health care is its most urgent application” Satya Nadella, CEO, Microsoft 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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Workplace & Employment

“For every 100 employees, we may need seats for only 60 on average. This will significantly reduce our need for real estate” Jamie Dimon, CEO, JP Morgan Chase & Co.

“All tenants are saying those days [10 square meters per person] are gone. The reversal, going back to 14 square metres per person is a massive change for the market which will offset the demand drain caused by people working from home two days a week” David Harrison, CEO, Charter Hall Group

“I think we are entering a period where it starts to get less cool to work from home” Harold Goddijn, CEO, TomTom N.V.

“The pandemic has fundamentally changed the concept of work…This is going to drive the continued consumerisation of corporate IT and a new wave of innovation, from more versatile and secure technology” Enrique Lores, CEO, HP Inc.

Healthcare

“AI [artificial intelligence] is technology’s most important priority, and health care is its most urgent application” Satya Nadella, CEO, Microsoft Corporation

Telecommunications & Technology

“We heard from our customers that companies like Facebook, Amazon and Google were simply not doing their planned expansions and upgrades [of data centres] during COVID, even with all the pressure for more data and more bandwidth. As business conditions improve, we believe we will see a strong increase in investment in the space due to pent-up demand” Gayn Erickson, CEO, Aehr Test Systems Inc [worldwide provider of testing systems for semiconductor manufacturers]

“In terms of what we’ve seen in the demand environment, I think, it’s one of the strongest demand environments that we’ve seen for a while” Salil Parekh, CEO, Infosys Ltd [top 10 multinational IT consulting & outsourcing firm]

Global Economy

“I feel we’re going to be talking not just about COVID-19, but COVID-22 and COVID-24, We’re going to have the stop-start economy for quite a while. I think we’re going to need to be prepared for a long haul” Magnus Nicolin, CEO, Ansell Ltd

Supply & Logistics

“We are seeing in ports around the world there’s a lot of constraint. Constraint and rising activity create one thing and that is inflationary pressures, and we are seeing that. Pretty nominal impact to the first quarter [of 2021], we do anticipate seeing a larger impact as we move into Q2 and Q3” Dan Florness, CEO, Fastenal Company [multinational distributor of industrial, safety and construction supplies]

Construction & Infrastructure

“The Australian Government’s economic recovery plan includes substantial investments in infrastructure construction. Spending on major projects in Australia is expected to average around $30 billion per year for the coming years” Juan Santamaria, CEO, CIMIC Group Ltd

Residential Property & Households

“[Industry is] looking beyond this JobKeeper and HomeBuilder period and seeing that the normalisation of population growth [through immigration] needs to be addressed and, at the moment, the timelines around international borders is very unclear” Ken Morrison, CEO, Property Council of Australia  

“We expect house prices to continue to grow through this year and next but not at the rapid levels we have seen in the first two months of the year” Matt Comyn, CEO, Commonwealth Bank of Australia Ltd

“In some cultures where there was a longstanding do-it-for-me preference, we are seeing a new mindset emerge. COVID has created an environment in which people have not wanted to invite professionals into their homes. Therefore, to fix something in the home, one must do it themselves. We believe this trend has created a DIY tipping point in many markets and cultures around the world” Steve Brass, COO, WD-40 Company

Consumer Spending & Retail

“Consumer excitement and optimism is returning in ways it hasn't since well before the pandemic, and we're seeing a denim resurgence as more people are going out” Chip Bergh, CEO, Levi Strauss & Co.

“Customers complete 28% of purchases on Amazon in three minutes or less, and half of all purchases are finished in less than 15 minutes. Compare that to the typical shopping trip to a physical store – driving, parking, searching store aisles, waiting in the checkout line, finding your car, and driving home. Research suggests the typical physical store trip takes about an hour” Jeff Bezos, outgoing CEO/Founder, Amazon Inc

Food & Beverage

“It's going to be difficult to exactly predict what will happen with the on-premise [consumption & inventory], because we've already seen as markets have opened and then closed a little bit and reopened, there's just a lot of variability that's hard to predict” William Newlands, CEO, Constellation Brands Inc [global beer, wine & spirits conglomerate]

Travel, Leisure & Transport

“Corporate travel, including the small business segment, is now back to around 65 per cent of pre-COVID levels, and increasing month-on-month” Alan Joyce, CEO, Qantas Airways Ltd

“The current environment is characterised by extremely strong leisure demand – helped by the Federal Government’s half-price fare offer” Company Announcement, Qantas Airways Ltd

“The change we’ve actually seen is more people driving private transport and not using public transport” Robbie Blau, CEO, SG Fleet Ltd

Automotive

“Typically, carmakers will go for the latest and greatest [technology]” Harold Goddijn, CEO, TomTom N.V.

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.