NAOS CEO Insights

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

July 16, 2021

“We are optimistic about the long-term trends [of e-commerce and urban store formats] – we’re not planning a business for the long-term based on the last 12 to 15 months of COVID-19” Tom Daunt, CEO, Aldi Australia

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

“We are optimistic about the long-term trends [of e-commerce and urban store formats] – we’re not planning a business for the long-term based on the last 12 to 15 months of COVID-19” Tom Daunt, CEO, Aldi Australia


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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Consumer Behaviour

“We are optimistic about the long-term trends [of e-commerce and urban store formats] – we’re not planning a business for the long-term based on the last 12 to 15 months of COVID-19” Tom Daunt, CEO, Aldi Australia

“We're seeing the pendulum swing in consumer behaviour from the stockpiling and search demand for essentials in Q3 of last year to an increased demand for discretionary items this year” Sherry Bahrambeygui, CEO, PriceSmart, Inc [multinational membership shopping operator]

Food & Beverage

“Demand for almonds, both in their natural form and as a value-added food ingredient, in products such as plant-based milks and yoghurts, continues to grow” Paul Thompson, MD, Select Harvests Ltd

“I think the non-sugar portfolio is excellent and that's the area of the [drinks] category that is growing the fastest” Ramon Laguarta, CEO, PepsiCo Inc

Building & Construction

“The demand has grown above and beyond what we call the robust market scenario” David Denton, CFO, Lowe's Companies Inc [world’s second largest hardware retailer]

Residential Property

“Property values and rents across the combined regional areas of Australia suggest 60.1 per cent of properties are currently cheaper to service a mortgage than rent, while across the capital cities, this is only true of around one-quarter of properties” Eliza Owen, Head of Research, CoreLogic Australia

Inflation & Supply Chain

“I would say, obviously, same as everybody else we're seeing inflation in our business, across many of our raw ingredients and some of our inputs in labour and freight and everything else that we operate in the same context” Ramon Laguarta, CEO, PepsiCo Inc

“We've seen unprecedented increases in [prices of] commodities, particularly lumber over the last 12 to 18 months” David Denton, CFO, Lowe's Companies Inc [world’s second largest hardware retailer]

“The main impact that we foresee and we are seeing in our numbers relates to three things, one, is the resin shortage supply that has hit us on 2021, some copper impact that also hit us on 2021, and last but not least logistics [issues]” Beatriz Ferreras, CFO, Siemens Gamesa Renewable Energy SA [major global renewable energy generator]

Commodities & Resources

“Coal prices staged a remarkable recovery over the quarter, responding to increased economic activity as well as continuing supply side constraints” Paul Flynn, CEO, Whitehaven Coal Ltd

Manufacturing

“Gas users [manufacturers] are intensely worried by the price surge” Innes Willox, CEO, Australian Industry Group

Workplace & Employment

“Right at the beginning of COVID, in February of 2020, I think I said when I was asked how would this end up, I think I said that I felt 80% of all employee hours worked would be done in one of our offices, and that's probably where it's going to end up. Not 100%, but not 0%” James Gorman, CEO, Morgan Stanley

“As the pandemic fog lifts and more people get vaccinated to return to social activities as the lockdowns lift, people are now starting to go back to the office in many parts of the world, all of this creates a new wardrobe opportunity” Chip Bergh, CEO, Levi Strauss & Co.

Aviation & Travel

“We expect strong leisure demand to continue through the fall and winter, and we're starting to see the next leg of the recovery take hold with improving trends in business and international travel” Edward Bastian, CEO, Delta Air Lines, Inc. [world’s second-largest airline fleet]

“The Group’s holiday parks have benefitted from buoyant demand for domestic travel” Market Statement, Ingenia Communities Group

“We're seeing slightly unusual behaviours by customers in terms of the historical adoption of things like public transport versus this ongoing preference after COVID to drive an individual vehicle. So that will tend to have a benefit to a retail driven company like ourselves” Louise Warner, SVP Global Fuels, Alimentation Couche-Tard, Inc [one of the world’s largest convenience retailers]

Automotive

“After 2035, you won’t be able to buy a new fossil fuel-powered car in Europe. That’s not far away, and the sheer scale of lithium that Europe will require to achieve that is just phenomenal” Francis Wedin, CEO, Vulcan Energy Resources Ltd

Media & Entertainment

“It [music streaming] is a narrow-margin business, so it wouldn't actually take that much [regulatory change] to upset the so-called apple cart” Elena Segal, CEO Publishing, Apple Music

Macroeconomic

“With significant amounts of cash still in the sidelines, markets are anticipating continued growth near-term, despite the potential for various restrictions in certain regions” Lawrence Fink, CEO, BlackRock Inc

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.