NAOS CEO Insights

CEO INSIGHTS – Week Ending 16 October 2020 By NAOS Asset Management

October 16, 2020

“We think this will be the biggest Christmas ever by far, given the circumstances” Steve Cain, CEO, Coles Group Ltd

CEO INSIGHTS – Week Ending 16 October 2020 By NAOS Asset Management

“We think this will be the biggest Christmas ever by far, given the circumstances” Steve Cain, CEO, Coles Group Ltd


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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Automotive

“The automotive aftermarket is a resilient industry and historically has performed strongly in difficult economic circumstances. Recent trading is another example of its resilience assisted by the increase in sales of second-hand cars, reduction in use of public and shared transport modes as well as government stimulus” Darryl Abotomey, CEO, Bapcor Ltd

“I look at the market for self-driving and the progress that we've seen there I have to say that it’s disappointing. I think there are two things playing a role here. First is the complexity of self-driving technology, and I think that has been underestimated…The second one is the justification of the system cost; the total bill of materials for self-driving seems to be higher than originally anticipated” Harold Goddijn, CEO, TomTom N.V.

Travel & Leisure

“Yes, I'm fairly confident the worst is over. You do see people are traveling, just nowhere near the rate they were traveling last year” Glenn Fogel, CEO, Booking Holdings Inc [conglomerate of online travel agencies]

“It’s really hard to say when a recovery is going to be. This situation we are in now, it’s not sustainable. It’s really bad. You’ve got a lot of pressure on cash flow, and you can only do so much with eliminating expenses and cutting people. You still need revenues” David Kong, CEO, Best Western Hotels & Resorts

Aviation

“Brisbane is currently the busiest airport in the nation due to strong intrastate travel and an increase in domestic tourism” James Goodwin, CEO, Australian Airports Association

“We are seeing signs of life” Geoff Culbert, CEO, Sydney Airport Holdings

Media & Advertising

“COVID basically has accelerated the digital transformation at the consumer level, at the media level… and then last but not least at the enterprise level” Sir Martin Sorrell, CEO, S4 Capital/Founder of WPP plc

Food & Beverage

“The reality is it’s just more expensive to operate in the coronavirus world that we’re living in now” Richard Allison, CEO, Domino's Pizza Inc

“We think this will be the biggest Christmas ever by far, given the circumstances” Steve Cain, CEO, Coles Group Ltd

Agriculture

“The agriculture sector and food...it’s an area of natural advantage for us as a country [to export] and I think that the COVID situation probably only amplifies that. We’ve always had the opportunity to do a lot more and continue to grow” Alison Watkins, CEO, Coca-Cola Amatil Ltd

Energy & Resources

“I see solar becoming the new king of the world’s electricity markets. COVID-19 has catalysed a structural fall in global coal demand” Faith Birol, Executive Director, International Energy Agency

“When it comes to the observed rebound in global aluminium demand, China is leading the way. Though the restart of the Chinese economy from COVID has been faster than other regions, we are [also] seeing improvements across the globe” Roy Harvey, CEO, Alcoa Corporation [global aluminium producer]

“The [gold] sector needs to shrink to greatness by producing less gold at a higher margin and being a better investment opportunity” Jake Klein, CEO, Evolution Mining Ltd

Technology & Telecommunications

“COVID has proven that change can be made and embraced quickly. It has also proven that digitisation of the economy is central to the recovery” Andy Penn, CEO, Telstra Corporation Ltd

“Until now, most people have taken a wait-and-see approach to 5G. They’ve been waiting for 5G to get real…Well, today, with [the new] iPhone, the wait is over. 5G just got real” Hans Vestberg, CEO, Verizon Communications

Retail

“It's not category specific – e-commerce is becoming mainstream. In the first years it was price hunters and early adopters. Now we're seeing the convenience customer coming online – the convenience customer is a big part of what's driving ecommerce” Ruslan Kogan, CEO, Kogan.com

“We believe the premium audio [product market] uptick is sustainable for a number of reasons. First the entire industry has seen a gain. COVID certainly impacted sales to the upside and it seems consumers have rediscovered quality audio and not just for listening to a stereo system but for movies where we've seen growth in home theatre and high-end sound bars but also home gyms, outdoor, gaming” Patrick Lavelle, CEO, Voxx International Corp [global consumer electronics company]

Residential Property

“There’s an opinion it’s [current strong sales] a stimulus driven sugar hit…but what we’re seeing is strong growth in other markets internationally where there haven’t been the same levels of stimulus, which speaks of a structural shift in spending” Blaine Callard, CEO, Freedom Furniture

“Customer feedback suggests orders for new homes remain robust into early 2021” Theresa Mlikota, CFO, Adbri Ltd

Domestic Economy

“We should acknowledge the [recent federal] budget has been very effective in creating a sense of confidence that will get people back in work” Rob Scott, CEO, Wesfarmers Ltd

Defence

“Many Australians don’t see the significant investment that is being made by the government and industry in the development of world-leading defence technologies. This investment is both supporting the security of the nation and is a catalyst for economic growth” Gabby Costigan, CEO, BAE Systems Australia [multinational defence, security & aerospace company]

Healthcare

“I have some discussions with some people in different hospitals around the world. I mean, when the lockdown came and people postpone surgeries, etc, what actually happened is that a lot of those hospitals were then empty. So, they didn’t have anything to do. So they acted, but maybe they acted a bit too harsh at that point in time.…and I don't think that we will have a situation that we will lock down the hospitals that quickly [again]” Thomas Schinecker, CEO, Roche Diagnostics

terial 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.