NAOS CEO Insights

CEO INSIGHTS – Week Ending 17 July 2020 By NAOS Asset Management

July 17, 2020

“Eleven of Australia’s top 15 most valuable red meat export markets are expected to enter recession in 2020, creating a range of factors that are expected to impact red meat sales” Market Announcement, Meat & Livestock Association Australia

CEO INSIGHTS – Week Ending 17 July 2020 By NAOS Asset Management

“I think e-commerce, if you see the growth of e-commerce, it is going to be quite strategic. I think whoever wins in e-commerce now and is able to capture those families that are trying this e-grocery service for the first time I think is going to win those families in the future” Ramon Laguarta, CEO, PepsiCo 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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Healthcare

“With respect to the health care industry, we are encouraged to see many procedures starting to return versus what we saw in the back half of the first quarter across the globe” Joseph Wolk, CFO, Johnson & Johnson Inc

“As vaccines become available, we would anticipate continued surveillance testing to monitor and assess for both natural and vaccine-related immune response, which would be followed by a steady state of ongoing monitoring and tracking of vaccine protection. Looking across the spectrum, it’s clear that the need for testing is large and it isn’t going away” Robert Ford, CEO, Abbott Laboratories Inc

Automotive

“So my impression is that carmakers are seeing this as a temporary dip and their longer term planning, their strategic choices are not really influenced by this pandemic, although their cash balances are” Harold Goddijn, CEO, TomTom NV

“I think the EV [electric vehicles] train has left the station. I don't think there is any carmaker now who is not taking it serious and is not putting out models in the coming years. So I think that's growing and I do think that at some point in the near future we do see an inflection point where EV vehicle sales will take up faster than what we have seen so far” Harold Goddijn, CEO, TomTom NV

Energy & Resources

“We are positioning to take advantage of a forecast global LNG supply shortfall later this decade” Peter Coleman, CEO, Woodside Ltd

Transport & Logistics

“Every day may kind of bounce up and down a couple of percentage points, but the overall trend [in travel volumes] is an unmistakably positive trend. When I translate that to globally, that trend is absolutely positive on a week-on-week basis” Dara Khosrowshahi, CEO, Uber Inc

Travel & Leisure

“We have substantial new bookings, and we even have new to cruise bookings, which given the current state of the environment in the world is really a good testament to how strong a vacation experience and value cruising really is” Arnold Donald, CEO, Carnival Corp

Food & Beverage

“Are consumers meaningfully changing some of their needs? I would say, there are few spaces where we're trying to move quickly, immunity [beverages] being one, and we're seeing that consumers are looking for immunity more. Our juice business is booming” Ramon Laguarta, CEO, PepsiCo Inc

Retail

“I think e-commerce, if you see the growth of e-commerce, it is going to be quite strategic. I think whoever wins in e-commerce now and is able to capture those families that are trying this e-grocery service for the first time I think is going to win those families in the future” Ramon Laguarta, CEO, PepsiCo Inc

“It is clear this COVID situation has and will accelerate digitalisation. All e-commerce and related services have accelerated tremendously” Alain Dehaze, CEO, Adecco Group [world’s 2nd largest employment agency]

“This [pandemic] will lead to a permanent shift away from regular retail to online retail to some extent” Anthony Pratt, Executive Chairman, Visy Industries

Housing & Construction

“The thing that's become very clear to us in this last quarter is that, there is high demand for our product, particularly given the increased amount of DIY activity that's going” Garry Ridge, CEO, WD-40

Payments & Lending

“The difficulty for everyone is there is some uncertainty, we hear that a lot from customers. That’s probably been the dominant theme in the repayment check-ins... they still want the flexibility because they are not quite sure what is around the corner” Matt Comyn, CEO, Commonwealth Bank of Australia Ltd

Global Economy

“Our view of the length and severity of the economic downturn has deteriorated considerably from the assumptions used last quarter” Charlie Scharf, CEO, Wells Fargo & Co.

US Economy

“This is not a normal recession... the consumers' incomes are up, savings are up, and home prices up. The recessionary part will come later” Jamie Dimon, CEO, JP Morgan Chase & Co

“There are stimulus checks. There are unemployment benefits. There are all of these things that are in place in many ways to kind of prop up the economy, and so we aren't yet seeing the stress” Mark Mason, CFO, Citigroup Inc

Chinese Economy

Aluminum demand is starting to show some signs of recovery based on monthly data for some key end use sectors, particularly in China. For example, Chinese passenger vehicle production was up more than 11% in both May and June when compared with the same months last year. The most recent data on construction activities in China are also better than the monthly levels in May of 2019” Roy Harvey, CEO, Alcoa Corporation [global aluminum producer]

Workplace

“There is a lot of discussions [with clients] on cost efficiency and automation, we [also] have discussions on cyber security and workplace transformation” Salil Parekh, CEO, Infosys Ltd [top tier multinational consulting firm]

Entertainment

“TikTok’s growth is astounding, showing the fluidity of internet entertainment. Instead of worrying about all these competitors, we continue to stick to our strategy of trying to improve our service and content every quarter faster than our peers. Our continued strong growth is a testament to this approach and the size of the entertainment market” Reed Hastings, CEO, Netflix Inc

“Growth [in streaming demand] is slowing as consumers get through the initial shock of Covid and social restrictions” Reed Hastings, CEO, Netflix 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.