NAOS CEO Insights

CEO INSIGHTS – Week Ending 2 July 2021 By NAOS Asset Management

July 2, 2021

“In the post-COVID office, we are seeing growing interest in privacy, which can include a return to private offices for some customers or just more options for employees to use when they need to do heads down work or to join a video call while in the office” Jim Keane, CEO, Steelcase Inc [world’s largest office furniture manufacturer]

CEO INSIGHTS – Week Ending 2 July 2021 By NAOS Asset Management

“In the post-COVID office, we are seeing growing interest in privacy, which can include a return to private offices for some customers or just more options for employees to use when they need to do heads down work or to join a video call while in the office” Jim Keane, CEO, Steelcase Inc [world’s largest office furniture manufacturer]


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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Housing & Construction

“There continues to be a solid pipeline of residential construction activity despite the Government stimulus program aimed at boosting renovation activity ceasing in March this year” Market Statement, Metcash Ltd

“While non-residential construction remains in a downturn, we are encouraged by the positive trends we're seeing...These indicators turned strongly positive in recent months and remain so. That suggests we could see non-residential construction return to growth at some point in the next 12 months” Ty Silberhorn, CEO, Apogee Enterprises Inc [global manufacturer of glass & windows]

Retail

“In May, as restrictions eased, we saw a strong consumer response with incredible pent-up demand, and this momentum has continued into June” Matthew Friend, CFO, Nike Inc

Supply Chain

“We expect supply chain delays and higher logistics costs to persist throughout much of fiscal 2022” Matthew Friend, CFO, Nike Inc

Machinery & Industrials

“We are moving with a sense of urgency to maximise our participation in what we believe is the early stage of a strong demand cycle” Blake Moret, CEO Rockwell Automation [global manufacturer of automated industrial machinery & software]

Automotive

“If you look at the Consumer Price Index and the difference between new cars and late-model used cars, that gap has definitely narrowed. While new cars are going up, they have not gone up at the pace of used cars” William Nash, CEO, CarMax Inc [largest used car retailer in USA]

Labour Markets & Inflation

“We are seeing broad-based inflation across our various commodities, packaging materials and transportation costs. To offset rising costs, we are raising prices where appropriate, but usually, there is a lag time associated with pricing, particularly with how quickly costs are escalating” Lawrence Kurzius, CEO, McCormick & Company [largest herbs & spice producer in the world]

“I think our biggest challenge right now is labour from a manufacturing standpoint” Jeffrey Stutz, CFO, Herman Miller Inc [global furniture manufacturer]

“We certainly can’t ignore the wage levels that we are seeing in some of our markets” Brian Hannasch, CEO, Alimentation Couche-Tard Inc [one of the world’s largest convenience store retailers]

Workplace

“I think this is a very exciting time in our industry, probably the most exciting time in my career, work is changing, and workplaces are going to have to change to be more relevant” Jim Keane, CEO, Steelcase Inc [world’s largest office furniture manufacturer]

“In the post-COVID office, we are seeing growing interest in privacy, which can include a return to private offices for some customers or just more options for employees to use when they need to do heads down work or to join a video call while in the office” Jim Keane, CEO, Steelcase Inc [world’s largest office furniture manufacturer]

“I think the industry is seeing a lag in the recovery of the morning/day [customers] as many office work environments remain either fully or partially remote” Brian Hannasch, CEO, Alimentation Couche-Tard Inc [one of the world’s largest convenience store retailers]

Travel

“Everything we see every week makes us even more certain that business travel and international travel are ultimately going to come back. Some of them will be different, but they are ultimately going to come back at 100%” Scott Kirby, CEO, United Airlines Inc

Technology

“Pre-COVID our research showed a digital achievement gap with leaders growing 2x faster than laggers and we estimate that gap has now widened to 5x, with leaders stepping up their investment in technology and innovation, and lead progress taking accelerated steps to catch up” Julie Sweet, CEO, Accenture plc

“Security is top of mind for our clients as the threat landscape expands” Julie Sweet, CEO, Accenture plc

Food, Beverage, Petfood

“I think it would be fair to say there's a lot of pent-up consumer demand” William Newlands, CEO, Constellations Brands Inc [parent company of Corona]

“Frankly, there are more pets than there were before…and 85% of those new pets are in homes that already contain one pet and so, these are people who are used to having pets, and so the amount of pet food that's going to be consumed over the next few years, we think, is going to be elevated; in addition to the fact that the fastest-growing part of pet[food] continues to be the natural segment” Jeffrey Harmening, CEO General Mills Inc [multinational food & petfood conglomerate]

“[We] expect continued and long-lasting growth from the sustained shift of consumers cooking more at home” Lawrence Kurzius, CEO, McCormick & Company [largest herbs & spice producer in the world]

Health

“Getting as many people vaccinated with one of the two very good options available to Australians is the only way out of this [COVID]” Paul Perreault, CEO, CSL Ltd

Financial Markets

“Overall, we are encouraged by market trends. Clients are showing more willingness to spend against the backdrop of anticipated economic recovery” Phil Snow, CEO, FactSet Research Systems 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.