NAOS CEO Insights

CEO INSIGHTS – Week Ending 20 August 2021 By NAOS Asset Management

August 20, 2021

“It's not the first time we've dealt with some of these [cost] increases but the wage one is the bigger challenge over the longer time because we do take the belief that this is the age of delivery and there's not enough human beings to deliver” Don Meij, CEO, Domino’s Pizza Ltd

CEO INSIGHTS – Week Ending 20 August 2021 By NAOS Asset Management

“It's not the first time we've dealt with some of these [cost] increases but the wage one is the bigger challenge over the longer time because we do take the belief that this is the age of delivery and there's not enough human beings to deliver” Don Meij, CEO, Domino’s Pizza 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.  
 
If you do not already subscribe and wish to receive this weekly publication of “CEO Insights” via email please click here. 
 

Consumer Staples

“We believe the store-based fulfilment model will remain the predominant model for online grocery fulfilment in Australia due to relatively low population densities, large distances, established existing supply chains and high temperatures” Market Statement, SCA Property Group Ltd

“Almost the biggest challenge we’ve got at the moment is keeping up with the changing sales profiles we’re experiencing. It doesn’t feel like we’re experiencing the same degree of home cooking as last time, there’s less of a rush to the pantry and more demand for produce and meat” Steve Cain, CEO, Coles Group Ltd

Housing & Construction

“As an international real estate group, we expect FY22 to be the cyclical low point for both development production and profitability” Tony Lombardo, CEO, Lendlease Corporation Ltd

“In Australia, the residential outlook also remains resilient, particularly across detached housing and renovations, while the apartments, commercial and key civil sectors are likely to stabilise at current levels” Ross Taylor, CEO, Fletcher Building Ltd

“We're acutely aware that current conditions are providing considerable tailwinds and may not be sustainable” Mark Vassella, CEO, BlueScope Steel Ltd

Mining Services

“In summary, the outlook for the mining industry is positive and based on both current and planned exploration expenditure, we are still a long way off the previous peak” Paul House, CEO, Imdex Ltd

Food, Beverage & Hospitality

“It's not the first time we've dealt with some of these [cost] increases but the wage one is the bigger challenge over the longer time because we do take the belief that this is the age of delivery and there's not enough human beings to deliver” Don Meij, CEO, Domino’s Pizza Ltd

“There's been a tremendous variation in [insurance] pricing for property for the hospitality industry and the reason for that variation is pretty simple to explain. There's a huge difference between the quality of people that seek to get property insured” Robert Kelly, CEO, Steadfast Group Ltd

“We are a major [can] supplier to the beer market, and we're seeing some really good growth in that sector over recent times” Brian Lowe, CEO, Orora Ltd

Automotive

“Automotive supply conditions improved in the second half with inventory volumes steadily increasing” Market Statement, Carsales.com Ltd

Supply Chain & Logistics

“Lumber supply constraints during the period produced a shortage in pallets across the globe and impacted all pallet industry players, leading to a longer cycle time, affecting service levels and causing further disruptions to supply chains” Graham Chipchase, CEO, Brambles Ltd

“The [logistics] sector has also experienced robust demand from tenants, with levels of take-up well above average across the eastern seaboard, resulting in low vacancy rates in core markets” Bob Johnston, CEO, GPT Group Ltd

Inflation

“Recognising that commodity prices are expected to remain at the highest levels in recent history, in July we took our fifth price increase since the pandemic began but this time also took a surcharge on our backlog” Melinda Whittington, CEO, La-Z-Boy Furniture Inc

Technology

“Every day, many companies have technology incidents. The easiest way to reduce the risk of them, in the short-term anyway, is not to change anything. In the long-term however, this is a false choice, because it creates even more risk” Dominic Stevens, CEO, ASX Ltd

Financial Markets

“Our customers are showing a lot of interest in crypto. In fact, this is the first quarter where we saw a larger share of new customers place their first trade in crypto rather than in equities” Vlad Tenev, CEO, Robinhood Markets Inc

Renewables

“We’re absolutely foot to the floor in terms of our growth rate and we need to be because the addressable market for solar has exploded, the ceiling is rising faster than the industry can grow into it at the moment” Chris McGrath, CEO, 5B Co [specialised solar company]

Packaging

“I think we would say that consumption and our demand other than in healthcare has more or less normalised over the last several months…So, at this stage, we haven't really seen any kind of dislocation resulting from COVID in the near-term here” Ronald Delia, CEO, Amcor Plc

Retail

“Shopping, however, has become more purposeful since the onset of COVID-19. Consumers are doing more research online and while they are visiting with less frequency and are less inclined to dwell, their spend per visit is much higher. As a result, this trend in consumer behaviour appears to favour retailers with strong omni-channel businesses, which are typically national retailers” Peter Huddle, COO, Vicinty Centres

Travel & Leisure

Leisure was the first segment [compared to business travel] to return and recover subsequent to most of the downturns in the last 20 years” Mark Hoplamazian, CEO, Hyatt Hotels Corporation

“We went into the pandemic with around 4 billion [2019 global traveller numbers], we think that we will be at an 88% level in 2022 [compared] to 2019…it gives you a sense for what we see, which is a tremendous recovery from what we’re seeing in the year that we’re in right now” Kyle Gendreau, CEO, Samsonite International Ltd

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.