NAOS CEO Insights

CEO INSIGHTS – Week Ending 20 May 2022 By NAOS Asset Management

May 20, 2022

CEO Insights - “I do think it feels more to me like 2000...where it quickly went from growth...to...building real businesses and had profitable growth”

CEO INSIGHTS – Week Ending 20 May 2022 By NAOS Asset Management

“I do think it feels more to me like 2000 and the dot.com bust, where it quickly went from growth at all costs to [a focus on] those companies that were building real businesses and had profitable growth” Patrick Spence, CEO, Sonos 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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Media & Advertising
 

“User engagement data from analyst surveys and third-party tracking points to the fact that short form vertical video has clearly emerged as the fastest growing content format for young audiences with TikTok rapidly gaining share relative to traditional platforms” Jonah Peretti, CEO, Buzzfeed Inc

Home Retail

“Since the beginning of March, the industry has seen a significant drop off in year-over-year point of sale data with sharply reduced shopper traffic, both in retail stores and online” Chris Scherzinger, CEO, Weber Inc

Interest Rates

“Availability of debt is something we all need to watch very, very carefully. There’s a lot of people in the industry who have never seen an interest rate increase and a lack of liquidity” Greg Goodman, CEO, Goodman Group

“An argument for an increase of 40 basis points could be made given the upside risks to inflation and the current very low level of interest rates. However, members agreed that the preferred option was 25 basis points” Meeting Minutes, Reserve Bank of Australia

Health & Lifestyle

“The Australian market remains a very healthy market and we continue to take market share in the boutique fitness space” Adam Gilchrist, CEO, F45 Training Holdings Inc

Freight & Logistics

“Our forecast, and what we hear from most of our partners is that this [disruption at Shanghai Port] is likely to continue all the way at least to Chinese New Year - January/February next year,” Thomas Knudsen, CEO, Toll Group Holdings

“[For Shanghai ports] when they open up and when they do allow transportation logistics to start-up, we believe there is going to be a high degree of congestion. We believe that there is going to be lots of competition for ports capacity, airport capacity” Chuck Robbins, CEO, Cisco Systems Inc

Infrastructure, Housing & Construction

“Ninety-five percent of the infrastructure being delivered in Australia above $500 million is being delivered by foreign contractors” Scott Power, CEO, BMD Group [large national private contracting group]

“Looking ahead we expect strong demand to continue in the construction and resources sectors” Nick Miller, CEO, Adbri Ltd

“There are challenges, there are labour shortages, there are some delays, and customers need to be patient with all builders, the industry's going through a pretty tough time as many industries are” Peter Langfelder, CEO, Metricon Homes

“There was a feeling during the middle of the pandemic that people would be driven further out of the city…But in the last several months, what we've seen is great demand for apartment projects, if they're well located with amenities” Diana Sarcasmo, Head of Design, Mirvac Group

Payments & Lending

“We are very conscious of merchant [payment] terminal development globally. We definitely recognise this as being a key area of competitive intensity” Matt Comyn, CEO, Commonwealth Bank of Australia Ltd

Inflation

“This is an unusual inflationary environment. We've seen inflation from 20% to 30% increases, I mean, across virtually every input” Donnie King, CEO, Tyson Foods Inc [one of the world’s largest food companies]

Commodities & Agriculture

“There is simply less supply available for what is very strong demand. Very strong demand because we continue to see increased expectation of aluminium being used in all the manufacturing processes” Roy Harvey, CEO, Alcoa Corp [major global aluminium producer]

“Despite some concerns around global supply chains and inflation, the growth outlook and prospects for our industry remain clear. The fundamental need to grow more food to meet the needs of growing populations is ever present” Greg Hunt, CEO, Nufarm Ltd

Travel

“Consumers had disposable income during the two years of the pandemic. People have, consumers have, saved and therefore they are prepared to spend that money” WiIllie Walsh, Director General, International Air Transport Association [IATA]

Vehicles

“We're also seeing a mixed change towards more parts on vehicles and that's being driven both by technology [and older vehicles used for longer due to high car prices]” Timothy O'Day, CEO, Boyd Group Services Inc [world’s largest smash repair company]

“The appetite is well and truly surging because of gas prices, in part, but also because there are so many new offerings. We’ve now got, in the next 24 months, 50 different models of EVs coming to market” Cathy Zoi, CEO, EVgo [America’s largest electric vehicle charging network]

Technology Sector

“I do think it feels more to me like 2000 and the dot.com bust, where it quickly went from growth at all costs to [a focus on] those companies that were building real businesses and had profitable growth” Patrick Spence, CEO, Sonos Inc

US Economy

“While we anticipated a post-stimulus slowdown…and we expected consumers to continue refocusing their spending away from goods and into services, we didn't anticipate the magnitude of that shift” Brian Cornell, CEO, Target Corp

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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.