NAOS CEO Insights

CEO INSIGHTS – Week Ending 20 September 2019 By NAOS Asset Management

September 20, 2019

“[With 5G] you're moving into an era of connectivity like we haven't conceived of before. This isn't just marginally better.” Randall Stephenson, CEO, AT&T Inc

CEO INSIGHTS – Week Ending 20 September 2019 By NAOS Asset Management

“[With 5G] you're moving into an era of connectivity, like we haven't conceived of before. This isn't just marginally better.” Randall Stephenson, CEO, AT&T 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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Tourism & Travel

“There is no doubt that we are operating in a tough economic climate with high fuel, a low Australian dollar, and subdued trading conditions.” Paul Scurrah, CEO, Virgin Australia Airlines

“As a tourism industry we did get a little bit of feedback the political situation was having a bit of an impact.” Phillipa Harrison, CEO, Tourism Australia

Food & Dairy

“We've always had good markets, but in the past few years, because of the research into the Mediterranean-style diet, including nuts and seeds in your diet and the health benefits of that, that's seen a lot of popularity drive consumption around the world. Because of the popularity we've been getting reasonable prices, and because of that people have started to plant more.” Neale Bennett, Chairman, Almond Board of Australia

“Infant milk formula is one of the largest and fastest-growing segments among all dairy segments in China, driven by increasing disposable income and growing child spend.” Mengniu Dairy Market Announcement [Chinese dairy company acquiring Bellamy’s Australia Ltd]

Domestic Economy

“With persistent domestic input inflation and a far weaker dollar, in several businesses input cost inflation will exceed the price uplift.” GUD Holdings Ltd Market Announcement

“The market [motorcycle sales] has improved to some degree but whether it has bottomed or not it might be a bit early to say.” David Ahmet, CEO, Motorcycle Holdings Ltd

Chinese Economy

“For China to maintain growth of 6% or more is very difficult against the current backdrop of a complicated international situation and a relatively high base, and this rate is at the forefront of the world’s leading economies.” Li Keqiang, Premier of China

“Most people don't think about the fact that when China slows down because of US tariffs or uncertainty or for whatever reason, as big a victim, if you want to call it that, of the China slowdown is Europe because Germany's contraction is because they're not selling as much to China.” Frederick Smith, CEO, Fedex

“As it relates to semiconductors, although the US-China trade conflict continues, we have not seen further deterioration in our business, both specific to China as well as globally.” Hock Tan, CEO, Broadcom Inc [global semiconductor company]

Global Economy

“Our performance continues to be negatively impacted by a weakening global macro environment driven by increasing trade tensions and policy uncertainty.” Frederick Smith, CEO, FedEx Corporation

Resources

“The escalating trade wars that I discussed at our year-end results continue to reduce the demand for steel and aluminum. At that time, steel mills appeared to be managing the lower demand, but in early September they materially reduced their scrap purchases, and also their outlook for scrap purchases. This reduction in demand for scrap has driven a steep fall in prices.” Alistair Field, CEO, Sims Metal Management Ltd

“Compounding the impact of falling scrap prices has been a consistent rise in deep sea freight prices over the last month.” Alistair Field, CEO, Sims Metal Management Ltd

“We are headed for the biggest skills shortage seen since 2012-13. Skilled job seekers in our industry will soon have even greater advantage in bargaining and determining their employment terms and conditions.” Australian Mines & Metals Association Statement

Mobile Technology

“When we brought 4G out, nobody really knew exactly what the innovations would be. We really thought it would be like a webpage on a mobile browser, loading faster, but instead, it transformed our economy and created massive companies.” Mike Sievert, COO, T-Mobile Inc

“[With 5G] you're moving into an era of connectivity, like we haven't conceived of before. This isn't just marginally better.” Randall Stephenson, CEO, AT&T Inc

“Because in a world of 4G, you can put on a cell tower in a given square mile area, thousands of simultaneous devices, thousands could be simultaneously connected to these networks. When you go to 5G, what changes is that becomes millions. Millions of simultaneous connections are now feasible within a given square mile area on this technology. That's a different business proposition for everybody who sits in this room and all the companies you invest in.” Randall Stephenson, CEO, AT&T Inc

Data

“The second key big trend we are seeing is the exponential growth in data. The Internet of Things, all these devices are creating huge amounts of data. 90% of the data that we see in the world today as estimated was created in the last 2 years.” Ajay Bhalla, President Cyber and Intelligence Solutions, Mastercard Inc

Environment

“The evidence is abundant: global warming is indisputable.” Andrew Mackenzie, CEO, BHP Group Ltd

General Insurance

“Of course, it doesn’t hurt that we have lots of tailwind with the pricing environment considerably improved from this time last year.” Brian Duperreault, AIG Insurance Inc

 

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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.