NAOS CEO Insights

CEO INSIGHTS – Week Ending 21 February 2020 By NAOS Asset Management

February 21, 2020

“And recent trends certainly confirm that the more the world goes digital, the more people need places to be physically together” Christophe Cuvillier, CEO, Unibail-Rodamco-Westfield

CEO INSIGHTS – Week Ending 21 February 2020 By NAOS Asset Management

“And recent trends certainly confirm that the more the world goes digital, the more people need places to be physically together” Christophe Cuvillier, CEO, Unibail-Rodamco-Westfield


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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Domestic Economy

“We actually see the Australian economy as in pretty good shape” Rob Scott, CEO, Wesfarmers Ltd

“We think the combination of both the recovery and the rebuild [following the bushfires] and also some of the underlying strength in the Australian economy will start to come through in the back half” Matt Comyn, CEO, Commonwealth Bank of Australia

Domestic Property

“We've already started to see a bit of an uptick in existing housing turnover and I think that's on the back of the fact that capital city house prices have started to increase” Tim Salt, CEO, GWA Group Ltd

“There have been early signs of improving property market activity since the Australia Day weekend” Jason Pellegrino, CEO, Domain Holdings Group Ltd

Building & Construction

“Expect improvements in all sectors from FY21” Market Announcement, Fletcher Building Ltd

Global Retail

“I read analyst reports, newspaper articles, and I agree with you. Retail is undergoing fundamental changes, essentially catalyzed by the expansion of the internet, not only as a retail channel, but also as an information, decision and social channel. However, I also fundamentally disagree with the vision that digital will do it all in the future” Christophe Cuvillier, CEO, Unibail-Rodamco-Westfield

“And recent trends certainly confirm that the more the world goes digital, the more people need places to be physically together” Christophe Cuvillier, CEO, Unibail-Rodamco-Westfield

Automotive

“The economic and currency headwinds experienced by the Company in the first half of the financial year have continued into the second half” Roger Brown, Chairman, ARB Corp Ltd

“Consumer sentiment, private new car sales, and the credit environment weakened again late in the period [1HYF20]” Robbie Blau, CEO, SG Fleet Group Ltd

Media & Advertising

“I think consolidation is a logical step for the [media] industry” Ryan Stokes, CEO, Seven Group Holdings Ltd

Energy & Resources

“There is a clear market appetite to shift to more energy-efficient buildings, as well as for greater use of renewables and electric vehicles. However, demand is not being met with supply” Alison Rose, CEO, The Royal Bank of Scotland Group

“Transport and logistics are the biggest challenges for our customers, we have seen an increase in finished steel inventories, so getting those inventories to the various construction sites [in China] is the biggest challenge facing the industry at the moment” Elizabeth Gaines, CEO, Fortescue Metals Group Ltd

 “We don’t see a euphoric, boom-time investment phase” Ryan Stokes, CEO, Seven Group Holdings Ltd

Coronavirus

“Given the impact of the coronavirus we expect a continuing downturn in Hong Kong in the first half of this year and we anticipate that we'll need to take additional expected credit losses into our first quarter results” Ewen Stevenson, CFO, HSBC Holdings plc

“We have seen a material decline in foot traffic at some of our key centres since late January 2020, particularly where there is a high proportion of international visitors, which in turn is impacting sales. As a result, we are forecasting modest reductions in percentage rent, ancillary income and hotel bookings” Grant Kelley, CEO, Vicinity Centres

“What we looked at is sort of in a range of outcomes, 3 to 6 months of escalation and impact from the outbreak. And then these things don’t turn around typically overnight, another 3 to 6 months on recovery. So essentially, a 6- to 12-month period of time” Chris Nassetta, CEO, Hilton Hotels

UK/EU Economy

“It has obviously been an eventful six months in the UK and the uncertainty surrounding the elections continued to flatten confidence early on. Since then, we are seeing some settling of the economy and without doubt, business feels more positive now” Robbie Blau, CEO, SG Fleet Group Ltd

“Our operating environment in the first-half was characterised by increasing macroeconomic uncertainty and ongoing political instability, particularly evident in major European markets” Graham Chipchase, CEO, Brambles Ltd

US Economy

“We saw the distribution of risks to the outlook for economic activity as more favourable than at the previous meeting” February Minutes, US Federal Reserve Committee

“In the US, while transport and lumber inflation continued to moderate, labour and property costs continued to increase” Graham Chipchase, CEO, Brambles Ltd

Food & Beverage

“We’ve heard the message on consumer wellbeing, and we’re delivering with reductions in sugar content across the portfolio of sales” Alison Watkins, CEO, Coca-Cola Amatil Ltd

Technology

“The global phenomenon of eSports keeps gaining momentum with an audience now exceeding $440 million, up over 30% in just two years, according to Newzoo [analytics & research publication]. The League of Legends [video game] World Championship brought more than a 100 million viewers, on par with this month’s Super Bowl” Colette Kress, CEO, NVIDIA Corporation [NASDAQ listed/world’s largest graphic chip maker]

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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.