NAOS CEO Insights

CEO INSIGHTS – Week Ending 23 July 2021 By NAOS Asset Management

July 23, 2021

“Internet streaming has been amazingly consistent, prolific. As you get new competition in, you get validation, more reasons to get a smart TV or unlimited broadband. So, I think, for at least the next several years, the growth story of streaming as a whole is very intact” Reed Hastings, Co-CEO, Netflix Inc

CEO INSIGHTS – Week Ending 23 July 2021 By NAOS Asset Management

“Internet streaming has been amazingly consistent, prolific. As you get new competition in, you get validation, more reasons to get a smart TV or unlimited broadband. So, I think, for at least the next several years, the growth story of streaming as a whole is very intact” Reed Hastings, Co-CEO, Netflix 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

“Looking at client sectors, the picture is also one of comprehensive acceleration. Each of our eight major sectors [auto, retail, consumer goods, tech & telecom, healthcare, food & beverage, financial services and other] had double-digit increases from a year ago” Philippe Krakowsk, CEO, The Interpublic Group of Companies Inc [one of the largest advertising agencies in the world]

Streaming

“Internet streaming has been amazingly consistent, prolific. As you get new competition in, you get validation, more reasons to get a smart TV or unlimited broadband. So, I think, for at least the next several years, the growth story of streaming as a whole is very intact” Reed Hastings, Co-CEO, Netflix Inc

“What we’re seeing is people are going to where the content they want is. The challenge they [streaming providers] have is making sure that they keep them on that platform, because it’s not hard to cancel a subscription and re-sign when a different piece of content comes in” Australian Entertainment & Media Outlook 2021 Report, PricewaterhouseCoopers

Labour Market Shortages

“We are at a crisis point in terms of skills, we can’t get people to come to Australia because they are concerned about being locked in and trapped here” Catherine Livingstone, Chairman, Commonwealth Bank of Australia

“The increased tightness in Western Australia’s labour market continues, in particular shortages of roles relating to structural, mechanical, electrical and instrumentation disciplines, which is amplified by ongoing COVID-19 travel restrictions” Market Statement, Rio Tinto Ltd

Workplace

“While there will be a lot more flexibility in work practices, the latest lockdown has shown the need for a [central] place where staff can gather to work, collaborate and innovate, which are key drivers of corporate culture” Darren Steinberg, CEO, Dexus

Domestic Economy

“While we are seeing the economy stalling at the moment, we saw economies bounce back very quickly when things opened up again, and we expect the economy to bounce back again” Ross McEwan, CEO, National Australia Bank Ltd

“We’re not at the point of requiring stand downs in our domestic operations at this stage. But to be honest, we can’t rule it out if multiple states keep their borders closed for extended periods” Alan Joyce, CEO, Qantas Group Ltd

Construction & Infrastructure

“We’re seeing an increased volume of work coming to the market as a result of the various economic stimulus packages. The $10.4 billion in new work we secured in the past six months exceeds the $6.8 billion won in the 12 months to the end of 2020 and there is a substantial pipeline of work yet to be awarded” Juan Santamaria, CEO, CIMIC Group Ltd

Transport & Logistics

“The supply chain remains very fragile not only for our business, but for every global manufacturer” Gina Goetter, CFO, Harley-Davidson Inc

Technology

“We have a sizable opportunity to become a holistic digital leader. Digital is of the utmost importance” James Quincey, CEO, The Coca-Cola Company

Consumer Behaviour

“We can see that consumer excitement and optimism is returning” Jochen Zeitz, CEO, Harley-Davidson Inc

Financial Markets & Superannuation

“Continued global interest in financial markets, amid the search for higher yield, led to industry trading volumes that are still above the activity level of 2020 in most products” Paul Brody, CFO, Interactive Brokers Group Inc

“I think we are going to see a completely changed landscape over the next few years, with fewer funds and bigger funds as a result” Steve Bracks, Chairman, Cbus Super

Insurance

“The second quarter marks the 15th consecutive quarter of rate increases in the commercial P&C [property & casualty] insurance marketplace” Dan Glaser, CEO, Marsh & McLennan Companies, Inc [largest insurance broker in the world]

“We are seeing a flight to quality and stability, which is contributing to high levels of business growth... and there's a long runway for growth as we think about major protection gaps around the world, new emerging risks, digitisation, workforce of the future and under penetrated market such as small commercial” Dan Glaser, CEO, Marsh & McLennan Companies, Inc [largest insurance broker in the world]

SMEs

“[Research indicates] for SMEs, access to credit remains a fundamental problem. Over the past 12 months, SMEs were declined $23.9 billion in credit. The rebound now being witnessed among SMEs has seen the appetite to invest in their future increase further.” Greg Moshal, CEO, Prospa Group Ltd

Energy & Resources

“The momentum for cleaner energy projects continues to increase around the world” Lorenzo Simonelli, CEO, Baker Hughes Co [major multinational oil field services company]

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.