NAOS CEO Insights

CEO INSIGHTS – Week Ending 23 October 2020 By NAOS Asset Management

October 23, 2020

“We do not see retail momentum for RVs [recreational vehicle] and boats slowing anytime soon” Michael Happe, CEO, Winnebago Industries Inc

CEO INSIGHTS – Week Ending 23 October 2020 By NAOS Asset Management

“We do not see retail momentum for RVs [recreational vehicles] and boats slowing anytime soon” Michael Happe, CEO, Winnebago Industries 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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Energy & Resources

“Renewables can’t be sustained unless you firm it [turning a variable energy source into a guaranteed & consistent supply] so we’re heavily investing into firming. There’s no magic answer. Unless you’ve got firming on scale all the renewables in the world can’t be sustained” Paul Broad, CEO, Snowy Hydro

“The energy market structure is also difficult at the moment when we’ve got all that variable renewable energy coming in...There are some market structure issues that have to be dealt with” Rob Wheals, CEO, APA Group ltd

“In line with the most recent IEA [International Energy Agency] projections, [absent of further COVID shocks] we see that the conditions still exist to rebalance demand and supply with improving demand recovery supported by economic stimulus measures and continued supply discipline from the major producers, ultimately resulting into a visible activity rebound” Olivier Le Peuch, CEO, Schlumberger Ltd [world’s biggest oilfield services company]

Global Economy

“I would say that CEO confidence has improved meaningfully in the quarter” David Solomon, CEO, Goldman Sachs Group Inc

Residential Property

“The housing market overall has been an area that has surprised us on the upside...Overall, housing volumes – in terms of applications and listings coming on the market – are much stronger than you’d expect, or certainly what we had expected. There is some cause for optimism compared to what we were expecting just a month or two ago” Matt Comyn, Chief Executive, Commonwealth Bank of Australia Ltd

“The housing stimulus packages from both Federal and State Governments continue to have a positive impact on new house sales and will underpin some recovery in the residential building market” Market Announcement, Capral Ltd [Australia’s largest manufacturer & distributor of aluminium products]

Banking & Financial Markets

“Fintech innovation is changing banking in important ways and our new digital banking platform is part of our long-term strategy to support this trend and better respond to changing customer needs” Peter King, CEO, Westpac Banking Corporation

“I think we are seeing a secular shift in getting more younger investors engaged in the market and I think that could create a more sustainably higher trading environment than what we saw in the 2017, 2018, 2019 timeframe” Adena Friedman, CEO, Nasdaq Inc

Trade, Transport & Logistics

“Australia is experiencing substantial disruption to the importing of goods through the Asia shipping lane. This is due to several macro factors that are impacting shipping capacity with demand being greater than supply. These international delays have been further exacerbated by delays at Australian ports” Andre Reich, CEO, The Reject Shop

“We are planning for a Christmas like no other. Our growth in parcels from July to September was more than the growth for the entire year just two years ago” Christine Holgate, CEO, Australia Post

Automotive

“We do not see retail momentum for RVs [recreational vehicle] and boats slowing anytime soon” Michael Happe, CEO, Winnebago Industries Inc

“A lot of the automobile guys and the battery guys are talking to us about nickel [a key input in electric vehicle batteries]” Ivan Glasenberg, CEO, Glencore plc

Retail

“The outdoor apparel [once in a lifetime] moment, we absolutely see…There is a trend towards outdoors and people’s desire to get outside linked to health and wellness” Steve Rendle, CEO, V.F. Corporation [footwear & outdoor/action sports apparel conglomerate]

Miscellaneous

“Demand [for hand sanitiser] has subsequently dissipated and the supply base for such products has become much more competitive, resulting in excess quantities of hand sanitiser inventory” Market Announcement, McPherson's Ltd

Employment & Workforce

“Some people will work from home, but really, the majority will come back to offices. You can’t run a business with people working from home” Harry Triguboff, CEO, Meriton

“[Post the initial COVID downturn] we already even now are feeling that same structural scarcity in tech jobs, in educational jobs and in healthcare jobs” Jacques van den Broek, CEO, Randstad NV [world’s largest staffing/recruitment company]

Technology & Telecommunications

“It [artificial intelligence] is a really exciting area, and like most things, it’s tech being applied in tech first, and it will start being applied elsewhere at scale [soon]” Mike Cannon-Brookes, Co-CEO, Atlassian Inc

“Much has been made of the technology transitions that have been accelerating by more per month. With these transitions, we believe many of the activities that are now virtual will remain virtual. And as such, this represents a significant change in the way people conduct their lives” Patrick Lo, CEO, NETGEAR Inc

Telecommunications

“4G drove the consumer app economy and China, the U.S. and the Nordics, they were the first countries to roll out 4G, and that allowed entrepreneurs in those regions actually to innovate on top of the network, building what has become the app economy. So it's no surprise that we see the, call it, the consumer app economy today dominated by Chinese and American companies” Börje Ekholm, CEO, Ericsson

Food & Beverage

“Craft distilling has gone from being a true cottage industry to a significant contributor to the drinks industry and Australian economy. Unlike the wine industry, we don’t have to rely on a certain climate or single annual harvest. If we get it right, craft distilling has every bit as much potential, if not more, than wine” Stuart Gregor, President, Australian Distillers Association

“I think as an industry we have been supply constrained [in addressing online shoppers] for at least the last two years, and what happened, the e-commerce was increasing demand and in this case ourselves and many of our competitors all responded with an increasing supply and that is what has really led to acceleration” Brad Banducci, CEO, Woolworths Group Ltd

terial 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.