NAOS CEO Insights

CEO INSIGHTS – Week Ending 24 June 2022 By NAOS Asset Management

June 27, 2022

24th June CEO INSIGHTS - “Today software represents 10 per cent of the value of the car. In 2030 it will be 40%”

CEO INSIGHTS – Week Ending 24 June 2022 By NAOS Asset Management

“Today software represents 10 per cent of the value of the car. In 2030 it will be 40%” Luca de Meo, CEO, Groupe Renault

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

“Commercial radio is currently flying on all fronts with record audience listening levels” Ford Ennals, CEO, Commercial Radio Australia [radio industry body]

Books

“[Print volume in 2021] was the highest ever seen in NPD BookScan” Kristen McLean, CEO, NPD BookScan [US book industry point of sale analysis company]

Interest Rates

“We have a situation here where if interest rates move, as theory says they should, to deal with inflation, you have a huge problem in the household sector that will spill over into the SME economy” Joseph Healy, CEO, Judo Bank Ltd

Macroeconomic

“Chocolate and candy bars do well in recessions” Dirk Van de Put, CEO, Mondelez International Inc [snack food conglomerate / owner of Cadbury, Toblerone & Oreo]

“Telecommunications services are quite resilient to inflationary pressures or recession because they're needed, they're essential” Jeffrey McElfresh, COO, AT&T Inc

Labour Markets & Employment

“The root cause of these challenges [delays at airports] is that every business at the airport is rebuilding its workforce and doing it in the tightest jobs market in nearly half a century” Geoff Culbert, CEO, Sydney Airports Ltd

“If wage increases become common in the 4–5 percent range, then it is going to be harder to return inflation to 2.5 percent” Philip Lowe, Governor, Reserve Bank of Australia

“The megatrend of work anywhere, anytime has only accelerated during the pandemic and we don't really see that going away. So this idea of flexibility in a hybrid work and what I would call career nomads, I think it's going to continue” Gary Burnison, CEO, Korn Ferry Inc

Automotive

“Cars have been closed products. They tend to stay more or less the same for the whole life cycle, and that will change. They will become intelligent, they will learn from the driver, so your car after three years will be better than when you buy it, because it knows you” Luca de Meo, CEO, Groupe Renault

“Supply chain lead times remain elevated and, in some cases, have increased since the [our] April update” Market Statement, GUD Holdings Ltd

Technology & Software

“Today software represents 10 per cent of the value of the car. In 2030 it will be 40%” Luca de Meo, CEO, Groupe Renault

“If you look at the landscape…it is changing dramatically. We are all aware that the onset of 5G is upon us. Industry 4.0 is also gaining traction. Hyperscalers are really increasing” Raghav Sahgal, CEO of Cloud & Network Services, Nokia Corporation

Supply Chain & Logistics

“It's frustrating [the AdBlue diesel fluid shortage] because it was already a problem last year, and now we are back to worrying about it again” Warren Clark, CEO, National Road Transport Association

“The past two years have been an absolute nightmare of supply chain interruptions, one thing after another, and we’re not out of it yet” Elon Musk, CEO, Tesla Inc

Commercial & Industrial Property

“And this is really the new problem that our industry and our customer base in our world has about how we reduce the amount of carbon that we consume in buildings” Douglas Wright, CEO Building Technologies, Honeywell International Inc

“We have continued to see growth in asset values for well-located industrial and logistics facilities supported by market rent growth” Darren Steinberg, CEO, Dexus

Financial Markets

“This is an entirely different situation and no one’s [central bank] coming to the rescue this time. This is actually caused by normalisation of policy settings, which is just a normal business cycle. But people haven’t had one of those for more than a decade” Raphael Arndt, CEO, The Future Fund

Mining Sector

“This new tax [increased QLD mining royalties] is inconceivable, and it will place a heavy burden on our sector and Queensland mining regions” Nick Barlow, Australia CEO, Anglo American plc

Regional Australia

“The housing market in the regions where we’re operating, you’re looking at 0.5 percent vacancy rates, so you couple that with the future growth of jobs, and it means you’re going to see an accelerated demand for housing” Wes Maas, CEO, Maas Group Ltd

Domestic Energy Markets

“The hope is that it has stabilised” Innes Willox, CEO, Australian Industry Group

Consumer Behaviour

“As far as the consumer, the entire [furniture] industry over the last 3, 4 months is certainly seeing a slowdown in traffic. And I think there's a couple of things driving that. Overall, consumer sentiment, no doubt, is challenged” Melinda Whittington, CEO, La-Z-Boy 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.