NAOS CEO Insights

CEO INSIGHTS – Week Ending 25 October 2019 By NAOS Asset Management

October 25, 2019

"Today you can access 60 percent of the world’s population in a single flight from Sydney. Project Sunrise will connect us to 100 percent. The opportunities for Australia in business and tourism are enormous.” Geoff Culbert, CEO, Sydney Airport Ltd

CEO INSIGHTS – Week Ending 25 October 2019 By NAOS Asset Management

"Today you can access 60 percent of the world’s population in a single flight from Sydney. Project Sunrise will connect us to 100 percent. The opportunities for Australia in business and tourism are enormous.” Geoff Culbert, CEO, Sydney Airport Ltd


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

"Today you can access 60 percent of the world’s population in a single flight from Sydney. Project Sunrise will connect us to 100 percent. The opportunities for Australia in business and tourism are enormous.” Geoff Culbert, CEO, Sydney Airport Ltd

"In Hotels, whilst the markets in which we operate remain challenging, we anticipate a similar year to 2019." Jane Hastings, CEO, Event Hospitality and Entertainment Ltd

Energy & Resources

"In the refining market, given the increased competition from new energy forms, combined with transportation fuel demand reaching its peak, there is the expectation of a longer-term decline in traditional refining markets." Andrew Wood, CEO, WorleyParsons Ltd

"The Mining, Minerals and Metals markets are being driven by miners’ strong balance sheets resulting in increasing project development pipelines. The trend towards accelerated sustaining capital investment is evident as miners seek to extend the life of mines, improve productivity and maintain market share." Andrew Wood, CEO, WorleyParsons Ltd

"Changes in major input costs which include petroleum-based specialty chemicals and aerosol cans negatively impacted our margin." Jay Rembolt, CFO, The WD-40 Company

Domestic Property

“The residential market cycle has improved, particularly in Sydney and Melbourne, and the southeast Queensland market is steadily improving." Mark Steinert, CEO, Stockland

"We have passed the bottom of the residential cycle. There are now clear signs of improvement in the Sydney and Melbourne established housing markets with lifts in loan approvals consistent with the upturn in auction market activity, prices and turnover." Susan Lloyd-Hurwitz, CEO, Mirvac Group

"I am still very confident about the commercial property sector, with vacancy rates still at record lows in many areas." Lang Walker, CEO, Walker Corporation

Dairy & Agriculture

“Demand for whole milk powder (WMP) has been firm, and for the full season we’re expecting it to be above last year. Global WMP production is down year to date and expected to continue to decrease for the remainder of 2019." John Monaghan, Chairman, Fonterra Co-operative Group

Domestic Retail

"In response to a cautious consumer, we have activated a higher level of promotional activity across the business, which has successfully generated top-line growth but adversely impacted margin." Anthony Heraghty, Managing Director and Chief Executive Officer, Super Retail Group Ltd

"Our hypothesis remains that the shift to online, which is being driven by the older Millennials and those that have grown up buying everything online, is independent of broader macroeconomic factors. We believe the shift from offline to online will continue regardless of what’s happening macroeconomically." Mark Coulter, CEO, Temple & Webster Group Ltd

Financial Markets

"We observed a meaningful shift in retail investor sentiment during the quarter as our customers were net sellers of securities for the first time since 2016." Michael Pizzi, CEO, E-Trade Financial Corporation

Automotive

"Market conditions continue to be challenging. New car sales for the September quarter were down 6.7% on PCP and having some impact on novated growth. We are also seeing some pressure on yields due to credit availability and insurance repricing." Mike Salisbury, CEO, McMillan Shakespeare Ltd

“For 2020, we expect markets to come down to more normal replacement levels in both Europe and North America." Martin Lundstedt, CEO, The Volvo Group

"Buses, the general story is that we -- if anything, see also a little bit of correction in the total demand." Martin Lundstedt, CEO, The Volvo Group

Technology & Media

"The digital market has evolved so quickly, we need scale to compete with Google and Facebook." Brendon Hill, CEO, Bauer Media Australia [global magazine conglomerate]

"While global economic and geopolitical uncertainty continues, long-term trends such as AI, 5G, cloud and IoT continues to drive strong [semiconductor] design activity." Lip-Bu Tan, CEO, Candence Design Systems Inc [global semiconductor company]

Global Economy

"The global economy remains challenged by factors including demographics and debt levels." Peter Costello, Chairman, Australian Government Future Fund

"I will tell you that [in China] we are seeing a slowdown." Adaire Fox-Martin, Co-CEO, S.A.P

 

 
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.