NAOS CEO Insights

CEO INSIGHTS – Week Ending 25 September 2020 By NAOS Asset Management

September 25, 2020

“You can imagine particularly in the very early days of March, April, we saw companies go down. We saw car listening go down pretty materially. I think at the peak [of COVID], car listening was down about 50% from the peak, it's recovered almost all the way, it's now down less than 10% from where it was” Paul Vogel, CFO, Spotify Technology S.A.

CEO INSIGHTS – Week Ending 25 September 2020 By NAOS Asset Management

“You can imagine particularly in the very early days of March, April, we saw companies go down. We saw car listening go down pretty materially. I think at the peak [of COVID], car listening was down about 50% from the peak, it's recovered almost all the way, it's now down less than 10% from where it was” Paul Vogel, CFO, Spotify Technology S.A.


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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Government Stimulus

“The civil contractors cannot keep up [with the HomeBuilder stimulus package], nor can the builders, nor can we” Nigel Satterley, Chief Executive, Satterley Property Group [Australia’s largest private residential land developer]

“There’s never been a better deal on the table [to build a new home]” Lindsay Partridge, MD, Brickworks Ltd

“It’s fair to say that when we are providing support to the states, or to various industries, we want that money to be spent as quickly as possible” Josh Frydenberg, Treasurer, Federal Government

Chinese Economy

“I'm not alone in the business community saying that something needs to change [with Australia-China relations]. We need to find some formula that works. The political tensions appear to be escalating and we need a circuit breaker” Geoff Babidge, CEO, The a2 Milk Company

“China is in many ways up and running in a very, very normal way. We look at our businesses there. People are walking around without mask. People are back in the office, so we are really seeing that part of the world kind of coming back up to normal” Andi Owen, CEO, Herman Miller Inc [multinational office furniture manufacturer]

Retail

“This is my best sales in my lifetime, and I have been doing this since 1959. It’s the best sales in over 60 years, not just in Australia but in our stores right across the world. For me that is terribly important, human behaviour has been identical in all the countries we have stores” Gerry Harvey, Chairman, Harvey Norman Holdings Ltd

“The accelerated consumer shift toward digital is here to stay” John Donahoe, CEO, NIKE Inc

Media, Advertising & Entertainment

“Advertising is starting to bounce back” Patrick Delany, CEO, Foxtel Ltd

“I would say from an opportunity standpoint, we still think that audio in general is under-represented and under monetised. It's about one 10th the size of video globally. We think there's a tremendous opportunity for audio to expand” Paul Vogel, CFO, Spotify Technology S.A.

“You can imagine particularly in the very early days of March, April, we saw companies go down. We saw car listening go down pretty materially. I think at the peak [of COVID], car listening was down about 50% from the peak, it's recovered almost all the way, it's now down less than 10% from where it was” Paul Vogel, CFO, Spotify Technology S.A.

“The large global [technology] companies use this [locally made] content to generate revenue, but they do not pay for it at a rate that fairly shares the cost of making it or fairly shares the value they get from it” Peter Costello, Chairman, Nine Entertainment Co Holdings Ltd

Workplace & Employment

“While there are still a few articles about companies deciding to have large parts of their workforce permanently working from home, we see very few examples of this. Most of our clients aren't even considering it, and they're not interested in even talking about it” Jim Keane, CEO, Steelcase Inc [multinational office furniture manufacturer]

“Personally, I believe if everybody worked from home forever, it will hurt productivity, it will hurt innovations” John Chen, CEO, BlackBerry Ltd

Technology

“This [the rollout of 5G] is about as good an environment as I can ever remember” Jay Brown, CEO, Crown Castles International Corp [global mobile/communications tower REIT]

“Content creation and consumption are exploding in a world where connecting visually has become even more essential” Shantanu Narayen, CEO, Adobe Inc

“Electronic workflows and signatures are the only way to efficiently complete business transactions. The world has changed in a way that none of us could have foreseen” Shantanu Narayen, CEO, Adobe Inc

“Post-COVID leadership [company management teams] requires that every business become a cloud first business, quickly moving from today's approximately 20% in the cloud to 80%. This is a “once in a digital era” massive re-platforming of global business” Julie Sweet, CEO, Accenture PLC

Financial Markets

“I think in the second quarter I said, leverage finance was slow and M&A was slow. We've started to see signs of life in both of those” Jon Pruzan, CFO, Morgan Stanley

Payments & Lending

“There are 16 million credit card accounts in Australia; we believe the addressable market [for BNPL] is that plus, of course, the debit card population” Larry Diamond, CEO, Zip Co Ltd

Automotive

“We’re also seeing cities get in the game [of vehicle connectivity], introducing technology, to make intersections smarter, doing things like enabling the vehicle to talk to these intersections to improve safety, enhance mobility services, provide for data collection, as well as improve and enhance autonomous driving” Ken Washington, CTO, Ford Motor Company

Agriculture

“From a weather perspective, the early indications suggest an improved outlook for the summer season 2021” Greg Hunt, CEO, Nufarm Ltd

Health & Beauty

“We are seeing more focus on hygiene, skin cleansing, hand washing and cleaning generally and we are definitely seeing an increase in cocooning and a desire to stay at home and replicate out-of-home experiences [such as beauty salons and dining out] in the home” Nicole Sparshott, CEO, Unilever ANZ

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.