NAOS CEO Insights

CEO INSIGHTS – Week Ending 27 March 2020 By NAOS Asset Management

March 27, 2020

“As an industry, we have already noticed significant business demand changes from coronavirus. Demand is high, farmer confidence is high and we have had significant rain” Mark Allison, CEO, Elders Ltd

CEO INSIGHTS – Week Ending 27 March 2020 By NAOS Asset Management

“As an industry we have already noticed significant business demand changes from coronavirus. Demand is high, farmer confidence is high and we have had significant rain” Mark Allison, CEO, Elders 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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Chinese Economy

“Our employees in China were not allowed to leave their house for 60 days, other than for medical and food supplies. They went back to work Monday” Peter Davey, CEO, Clover Corporation Ltd

“Our digital business in China has accelerated even further over the past month, and we are now seeing double-digit increases in retail traffic week-over-week with some stores having already returned to prior year levels” John Donahoe, CEO, Nike Inc

“So, today, I can say that we're seeing the other side of the crisis in China” John Donahoe, CEO, Nike Inc

“I'm not saying we're back to normal yet, but it's perhaps not as negative there as you might think” James Keane, CEO, Steelcase Inc [global office furniture manufacturer]

Workplace

“The fact that actually we can even contemplate large sectors of the economy and the population working and studying from home is in of itself a pretty impressive fact, given the technology and the capacity that’s had to be created and invested in to get us to that point” Andy Penn, CEO, Telstra Corporation Ltd

“So factories will have -- all around the world, not just our factories, but everyone's factories will have to be reconsidered to think about how you improve safety and reduce the risk of infection. Offices will go through the same thing and a lot of our customers are already trying to think about how our offices have to be changed” James Keane, CEO, Steelcase Inc [global office furniture manufacturer]

Telecommunications

“We are seeing an increase in mobile traffic, we’re seeing a shift in the peak time of mobile traffic, which was typically around 5:00 pm, it’s now trending more towards 2:00 pm in the afternoon. We’re seeing, obviously, volumes on the network more generally increase” Andy Penn, CEO, Telstra Corporation Ltd

“This [5G] is a multi-year thematic move and the interesting thing right now is that you know people today are clamoring to get the technology” Liam Griffin, CEO, Skyworks Solutions Inc [global semiconductor manufacturer]

Agriculture

“As an industry we have already noticed significant business demand changes from coronavirus. Demand is high, farmer confidence is high and we have had significant rain” Mark Allison, CEO, Elders Ltd

Domestic Food & Beverage

“The supply chain is working very well. We are dealing with Christmas volumes every day without planning for Christmas” Scott Marshall, CEO, Metcash Supermarkets Ltd

“You can’t turn off and then quickly turn back on major breweries. After re-opening, there could be up to three months of no beer for pubs or bottle shops because it takes that long to grow the quantity of yeast needed” James Brindley, MD, Lion Australia Co

Environmental

“For the first time in Enel’s history, the production from renewable sources has overtaken the production coming from thermal generation” Francesco Starace, CEO, Enel SpA [Europe's largest utility company]

“This [Co2 reduction] is clearly a mid and long-term issue which is absolutely relevant for us as a company, but also for us as an industry” Dominik von Achten, CEO, HeidelbergCement AG [global building materials company]

Energy & Resources

“On commodities - we see gas in Europe weakening along [with] the global gas price assumptions due to the increasing oversupply. We think this is going to continue like that and we have become more bearish not just for 2020, but also for the next two years” Francesco Starace, CEO, Enel SpA [Europe's largest utility company]

Aviation

“Caltex estimates that jet fuel demand reductions could be in the magnitude of 80-90% for the period during which the announced level of flight cancellations are in place” Market Announcement, Caltex Australia Ltd

Automotive

“When we look at the containment measures that the various governments have implemented around the world, it is only a matter of time before we start feeling the impact on our business whether through supply chain or retail demand” Sébastien Martel, CFO, BRP Inc [global vehicle conglomerate]

Construction

“I think for now the governments, at least some of them, have started to reduce public work [construction], but whether that's going to continue or not, it's very difficult for us to say” Dominik von Achten, CEO, HeidelbergCement AG [global building materials company]

“We are rapidly heading for a building downturn that will result in reduced demand for at least the remainder of the current financial year. Builders are reporting reduced activity at display homes and are imposing restrictions on the number of trades on site” Lindsay Partridge, CEO, Brickworks Ltd

Insurance

“It's too early to give any indications of industry and Swiss Re's [COVID-19] losses related to business interruptions” John Dacey, CFO, Swiss RE Group

Domestic Manufacturing

“This is the problem when you don’t look after your local manufacturing base …. when there’s a crisis you quickly run out of critical supplies” Greg Whiteley, Executive Chairman, Whiteley Corporation [domestic medical company]

Leisure & Travel

“Some might make the argument that outdoor businesses will receive a material future boost as end customers reevaluate how they want to spend their discretionary time in the future when social distancing practice may become more of a norm than they are today” Michael Happe, CEO, Winnebago Industries Inc

 
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.