NAOS CEO Insights

CEO INSIGHTS – Week Ending 28 August 2020 By NAOS Asset Management

August 28, 2020

“The challenge that our customers have had with their global supply chains have not been driven by an inability to get goods transported across the world, but rather a lack of buffer inventory and single vendor reliability” Søren Skou, CEO, Maersk Group [world’s largest shipping container company]

CEO INSIGHTS – Week Ending 28 August 2020 By NAOS Asset Management

“The challenge that our customers have had with their global supply chains have not been driven by an inability to get goods transported across the world, but rather a lack of buffer inventory and single vendor reliability” Søren Skou, CEO, Maersk Group [world’s largest shipping container company]


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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Advertising & Marketing

“The worst is behind us in terms of advertising budget cuts [by clients] ... The pandemic has caused decades of innovation packed into about four months” Mark Read, CEO, WPP plc [world’s largest advertising agency]

“Two things are happening; post-pandemic brand advertising – there's been some reallocation back to brand – and a consciousness that actually various parts of the economy have performed reasonably well through the pandemic, particularly retail in many areas” Hugh Marks, CEO, Nine Entertainment Co

US Economy

“As the benefits from stimulus waned towards the end of the quarter, we saw our comp sales [comparable same store sales] settle into a normal range” Doug McMillon, CEO, Walmart Inc

“In seeking to achieve inflation that averages 2% over time, we are [now] not tying ourselves to a particular mathematical formula that defines the average. Thus, our [new] approach could be viewed as a flexible form of average inflation targeting” Jerome Powell, Chairman, US Federal Reserve

Chinese Economy

“Based on what we've seen of our customers, as well as observing the whole market growth, the China market is going to be a much faster-growing market in cloud than the U.S. market” Jos Tsai, Co-Founder/Vice Chairman, Alibaba Group

Commercial Property

The Sydney CBD [for example] is in decline in the last 4 weeks by 45% as all the offices are essentially shut. If you talk to most stores that are open, they're trading about half the levels that they were, and that volume has moved to the suburbs and so we're seeing growth in suburbs” Peter West, Managing Director Australia, Coca-Cola Amatil Ltd

“The retail rental market in Australia is not paused because of the pandemic — it is fundamentally changed for the future” Scott Evans, CEO, Mosaic Brands Ltd

Residential Property

“The more impacted part of the economy has tended to be lower-skilled workers, more casual workers and sadly more females, [the] more low-income cohort and therefore that’s disproportionately the renter population as opposed to the homeowner population” Shayne Elliot, CEO, ANZ Banking Group Ltd

“What we've seen in the last quarter is that spending in the household category has been very strong, including furniture, homewares, hardware and electrical. In my 26 years of large-format retail experience, I've never witnessed anything like this” Darren Holland, CEO Aventus Group

“As evidenced by our most recent AFG Index, the pipeline of business currently remains strong and various federal and state government incentives have played an important role in stimulating lending activity” David Bailey, CEO, Australian Finance Group Ltd

Construction & Infrastructure

“East Coast [Australian] infrastructure activity remains resilient, being a key lever for governments to accelerate economic activity” Market Announcement, Seven Group Holdings Ltd

Manufacturing

“More than ever, our industries require solutions that reduce costs, enhance productivity and deliver sustainable outcomes” Ryan Campbell, CFO, Deere & Company

Transport & Logistics

“The challenge that our customers have had with their global supply chains have not been driven by an inability to get goods transported across the world, but rather a lack of buffer inventory and single vendor reliability” Søren Skou, CEO, Maersk Group [world’s largest shipping container company]

“Our single biggest challenge has been the difficulties with getting our seafarers relieved when their tours were up due to travel restrictions, closed borders and lack of flights. And we continue to battle this problem” Søren Skou, CEO, Maersk Group [world’s largest shipping container company]

Automotive

“The scale of the supply shortages differs among brands and it differs among models, but many dealers are still reporting shortages and delays” James Voortman, CEO, Australian Automotive Dealer Association (AADA)

“Semiconductors and software are really the future of cars. That’s the way to think about it. All of the intelligence — the whole bedrock of what’s in the car in terms of the user experience, the intelligence, the driving experience – that is all being, if you like, enabled by semiconductors and software these days” Vincent Roche, CEO, Analog Devices Inc [global semiconductor chip manufacturer]

Retail

“We still see there's life in retail and life in shopping centres. In markets that have less impact from COVID we're still trading strongly” Shane Fallscheer, CEO, Lovisa Holdings Ltd

“We still see an accelerated adoption of online shopping for all kinds of goods, including groceries” Fabian Siefel, CEO, Marley Spoon Ltd

“We saw tremendous growth in e-commerce, including direct to customer and online grocery pickup and delivery” Jim Snee, CEO, Hormel Foods Corporation [multinational food conglomerate]

Travel, Leisure & Experience

“Human beings will adapt. They will find ways to entertain themselves and express themselves and it seems that they continue to see GoPro as a useful tool to help them do that. I think at the core, that's why we're seeing such momentum in our businesses” Nicholas Woodman, CEO, GoPro Inc

“We believe that the demand for out-of-home family entertainment experiences will be stronger than ever once the pandemic has subsided and restrictions have eased” Dr Gary Weiss, Chairman, Ardent Leisure Group

Healthcare

“The public [hospital] sector doesn't have the capacity to be able to deal with the backlog of elective surgery without support, so we are there to do that” Craig McNaly, CEO, Ramsay Healthcare Ltd

Agriculture & Livestock

“Up until now demand has been good and the industry has been able to continue pretty much unfettered during COVID” Mark Harvey-Sutton, CEO, Australian Livestock Exporters Council

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.