NAOS CEO Insights

CEO INSIGHTS – Week Ending 29 July 2022 By NAOS Asset Management

August 2, 2022

29th July CEO INSIGHTS “We seem to have entered an economic downturn that will have a broad impact on the digital advertising business” - Meta

CEO INSIGHTS – Week Ending 29 July 2022 By NAOS Asset Management

“We seem to have entered an economic downturn that will have a broad impact on the digital advertising business” Mark Zuckerberg, CEO, Meta Inc

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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Construction & Infrastructure

“I think we’re at the start of that reversal on pressure when it comes to skills and capabilities to go and build a new mine” Andrew Cole, CEO, OZ Minerals Ltd

“There's something like $200 billion to $250 billion of infrastructure projects that are on the slate in Australia, typically in and around major cities. Look at that specialised labour, [saying am I] going to fly in and fly out for a mine site…or am I going to go and work on this bridge or this freeway extension, I think you're seeing that play out across the world in different places” Thomas Palmer, CEO, Newmont Corporation [world’s largest gold company]

“It’s going to take an enormous amount of capital and focus to undertake the [renewables] transition” David Griffin, CEO, Sun Cable [world’s largest solar energy infrastructure development]

Food & Beverage

“We’ve got demand outstripping what we can produce” Bruce Sabatta, COO, Primo Foods [Australia’s biggest ham, bacon and salami company]

“This [FY22 industry results] reflects the wine sales trends in many markets around the globe, which have seen a downward trend in commercial/value sales [less than US$10 per bottle retail] and sales growth in premium and above segments [US$10 or more per bottle retail]” Market Statement Wine Australia Export Report

Fibre Optic Cable Shortages

“In my professional career I’ve never seen anything like this inflationary crunch [due to the fibre optic cable shortages]” Wendell Weeks, CEO, Corning Inc [world’s biggest producer of fibre optic cable]

Xinjiang Cotton Ban

“Let's look at the total Chinese balance sheet of cotton, they consume close to about 8 million tonnes. And out of that, they import almost 1.5 million to 2 million tonnes, [approximately] 6 million tonnes a year is their domestic production. Out of that, 80% comes from Xinjiang” Neeraj Jain, Co-CEO, Vardhman Textiles Ltd [India's largest vertically integrated textile manufacturer]

Leisure & Transport

“The boating industry is ripe for the share economy given it involves expensive luxury items that are extremely under-utilised” Matthew Lloyd, CEO, Book My Boat [peer to peer boat rental marketplace]

“There is clearly pent-up demand, but it is very fragile and capable of being damaged at very short notice” Michael O'Leary, CEO, Ryanair Holdings Plc

Corporate Sector

“Rather than making multiple short trips in a month, a single, longer [business] trip has become a better option for business travellers as they look to fit more into these trips” Trent Fraser, CEO, Choice Hotels

Workplace & Labour Markets

“Hybrid is very dangerous. I think that’s the worst of both worlds. We don’t want a second-class citizen culture where the people that don’t come in are second-class citizens” Chris Hulls, CEO, Life360 Inc

Housing Market

“The reality is housing price declines are gathering momentum, and it’s likely the decline phase will worsen before it gets better” Tim Lawless, Research Director, CoreLogic

Technology

“Demand for end-user computing and devices has normalised” Market Statement, Dicker Data Ltd

“IT spend is going to increase because every business is trying to fortify itself with digital tech to, in some sense, navigate this macro environment” Satya Nadella, CEO, Microsoft Corp.

“At the moment, the pandemic and war forces are bigger. But when the war is over and the pandemic is done and dusted, technology will still be deflationary” Sam Sicilia, CIO, Hostplus

Domestic Economy

“The world needs a lot of what Australia produces, in terms of minerals, agriculture and energy. And we still have very strong levels of consumer demand” Andrew Irvine, CEO Business Banking, National Australia Bank Ltd

Macroeconomic

“From now on we will make our monetary policy decisions on a data-dependent basis, [we] will operate month by month and step by step” Christine Lagarde, President, European Central Bank

“There's not been an asset class that has been immune to the effects of the challenging global macroeconomic environment” Ralph Hamers, CEO, UBS Group AG

Recession

“A typically recessionary pattern would be consumers initially stop buying high-ticket items, discretionary things. ‘I’ll replace the car later, I’ll replace the mattress later’. They then start saving on the lower-ticket items…We can see, in some categories in some countries, what looks like the beginning of that process” James Quincey, CEO, The Coca-Cola Co.

“I mean, my fear is that all these comments about recession and dropping demand would become a self-fulfilling prophecy” Jean-Jacques Guiony, CFO, LVMH Moët Hennessy Louis Vuitton SE

Telecommunications

“I think importantly, for the sector and something I've talked a lot to governments about is we need to do this [pricing increases] to improve returns” Nicholas Read, CEO, Vodafone Group Plc

Advertising & Marketing

“We seem to have entered an economic downturn that will have a broad impact on the digital advertising business” Mark Zuckerberg, CEO, Meta Inc

For all enquiries please contact enquiries@naos.com.au

 

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.