NAOS CEO Insights

CEO INSIGHTS – Week Ending 29 October 2021 By NAOS Asset Management

October 29, 2021

“[Cotton] Prices in the last 30 years have only been above $600 a bale about 10 per cent of the time. We’re in rare air above $650” Adam Kay, CEO, Cotton Australia [peak industry body]

CEO INSIGHTS – Week Ending 29 October 2021 By NAOS Asset Management

“[Cotton] Prices in the last 30 years have only been above $600 a bale about 10 per cent of the time. We’re in rare air above $650” Adam Kay, CEO, Cotton Australia [peak industry body]

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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Inflation

“Hyperinflation is going to change everything. It’s happening” Jack Dorsey, CEO, Twitter Inc/Square Inc

“The case for digital transformation has never been more urgent or more clear. Digital technology is a deflationary force in an inflationary economy” Satya Nadella, CEO, Microsoft Corporation

Consumer Behaviour

“Shopping habits have ebbed and flowed over the last 20 months. But the underlying takeaway is that people want more choice, they want more information, more flexibility, and we don't see this reversing -- omnichannel is definitely in full force” Philipp Schindler -- Chief Business Officer, Google Inc

“I think the weekends, people want to be out. It turns out they didn't like being locked in their closets and basements and attics, and so they're going to want to get out. And we've seen this pattern of very high demand on weekends. I think that will continue” Christopher Nassetta, CEO, Hilton Worldwide Holdings, Inc.

Consumer Staples

“The China infant milk formula market has experienced unprecedented change over the past 12 months which has required us to adapt our growth strategy” David Bortolussi, CEO, a2 Milk Company

Food & Restaurants

“I think it is fair to say, again, just thinking about the global environment, there are certainly supply chain challenges across the world on various things related to kitchen equipment, technology equipment, I’ll say pandemic-related disruptions, slower permitting times. All the things are making it a bigger challenge, I’ll say, to get restaurants open than historically” Kevin Ozan, CFO, McDonald's Corporation

Payments

“We know from other markets that tapping [card payments] brings increased spending and transactions while digitizing cash” Al Kelly, CEO, Visa Inc

“We believe we're currently experiencing BNPL 1.0. Individual fintechs and companies are cutting individual deals merchant by merchant. Eventually, we believe the business model will evolve to BNPL 2.0…We're already seeing this evolution begin to take shape” Al Kelly, CEO, Visa Inc

Technology

“Video collaboration will almost totally replace audio-only collaboration” Bracken Darrell, CEO, Logitech International

“We've entered the next era where your workplace is your workspace, wherever that is; traditional office desk, hot desk, home office, kitchen table, conference room, your child's room or a coffee shop” Bracken Darrell, CEO, Logitech International

Cryptocurrency

“The regulatory environment in terms of new coins and lending products in crypto is uncertain and evolving” Vlad Tenev, CEO, Robinhood Markets Inc

Audio & Advertising

“A good reminder, Linear [traditional] Radio still has a 46% share of audio listening in the US alone, this despite consumption shifting steadily away from it. In this year, more than 60% of all audio ads spending will go to traditional radio” Daniel Elk, CEO, Spotify Inc

Agriculture

“[Cotton] Prices in the last 30 years have only been above $600 a bale about 10 per cent of the time. We’re in rare air above $650” Adam Kay, CEO, Cotton Australia [peak industry body]

Building & Construction

“The demand drivers associated with increased repair and remodelling activity have continued to underpin volumes” Heath Sharp, CEO, Reliance Worldwide Corporation Ltd

“As experienced following previous lockdowns, hipages has seen a strong bounce back heading into Q2, as pent-up consumer demand and the easing of restrictions has converted into increased platform activity” Market Statement, hipages Group Holdings Ltd

Mining & Energy

“The pandemic has undoubtedly posed different challenges and opportunities for our metal detection segment. The travel restrictions have increased the exposure of outdoor recreation hobbies such as metal detecting” Donald McGurk, CEO, Codan Ltd

“While we do expect volumes to begin to recover as consumer mobility increases, crude and refined product prices have continued to trend higher in recent weeks” Matt Halliday, CEO, Ampol Ltd

Freight & Logistics

“We started by not getting access to shipping capacity. Then there were issues about getting access to containers. And now the big issue is making sure we all get access to pallets” Brad Banducci, CEO, Woolworths Group Ltd

“In a significant area of growth, projected demand has increased for dedicated freighters, including new and converted models. With sustained demand for air cargo tied to expanding e-commerce and air freight's speed and reliability, we project the global freighter fleet in 2040 will be 70% larger than the pre-pandemic fleet” David Calhoun, CEO, The Boeing Co.

“High ocean freight rates have made it uneconomical to ship some commodities unless they can fully pass through the increases to the end consumer. For example, shipping rates are now equal to 100% of furniture prices” Ryan Peterson, CEO, Flexport [global logistics technology platform]

Environmental

“The market, the world and our customers are getting on with the [energy] transition, and that provides massive opportunities” Shayne Elliott, CEO, ANZ Banking Group Ltd

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.