NAOS CEO Insights

CEO INSIGHTS – Week Ending 3 July 2020 By NAOS Asset Management

July 3, 2020

“I will go on the record to say that travel will never, ever go back to the way it was pre-COVID. It just won’t. People will, one day, get back on planes. But one of the things that I do think is a fairly permanent shift is...a redistribution of where travelers go. I think a lot of people are going to realise they don’t need to get on an airplane to have a meeting” Brian Chesky, CEO, Airbnb Inc

CEO INSIGHTS – Week Ending 3 July 2020 By NAOS Asset Management

“I will go on the record to say that travel will never, ever go back to the way it was pre-COVID. It just won’t. People will, one day, get back on planes. But one of the things that I do think is a fairly permanent shift is...a redistribution of where travelers go. I think a lot of people are going to realise they don’t need to get on an airplane to have a meeting” Brian Chesky, CEO, Airbnb 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.  
 
If you do not already subscribe and wish to receive this weekly publication of “CEO Insights” via email please click here. 
 

Residential Property

“Whilst we're seeing a more positive environment currently than we had seen during the height of lockdown, there are two things – it's off relatively low bases of listings volumes because this is a traditionally slow period of the year, and secondly, it's a very fluid situation” Jason Pellegrino, CEO, Domain Holdings Ltd

Commercial Property

“What we are finding is that as people bring people back to the office now, fewer people can be in the environment, so it’s much harder to restrict your space and your real estate when you need more space for fewer people. We aren’t seeing a dramatic trend in real estate in [regards to] size and lease reductions” Andi Owen, CEO, Herman Miller Inc [multinational office furniture manufacturer]

Workplace & Employment

“We have all seen articles suggesting the office is dead, and we will all work from home. Those types of articles were being written 20 years ago, and they were wrong then and they are wrong now. They show up every time there is a new technology like laptops and then high-speed Internet and Wi-Fi and now low-cost videoconferencing platforms. The predictions are always wrong because it's not about the technology, it's about the people” Jim Keane, CEO, Steelcase Inc [world’s largest office furniture manufacturer]

“Almost every company on the planet is and will have to reimagine their business. And I believe in the next two years, there is going to be more change than in the last 10. Quite simply, different work needs to get done and work needs to get done differently and to get work done differently, companies will need to rethink their org structure, roles and responsibilities” Gary Burnison, CEO, Korn Ferry Inc [global management consultancy company]

Travel & Leisure

“I will go on the record to say that travel will never, ever go back to the way it was pre-COVID. It just won’t. People will, one day, get back on planes. But one of the things that I do think is a fairly permanent shift is...a redistribution of where travelers go. I think a lot of people are going to realise they don’t need to get on an airplane to have a meeting” Brian Chesky, CEO, Airbnb Inc

“We are expecting a lot of [holiday] bookings for Queensland out of NSW and South Australia and we are expecting a lot from Victoria when there’s certainty” Andrew Burnes, CEO, Helloworld Travel Ltd

Food & Beverage

“From a nutritional standpoint our products match the protein quality and content of the animal products that they replace and they are clear winner from a health and nutrition standpoint. This is why I think people are increasingly aware plant-based products are going to completely replace the animal-based products in the food world within the next 15 years” Patrick Brown, CEO, Impossible Foods Inc

“If you look at the growth of the pet category, first of all, the pet category is growing mid-single digits and is primarily on pricing and the part of the category that’s growing the fastest is the premium part of the category” Jeff Harmening, CEO, General Mills Inc [multinational consumer & pet food manufacturer]

“As a result of sheltering in place restrictions and the shutdown of on-premise accounts due to COVID-19, eCommerce for beverage alcohol has exploded, increasing three to seven times in volume versus prior year, depending on the channel. Consumer awareness for eCommerce and beverage alcohol has significantly increased and accelerated change in consumer behaviors by several years” Bill Newlands, CEO, Constellation Brands Inc

Global Economy

“A full recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities. The path forward will also depend on the policy actions taken at all levels of government to provide relief and to support the recovery for as long as needed” Jerome Powell, Chairman, US Federal Reserve

Corporate Governance

“We think, as far as we can tell, we're the first ASX 50 company to put carbon goals into our long-term incentive scheme” Brett Redman, CEO, AGL Energy Ltd

Retail

“I’d say the basket size is significantly higher for home delivery [vs. in-store]. And so far we're seeing it being very complimentary to our typical patterns [of trading]” Brian Hannasch, CEO, Alimentation Couche-Tard Inc. [world's second largest convenience store chain]

Transport & Logistics

“While commercial volumes were down significantly due to business closures across the globe, there were surges in residential deliveries at FedEx Ground and in transpacific and charter flights at FedEx Express” Frederick W. Smith, CEO, FedEx Corp.

Technology

Clearly, certain trends that would have taken 2 to 4 years to develop have been accelerated into months. It is easy to see how these changes will drive higher consumption of memory and storage in the long term. The faster pace of digital transformation in the economy is here to stay. Sanjay Mehrotra, CEO, Micron Technology Inc [global manufacturer of computer memory/storage devices]

“The outlook for calendar 2021 [smartphone sales] is promising, with 5G expected to drive a resumption in smartphone unit sales growth” Sanjay Mehrotra, CEO, Micron Technology Inc [global manufacturer of computer memory/storage devices]

Energy & Resources

“The worst is behind us. We went from -$40 to +$40 with WTI [West Texas Intermediate oil]. In April we were looking at a demand of about 75-80 million barrels per day with significant supply at that time. Currently, you are looking at almost close to 90 million barrels per day. I’m very optimistic about the second half of this year” Amin Nasser, CEO, Saudi Aramco [world’s largest oil producer]

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.