NAOS CEO Insights

CEO INSIGHTS – Week Ending 4 December 2020 By NAOS Asset Management

December 4, 2020

“I think overall the automotive industry is going to have a strong fourth quarter, and I do believe it’s going to be a strong 2021. I think the industry is in a sweet spot right now” Mark Fields, Former CEO, Ford Motor Company

CEO INSIGHTS – Week Ending 4 December 2020 By NAOS Asset Management

“I think overall the automotive industry is going to have a strong fourth quarter, and I do believe it’s going to be a strong 2021. I think the industry is in a sweet spot right now” Mark Fields, Former CEO, Ford Motor 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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Domestic Property

“The market is improving and there is one reason for that: there is a lot of money at very low rates of interest. That's the only reason. There is always demand, and there is always insufficient supply. That is still the case. What's changed is cheap money in great abundance” Harry Triguboff, CEO Meriton

Domestic Economy

“We’ve been through some seven years of drought where most of those economies in the Australian bush have struggled to keep afloat, and now with the good harvest and the good tourism, there is money coming back into communities” Peter Langley, CEO, FedEx’s Australasia

Food, Beverage & Hospitality

“There’s absolutely no doubt in my mind that it’s going to take a very long time to recover to 100% of bars and restaurants that were open before the pandemic. I think that’s a long-haul – if we ever get back to that place” Gavin Hattersley, CEO, Molson Coors Beverage Company [worlds’ 5th biggest beer company]

“I think there’s going to be sadly, a fair amount of impairments coming for some [due to Chinese restrictions]. There is no other red wine export market anywhere else that is capable of absorbing what Australia sells to China” Robert Hill-Smith, Chairman, Yalumba Wines

Telecommunications

“Structural shifts are stripping profitability out of the sector: The NBN, growth of the tier-two MVNO [mobile virtual network operator] market, and the OTT [over-the-top/streaming] providers, who contribute little, if anything, to the infrastructure they rely on, yet drive increased usage and continued investment for telecommunications providers” Kelly Bayer Rosmarin, CEO, Singtel Optus Pty Ltd

Technology

“Over the next decade, technology spending as a percentage of GDP is projected to double” Satya Nadella, CEO, Microsoft Corporation

“I think we definitely are going to have real structural change [with technology adoption] so when we remove the pandemic constraints, I don't think we just go back to the way things were in the beginning of 2020 or late 2019” Satya Nadella, CEO, Microsoft Corporation

“We believe the explosion of devices, applications and data at the edge [computing] will continue to drive demand for secure connectivity, cloud computing capabilities and analytics, especially in a post-COVID world” Antonio Neri, CEO, Hewlett Packard Enterprise Company

Social Media

“When we think about what drives people to Twitter, we think about the events and topics that are happening in the world” Ned Segal, CFO, Twitter Inc

Automotive

“It’s very much [a] truck first recovery so far” Mark Smith, CFO, Cummins Inc [global engine manufacturer]

“I think overall the automotive industry is going to have a strong fourth quarter, and I do believe it’s going to be a strong 2021. I think the industry is in a sweet spot right now” Mark Fields, Former CEO, Ford Motor Company

“Labour shortages have become increasingly the concern since we restarted our operations in Q3” Doug DelGrosso, CEO, Adient plc [world’s largest automotive seat manufacturer]

Retail & E-Commerce

“As we look ahead to post-COVID, we do believe that a lot of the e-commerce gains will stick, and we'll continue to grow off of a higher base and the reasons why we believe that is convenience is habit forming” Amy Shapero, CFO, Shopify Inc

“I think the other trend that we believe is significant here [for e-commerce] is entrepreneurship, in times of tough economic climates, we know that business formation generally increases” Amy Shapero, CFO, Shopify Inc

“What we have seen as physical retail opens up, this has not had a cannibalising impact on the online channels. It is additive to what is already a tide that has risen online” Nick Molnar, Co-CEO, Afterpay Ltd

Transport & Logistics

“We have the weekly normal flights, but we’ve had to top them [up] with additional flights because there has been so much volume coming into Australia and it has been difficult to get the volume in” Peter Langley, CEO, FedEx’s Australasia

Travel & Leisure

“There’s been a rush of bookings as each border restriction lifted, showing that there’s plenty of latent travel demand across both leisure and business sectors” Alan Joyce, CEO, Qantas Airways Ltd

Environmental, Social & Governance (ESG)

“If we’ve got customers today that aren’t thinking about climate change, haven’t considered it in terms of their operations, what the risks are and what they should do about it, that’s a pretty big red flag to me that these are not good customers in the way they think about other issues” Shayne Elliott, CEO, ANZ Banking Group Ltd

Energy & Resources

“We’re not an electricity company so we’re not going to make a big announcement about going into renewables. Why? Because I don’t see much money in it, No 1. And No 2 it’s already a very, very crowded space. Electricity markets and retail markets are very crowded. We will continue to operate in fuels” Kevin Gallagher, CEO, Santos 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.