NAOS CEO Insights

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

September 4, 2020

“Looking forward, we see a lower carbon technology as being essential. If anything, the changes over the last few months have accelerated the drive towards better, cleaner power solutions. The world is demanding cleaner energy” Warren East, CEO, Rolls Royce Holdings Ltd

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

“Looking forward, we see a lower carbon technology as being essential. If anything, the changes over the last few months have accelerated the drive towards better, cleaner power solutions. The world is demanding cleaner energy” Warren East, CEO, Rolls Royce Holdings Ltd


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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Energy & Resources

“The [Chinese] government has stepped in with some stimulus that we expect is going to create further momentum through to next calendar year so things are looking pretty positive and pretty resilient [for iron ore]” Mike Henry, CEO, BHP Group Ltd

“At prices where they are at the moment, at $4-$5 [a gigajoule] there would be no new gas developments in south-eastern Australia; it’s just not economic” David Maxwell, CEO, Cooper Energy Ltd

Agriculture

“We don’t expect COVID to have a huge impact to both income and capital growth returns [for farmland assets]. In the current situation, if you look at every location globally, there has been a significant uptake in grocery trade. People have to eat. The growth demand is still there. That drives resilience” Martin Davies, CEO, Westchester Group Investment Management [world’s largest manager of farmland assets]

“Drought breaking rains on the east coast of Australia in late January and good follow up rainfall has provided welcome relief for farmers and generated strong demand for crop protection products” Greg Hunt, CEO, Nufarm Ltd

Food & Beverage

“Extraordinary demand [was] caused by the pandemic, driven by a major shift in consumer behavior toward eating at home with a resurgence of cooking simple meals and increased snacking occasions” Mark Clouse, CEO, Campbell Soup Co

“This [health shift due to COVID-19] window is so unique, we’ve got to make the most of it...We all knew there would be a pivot eventually back to healthier recipes, from a little more comfort-oriented initially” Mark Clouse, CEO, Campbell Soup Co

Retail

“While many people feel more comfortable shopping online than in stores, those that do venture out are much more intentional to make a purchase when they visit” Carlos Alberini, CEO, Guess Inc

Automotive

“Demand has stabilised. In China we saw a V-shaped recovery. That's not the case in Europe and North America but we have rebounded from the freefall” Ola Källenius, CEO, Daimler AG [Mercedes-Benz parent company]

“We expect to start to recover by Q4. That is the assumption we are looking at” Makoto Uchida, CEO, The Nissan Motor Company Ltd

Aviation

“We expect our large engine flying hours to recover to 90% of the 2019 levels by 2022” Warren East, CEO, Rolls Royce Holdings Ltd

Travel, Leisure & Hospitality

“I believe that travel experiences will be even more treasured when this has ended. People will not hesitate to go and see and do the things they have always wanted to do in the newfound knowledge that circumstances can change very rapidly” Andrew Burnes, CEO, Helloworld Travel Ltd

Environmental

“Looking forward, we see a lower carbon technology as being essential. If anything, the changes over the last few months have accelerated the drive towards better, cleaner power solutions. The world is demanding cleaner energy” Warren East, CEO, Rolls Royce Holdings Ltd

“What this crisis has done, it has accelerated the importance of sustainability and responsibility across the world” Alexandre Ricard, CEO, Pernod Ricard SA [global alcohol conglomerate]

Workplace & Employment

“I think people are zooming around [which tends] to be a little more casual and people aren't quite as well-groomed as they were when I went to an office” Hugh Sawyer, CEO, Regis Corporation [world's largest hair salon company]

“Organisations have moved beyond addressing immediate business continuity needs to actively redefining and embracing new approaches to support a future of working anywhere, learning anywhere and connecting anywhere” Eric Yuan, CEO, Zoom Video Communications Inc

Technology

“PCs have become essential. In the past, we were talking about one PC per home. Now we see the need to have one PC per person. This is going to be driving demand [and] it’s going to be staying with us for a while” Enrique Lores, CEO, HP Inc

“Many of the security leaders we spoke with believe that experiencing a breach now, while their business is under extreme stress due to the impact of COVID, would be far more detrimental to their business versus last year” George Kurtz, CEO, CrowdStrike Holdings, Inc [multinational cybersecurity technology company]

Domestic Economy

“It is clear that the recovery will take slightly longer and be more uneven than we thought a couple of moths ago, but there are some positive signs now emerging” Matt Comyn, CEO, Commonwealth Bank of Australia Ltd

Domestic Property

“The commercial leasing codes have unleashed a red tape octopus that has meant that by mid-August, only one in four dollars of rent relief provisioned by landlords has so far been provided to their tenants in finalised agreements” Ken Morrison, CEO, Property Council of Australia

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.