NAOS CEO Insights

CEO INSIGHTS – Week Ending 6 November 2020 By NAOS Asset Management

November 6, 2020

“We were really quite surprised by the level of demand that came into the product of the winter season. Within the first two weeks, we had literally triple the demand that we were expecting at rates above what we were expecting” Michael Bayley, CEO, Royal Caribbean International

CEO INSIGHTS – Week Ending 6 November 2020 By NAOS Asset Management

“We were really quite surprised by the level of demand that came into the product of the winter season. Within the first two weeks, we had literally triple the demand that we were expecting at rates above what we were expecting” Michael Bayley, CEO, Royal Caribbean International


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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Retail & E-Commerce

“We're seeing more customers than ever shopping early for their holiday gifts, which is just one of the signs that this is going to be an unprecedented holiday season” Jeff Bezos, CEO, Amazon Inc

“As we look into the future, there’s no difference between a micro [SME] business and an online micro business. Every micro business is going to be online. That’s just how people are going to find things. That’s just how people are going to want to transact, because it’s going to be simpler for them and it will allow them to scale in a way that previously they couldn’t” Aman Bhutani, CEO, GoDaddy Inc [worlds’ largest domain/website hosting company]

Meat & Livestock

“Never in my lifetime have we seen the dearest cattle in the world in Australia” Peter Hughes, Owner, Hughes Pastoral Company [major QLD cattle group/landowner]

“Values being paid for young grower or replacement cattle bear no reflection to the current domestic or global meat market and are more a reflection of the desire for producers to restock their properties that have experienced a great season following the drought” Trevor Lee, Owner, Australian Country Choice [major cattle group/landowner]

Mining & Resources

“We are excited to see recent reinvestment into our sector with major mining houses flagging increased exploration spend and junior miners now accessing capital through equity raisings” Jeff Olsen, CEO, Boart Longyear Ltd

Banking & Finance

“When we look at banking and how it is provided, [with the introduction of fintech companies] we think it is fundamentally changing” Peter King, CEO, Westpac Banking Corporation

“We just rolled out buy now, pay later in the US and the demand is tremendous” Daniel Shulman, CEO, PayPal Inc

Domestic Economy

“Interest rates will rise but it's hard to know exactly when, I think we have to be sufficiently optimistic that it will occur sometime in the next five years” Dr Phillip Lowe, Governor, Reserve Bank of Australia

There has been a modest deterioration in our economic assumptions, the expected shape of the recovery and downturn has changed, with a deeper trough and a slower recovery” Gary Lennon, CFO, National Australia Bank Ltd

Tourism & Leisure

“We were really quite surprised by the level of demand that came into the product of the winter season. Within the first two weeks, we had literally triple the demand that we were expecting at rates above what we were expecting” Michael Bayley, CEO, Royal Caribbean International

“I'd have to say it's [length of rental] pretty elevated. Our customers are keeping the cars longer so when I say that people are checking out at weekends, it's not like a weekend rental. It's like you think where you'd take out Friday and come back Sunday, it's not that at all. They're using the car over these longer leisure periods” Joe Ferraro, CEO, Avis Budget Group, Inc

“There's much discovery going on and price shopping and there seems to be more direct bookings in the smaller market independent hotels as people are calling to make sure they're open, make sure that safety protocols, etc” Peter Kern, CEO, Expedia Group Inc

Food & Beverage

“Consumption [of beer] is up but not enough to offset all of the sporting occasions, concerts” Gavin Hattersley, CEO, Molson Coors Beverage Co

Transport & Logistics

“Industry conditions improved meaningfully compared to the second quarter and much faster than we expected…Miles driven trends improved globally as freight volumes benefitted from increased consumer and industrial activity” Rich Kramer, CEO, The Goodyear Tyre & Rubber Company

Automotive

“With new car sales returning to pre-pandemic levels in September and dealer inventory more than 20% below average, we're likely to see continued strength in OE [original equipment sales] demand throughout the remainder of the year” Rich Kramer, CEO, The Goodyear Tyre & Rubber Company

Consumer staples

“We see incredible opportunities, quite frankly, across the mega trends all over the world that we're seeing on the ground. Naturals and sustainability, the urbanisation that we're seeing in big markets, aging population in developed markets, or younger population and per capita consumption opportunities in developing countries” Noel Wallace, CEO, Colgate-Palmolive Company

Government Stimulus & Regulation

“Anything that helps consumers feel more certain about spending in this important quarter will help propel the retail economy forward – which in turn creates a positive ripple effect on jobs and growth” Paul Zahra, CEO, Australian Retailers Association

“The last thing that businesses in any sector needs right now is more red tape, taking time and energy when we should be focused on recovery” Alan Joyce, CEO, Qantas Airways Ltd

Aviation

“Pre-COVID-19, 6 out of the 10 busiest [aviation] routes in the country originated in Melbourne. Having so much traffic cut off from the network has been a drag on the economic recovery of every other state in the country” Lyell Strambi, CEO, Melbourne Airport

Miscellaneous

“In the APAC region, Australia accounts for the majority of our sales and performance has been better than our expectations. That said, the soft market conditions that existed prior to the pandemic continued to be unfavourable factors impacting that market” Ophir Yakovian, CFO, Caesarstone Ltd [global kitchen/benchtop manufacturer]

terial 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.