NAOS CEO Insights

CEO INSIGHTS – Week Ending 7 August 2020 By NAOS Asset Management

August 7, 2020

“In recent months, the furniture industry has experienced unprecedented year on year growth as consumers reallocated their spending into the home given an inability to travel combined with an increased amount of time spent at home” Anthony Scali, CEO, Nick Scali Ltd

CEO INSIGHTS – Week Ending 7 August 2020 By NAOS Asset Management

“In recent months, the furniture industry has experienced unprecedented year on year growth as consumers reallocated their spending into the home given an inability to travel combined with an increased amount of time spent at home” Anthony Scali, CEO, Nick Scali 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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Aviation, Travel & Leisure

“We are starting to see positive signs pointing to a recovery in some markets in the second half of the year” Francisco Neto, CEO, Embraer SA [aircraft/aerospace manufacturer]

“China serves as a great example that travel recovery is possible even without pharmaceutical treatments or a vaccine as long as proper, well-coordinated actions are taken to significantly reduce the spread of the virus” Mark Hoplamazian, CEO, Hyatt Hotels Corporation

“In terms of demand, we are seeing meaningful improvements off the lows in April with monthly sequential increases throughout the quarter and into July” Chris Nassetta, CEO Hilton Worldwide Holdings Inc

“Demand for domestic and short-haul international travel is likely to take at least three years to return to pre-COVID-19 levels, with the real chance it could be longer” Paul Scurrah, CEO, Virgin Australia Holdings Ltd

Technology

“Contact centre [call centres] engagements are moving to the forefront of customer experience. COVID-19 has effectively converted jobs from brick-and-mortar retail sales and service people to contact center agents, making contact centers the new front door for many businesses” Rowan Trollope, CEO, Five9 Inc [multinational cloud communications company]

“There's also never been a better time to be in the contact centre [call centre] space” George Hu, COO, Twilio Inc [multinational cloud communications company]

“Because people have no choice but to go digital to support their businesses, we're seeing people experimenting with ideas. We're seeing people come online, even though they had hesitated to do it in the past” Aman Bhutani, CEO, GoDaddy Inc [world’s largest website hosting platform]

Retail & E-Commerce

“Demand is still super high. It’s driven by [Amazon] Prime members. They’re shopping more often. They have larger basket sizes” Brian Olsavsky, CFO, Amazon.com Inc

“Consumer behavior was already rapidly migrating to digital, and we believe this adoption has only accelerated during the COVID pandemic as new users become increasingly comfortable with buying online” Scott Baxter, CEO, Kantoor Brands Inc [parent company of Demin brands Lee & Wrangler]

Media & Advertising

“[Our] Total digital revenue has exceeded print for the first time ever” Mark Thompson, CEO, The New York Times Company

Residential Property & Household

“Despite the effects of COVID-19 we saw strong levels of buyer enquiry in July underpinned by low interest rates and healthy bank liquidity” Market Announcement, REA Group Ltd

“On a per household basis, consumers continue to desire more services and more helpful home services and we expect that macro trend to continue for years to come. Record low interest rates, recent trends towards de-urbanisation and a growing millennial population seeking new homes all bode well for housing and home automation over time” Jim DeVries, CEO, ADT Inc [global security/smart home solutions provider]

“In recent months, the furniture industry has experienced unprecedented year on year growth as consumers reallocated their spending into the home given an inability to travel combined with an increased amount of time spent at home” Anthony Scali, CEO, Nick Scali Ltd

Cars & Motorbikes

“It's been a boom of the likes I've never seen. I've been in this business for 31 years and it's just been exceptional” Dave Ahmet, CEO, Motorcycle Holdings Ltd

“The pace of recovery in a number of regions has been faster than we had initially forecast” Market Announcement, Toyota Motor Corporation

“We continue to watch the forecast and how the EV penetration happens around the world to see if it changes that profile, but today we believe it’s the kind of [demand] curve [which is now] four years, five years out” Kent Masters, CEO, Albemarle Corporation [global lithium/specialty chemicals company]

Mining & Resources

“As a result of mining activities being confirmed as essential services in most countries, over 90 per cent of our volumes have remained intact following COVID-19, with limited impact in Australia and the US, which are two of our major regions” Alberto Calderon, CEO, Orica Ltd

“Inventory rose to levels that are in excess of five months above normal levels for refined Lithium products. That’s largely almost entirely in the battery channel. I mean there may be some inventories in industrial but that’s being worked off, so it’s really the battery channel” Kent Masters, CEO, Albemarle Corporation [global lithium/specialty chemicals company]

Domestic Economy

“I think in Victoria we are going to see more businesses close and not re-open. The impacts on the economy will be real, material and it is not just going to impact Victoria. The supply chain and distribution issues will impact Australia nationally” Tony Johnson, CEO, Ernst & Young Oceania

Food & Beverage

“We saw the drive-thru performance improve. It's now double-digit up versus where it was last year… the part of the business that's been impacted the most in the part of the industry that's been impacted the most is breakfast and kind of those high-frequency routine visits” José Cil, CEO, Restaurant Brands International Inc [parent company of Burger King]

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.