NAOS CEO Insights

CEO INSIGHTS – Week Ending 8 October 2021 By NAOS Asset Management

October 8, 2021

“The casualisation trends that have been accelerated by the pandemic globally are here to stay” Chip Bergh, CEO, Levi Strauss & Co

CEO INSIGHTS – Week Ending 8 October 2021 By NAOS Asset Management

“The casualisation trends that have been accelerated by the pandemic globally are here to stay” Chip Bergh, CEO, Levi Strauss & Co

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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Housing

“While the banking system is well capitalised and lending standards overall have held up, increases in the share of heavily indebted borrowers, and leverage in the household sector more broadly, mean that medium-term risks to financial stability are building” Wayne Byres, Chairman, Australian Prudential Regulatory Authority [APRA]

“The macro-economic environment for housing continues to be supportive of Beacon Lighting” Market Statement, Beacon Lighting Group

Labour Markets

“While expectations for future hiring remain positive, businesses across the country are facing skills and labour shortages not seen in decades” Andrew McKellar, CEO, Australian Chamber of Commerce and Industry

“We would typically be recruiting for the peak summer period, but right now we’re looking for more than double the amount of staff than what we would have pre-Covid” Jessica Furolo, Head of Human Resources, Merivale

Kids & Toys

“We believe the toy industry as a whole will remain a strategic category for retailers [despite pricing increases]. Items are not expensive and parents forever will prioritise spending money on their children” Ynon Kreiz, CEO, Mattel Inc

“It is important to emphasise that in our category, in-store service and tailored advice is critical” Matt Spencer, CEO, Baby Bunting Ltd

Food & Beverage

“Unlike a year ago where we were very selective at what we produced, this year, we've been producing all SKUs [products]. We've just had trouble keeping up with the demand” William Newlands, CEO, Constellation Brands, Inc. [one of the world’s largest alcohol companies]

“We feel good about the near-term recovery demand in the U.S. and our key international markets, as well as the long-term health and growth of the category” Thomas Werner, CEO, Lamb Weston Holdings Inc [one of the world’s largest producers of French fries]

“Another enduring trend is the growth of snacking, which has long been the fastest growing occasion in food and shows no signs of slowing down” Sean Connolly, CEO, Conagra Brands Inc [major global packaged food brand conglomerate]

Retail & Consumer Behaviour

“Across the world consumers seem to be looking at pricing a little bit differently than before...consumers are shopping faster in-store and they might be paying less attention to pricing as a decision factor, and they might be giving more relevance to the brands that they feel a bit closer to…We're seeing less [price] elasticity” Ramon Laguarta, CEO, PepsiCo Inc

“The casualisation trends that have been accelerated by the pandemic globally are here to stay” Chip Bergh, CEO, Levi Strauss & Co

“The behavioural science tells us that when people learn to cook in early age, they continue to cook at elevated levels as they get older, and consumers of all ages are rediscovering their kitchens, and cooking more at home” Sean Connolly, CEO, Conagra Brands Inc [major global packaged food brand conglomerate]

Corporate Activity

“Clearly, there is a backlog of international bidders who have been watching Australia carefully but structurally cannot apply themselves in the Covid environment. There is a portion of that M&A market that is still to be prosecuted” Michael Stock, CEO, Jefferies Australia

“There’s over $US1 trillion ($1.4 trillion) of dry powder in buyouts alone that’s looking to do deals. We will absolutely see prices go up when competition is that stiff” Brenda Rainey, CEO Private Equity, Bain & Co.

Sports

“The reality is that NBA basketball is the biggest betting sport in Australia. It became the biggest betting sport in the Australian market around 2015, 2016” Samuel Swanell, CEO, Pointsbet Holdings Ltd            

Healthcare

“We are seeing a huge shift towards [the] Cloud” Dr Sam Hupert, CEO, Pro Medicus Ltd

Construction & Maintenance

“Industry trends benefiting RPM include nesting by consumers who are making more home improvements, school re-openings requiring more maintenance and repair…and a greater desire for energy efficiency driven by both the cost benefits as well as the desire to minimise environmental impacts” Frank Sullivan, CEO, RPM International Inc [multinational building materials conglomerate]

Energy Markets

“The good news is that renewables are now the cheapest form of new generation in almost every part of the world, and investor interest far outstrips project supply. So, the economics are on our side” Shemara Wikramanayake, CEO, Macquarie Group Ltd

Chinese Economy

“End-use demand into machinery, consumer goods, exports and so on remains reasonably strong - and we expect that to continue to be the case into calendar year 2022. We do believe that there is a pretty strong growth outlook for China” Mike Henry, CEO, BHP Group Ltd

“In time, you'll see shortages of woollen products because of this change [closure of Chinese wool processors] in the supply chain” John Abbott, Chairman, Queensland Wool Processors

Banking

“It’s difficult to overstate how transformative blockchain technology, digital assets and the thousands of decentralised apps that have yet to be created could potentially be. We expect rapid changes to the current market structure – new use cases will be discovered, and others will be discarded” Market Statement, Bank of America Corporation

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.