NAOS CEO Insights

CEO INSIGHTS – Week Ending 9 July 2021 By NAOS Asset Management

July 9, 2021

“Nobody, nobody in Australia predicted that we were going to have this massive housing boom” Kersten Gentle, CEO, Frame and Truss Manufacturers Association of Australia

CEO INSIGHTS – Week Ending 9 July 2021 By NAOS Asset Management

“Nobody, nobody in Australia predicted that we were going to have this massive housing boom” Kersten Gentle, CEO, Frame and Truss Manufacturers Association of Australia


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 & Construction

“Nobody, nobody in Australia predicted that we were going to have this massive housing boom” Kersten Gentle, CEO, Frame and Truss Manufacturers Association of Australia

“With speculation that the market is overheated [from the current quarterly index data] it is reassuring customers are not drawing up to the full value of their properties and are instead retaining equity” David Bailey, CEO, AFG Ltd

“Despite hitting highs of 23% of application flow during the year on the back of support of State and Federal Government assistance packages, First Home Buyer activity dropped back to 14% of total activity for the final quarter of the year” David Bailey, CEO, AFG Ltd

Technology & Hardware

“We experienced an unprecedented spike in demand for devices throughout 2020, with no signs of demand abating in 2021” Market Statement, Dicker Data Ltd

Workplace & Labour Markets

“Offices should be the cultural touchstone for the company, but in the past, it has been the least valuable use of the space that has taken up the most square footage. Those factory-farm, battery-chicken desks with people sitting by themselves not talking to anyone else, just using their laptop. That’s the part of work that could happen anywhere, yet that’s the part that takes up 70 or 80 per cent of the square footage” Stewart Butterfield, CEO, Slack

“The primary risk to the Australian gold production forecast is a continuation of the labour and skills shortage that Australian gold mine producers are currently facing” Market Statement, Federal Government Resources & Energy Quarterly Report

Domestic Economy

“Because the inflation and wage outcomes have been lower than other places, we’re going to keep stimulus going probably longer than other countries” Philip Lowe, Governor, Reserve Bank of Australia

“For corporates, it is a great time to borrow. Cash rates are low and spreads are tight” Mark Delaney, CIO, Australian Super

Inflation & Supply Chain

“Like many other companies, we're operating in a challenging supply chain and inflationary environment. We're experiencing rises in raw material, freight, and wage costs which are all driving higher input costs” Jay Rembolt, CFO, WD-40 Co.

“Recently, for the first time in our company's history, we asked our customers for a wholesale price increase. This was not an easy decision but a necessary one based on the rising cost of our entire supply chain” Richard A. Wright, CEO, The Alkaline Water Company Inc. [large US listed independent water company]

“I would say that since 2019, the price [for hardware products] has increased by roughly close to 10% which is far from being the increases that we've seen for lumber [timber]” Richard Lord, CEO, Richelieu Hardware Inc [multinational housing & commercial hardware manufacturer]

Industrials

“We believe demand trends will remain strong throughout the remainder of this fiscal year and into fiscal 2022 as more sectors of the global economy reopen and industrial production continues to improve” Gregory Patrick Lynch, CEO, Northern Technologies International Corp [multinational industrials company selling environmentally friendly products]

Advertising

“It is a sign of the times that you can place ads in newspapers, in shopping centres, online, on Seek, and pay all sorts of large amounts for that and there is just no response” Warren Pearce, CEO, Association of Mining and Exploration Companies

Retail

“Whilst we are grateful for the business support grants and payroll tax deferrals from the NSW government, this doesn’t go far enough to compensate the downturn businesses will suffer during a three-week lockdown” Paul Zahra, CEO, Australian Retailers Association

“The majority of shopping centres don’t have that much vacancy inside” Peter Allen, CEO, Scentre Group

Energy, Resources & Fuel

“Australia has always relied on foreign investment in our resources sector, and if we are to continue to attract that investment, then we need to be making the most of our competitive advantage in carbon storage and leading the world on decarbonisation and carbon markets” Kevin Gallagher, CEO, Santos Ltd

“Overall, we haven’t seen demand back to where it was, but it’s got close if you take out the lockdowns” Matthew Halliday, CEO, Ampol Ltd

Aviation

“You will see some pent-up demand on the recreational side. Some of the business travel will never come back, but when you look net-net, I don’t think there will be a significant difference in aviation fuel in the future” Matthew Halliday, CEO, Ampol Ltd

Healthcare

“What we're hearing from them [pharmacies] is that they are often overwhelmed trying to manage different health conditions, providers, appointments, bills and medication, all of which are on different platforms and channels…the overall healthcare space is sprawling and incredibly complicated” Rosalind Brewer, CEO, Walgreen Boots Alliance Inc [global leader in retail pharmacy]

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.