NAOS CEO Insights

CEO INSIGHTS – Week Ending 9 October 2020 By NAOS Asset Management

October 9, 2020

“We've gone through some tough times as a farming industry but we've had a fairly good run of seasons and some good pricing [of late] and so I think we're in a good position at the moment” Simon Stead, CEO, CBH Group [Australia's largest grain exporter]

CEO INSIGHTS – Week Ending 9 October 2020 By NAOS Asset Management

“We've gone through some tough times as a farming industry but we've had a fairly good run of seasons and some good pricing [of late] and so I think we're in a good position at the moment” Simon Stead, CEO, CBH Group [Australia's largest grain exporter]


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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Federal Budget

“It can’t be understated just how much this will provide a shot in the arm to employment, youth job creation, consumer confidence and spending” Solomon Lew, Chairman, Premier Investments Ltd

“We have seen in the past how effective some programs have been, such as the instant asset write-off, and that features again in this budget” Shayne Elliot, CEO, ANZ Banking Group Ltd

“The HomeBuilder extension is really going to be critical if you want to get growth in housing in that period with low population growth” Mark Steinert, CEO, Stockland

“It may have taken a global pandemic to provide the impetus for a course correction, but the government's gas fired recovery deserves the support of all of us who care about this nation's economic recovery and future prosperity” Jeanne Johns, CEO, Incitec Pivot Ltd

Banking & Lending

“We have seen a very significant increase in people making additional repayments to their mortgages over the last 12 months and primarily over the last eight months” Bernadette Inglis, CEO, Newcastle Permanent [Australia's second largest mutual bank]

“While we are seeing encouraging signs that many customers are able to restart repayments on deferred loans, we know that others will continue to need our support for some time to come” Matt Comyn, CEO, Commonwealth Bank of Australia Ltd

Residential Property

“Australia's residential property sector generates over $100bn annually for our economy and creating new homes and apartments is one of the most important job multipliers in the country, with the Australian Bureau of Statistics establishing that every dollar spent on residential construction generates a $3 impact in the broader economy” Andrew Whitson, CEO, Stockland Communities

“Lately, we see a lot of interest in beautification. A lot of people are taking the opportunity to update their homes” Jesper Brodin, CEO, Ikea Group

Industrials

“We see solid growth in the [DIY] consumer segment for the balance of this year, and we think it will be on a new base that's higher than what any of us could have achieved on our own. I think [it’s] one of the very few positive consequences of this pandemic. The flip side is supply chains across all industries and certainly in DIY have been disrupted mightily” Frank Sullivan, CEO, RPM International Inc [multinational paints/coating company]

Transport & Logistics

“If you look historically at the demand for this business, the service that we provide has steadily grown in line with global GDP and the global trade which is a multiplier of global GDP, so it's always been very steady. It's the supply side that's messed up the market. This time around it's absolutely the supply side that looks very healthy [and the demand side doesn’t]” Niels Stolt-Nielsen, CEO, Stolt-Neilsen Ltd [multinational chemical storage & transport company]

Energy & Resources

“We need to be realistic about the extreme structural challenges that are facing the asset up at Lytton [Ampol’s oil refinery in QLD]” Matt Halliday, CEO Ampol Ltd

Farming & Agriculture

“We've gone through some tough times as a farming industry but we've had a fairly good run of seasons and some good pricing [of late] and so I think we're in a good position at the moment” Simon Stead, CEO, CBH Group [Australia's largest grain exporter]

Food & Beverage

“E-commerce for beverage alcohol has exploded due to the pandemic, increasing 3 to 4x in volume versus prior year” William Newlands, CEO, Constellation Brands Inc [global alcohol conglomerate]

Retail

“Through the pandemic, what we've seen is an acceleration of the trend towards casualisation globally and we obviously are set up to capitalise on that, so while the total apparel category has declined during the pandemic, denim's share of total apparel is unchanged” Charles Bergh, CEO, Levi Strauss & Co

Environmental

“Our experience has been that it is extremely difficult to purchase carbon offsets from projects located in Australia. This is something that needs to be addressed because what it says is that there are not enough projects contributing to a reduction in greenhouse emissions” Andy Penn, CEO, Telstra Corporation Ltd

Automotive

“Countries such as the USA, Norway and China have all invested in a strong charging network and offered monetary incentives to both commercial and private buyers of plug-in hybrid or fully electric vehicles, leading to high uptake across the board in these markets, however the cost benefit of electrified vehicles is just one of the challenges facing uptake in Australia” Vikram Pawah, CEO, BMW Group Australia

“The Board believes a substantial proportion of the recent growth can be attributed to satisfying pent up demand created during the lockdown period. In addition, an increased trend towards local touring in several countries has been helpful and government support has provided spending stimulus to people and businesses” Market Announcement, ARB Corporation Ltd

Travel & Leisure

“What we have seen during periods of public health restrictions is that there was an increase in sales in products for the home with a reduction in travel related categories, such as car seats and prams, etc. Outside of significant restrictions, these trends have reversed, and we have seen sales in our travel related categories rebound strongly” Matt Spencer, CEO, Baby Bunting Ltd

“We know there’s huge pent-up demand for air travel and we’ve seen families travelling to new places during the [September] school holidays because they weren’t able to get to their traditional holiday destinations” Andrew David, Domestic CEO, Qantas Airways Ltd

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.