CEO INSIGHTS – Week Ending 10 February 2023

“Frequency [of letter delivery] is one thing we need to address, the average household receives just one and a half letters a week now” Paul Graham, CEO, Australia Post

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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Households

“These ultra-low vacancy rates are simply not healthy, and it’s a nationwide issue, not just Sydney or Melbourne” Dr Michael Fotheringham, MD, Australian Housing and Urban Research Institute

“Frequency [of letter delivery] is one thing we need to address, the average household receives just one and a half letters a week now” Paul Graham, CEO, Australia Post

“It is in banks’ commercial interest to keep people in their homes and get them to keep them there until they’ve paid off the loan in 25 years’ time” Anna Bligh, CEO, Australian Banking Association

Agriculture

“Water prices in Australia remain well below historical averages” Market Statement, Cobram Estate Olives Ltd

Consumer Spending

“I think from a consumer standpoint, we continue to see consumers buying for immediate needs” Mark LaVigne, CEO, Energizer Holdings Inc

“I think that with the unemployment rate so low, and with some wages growth, they are still spending” Anthony Scali, CEO, Nick Scali Ltd

Chinese Economy

“Industry sales of excavators in China are expected to decline 25% to 35% in 2023 as the market adjust to new emissions regulations and digest the inventory on hand” Jennifer Rumsey, CEO, Cummins Engine Inc

Travel, Transport & Logistics

“We're also seeing CBD traffic continue to improve despite some of the recovery in public transport numbers. Again, our most recent research from January shows that respondents continue to prefer private transport over public transport” Scott Charlton, CEO, Transurban Group Ltd

“The combination of lower international sea freight and airfreight volumes and lower trading rates are reflected in reduced revenue and profit before tax levels for both the USA and Asia” Market Statement, Mainfreight Ltd

Insurance

“We are seeing [economic] uncertainty or complexity or interconnectivity, however you want to describe it, really everywhere around the world” Gregory Case, CEO, Aon plc.

Commodities & Resources

“Some scrap [metals], for example, shredder materials from dismantling end-of-life cars. The supply is relatively limited these days” Roland Harings, CEO, Aurubis AG [one of the world's largest copper recyclers]

“Governments stepping in to put in price limits on any commodity won’t increase investment in that commodity, and hence won’t increase supply of such commodities. Price limits may be seen as a temporary fix, but in reality, only make the situation worse, something we should learn from history” Gina Rinehart, Exec. Chair, Hancock Prospecting

“The challenges and volatility we have seen make it clear, maybe clearer than ever that the world wants and needs a better and a more balanced energy system” Bernard Looney, CEO, BP plc

Inflation & Macroeconomic

“We are not seeing orders slowing. I’m more worried about inflationary elements which are coming our way” Vik Bansal, CEO, Boral Ltd

“Our fourth [Dec-22] quarter results were below our expectations as the macroeconomic environment was more challenging than anticipated” Ynon Kreiz, CEO, Mattel Toys Inc

“There are strong signs the desired slowdown in activity is beginning to take effect” Innes Willox, CEO, Australian Industry Group

Commercial Property

“We're seeing a lot of the Asian fund managers [institutional property investors] that really are turning away from China and into Australia. So, I think in the new year, this new year, we've seen a lot of pickup in interest from those offshore groups” Jason Huljich, Co-CEO, Centuria Capital Group Ltd

Television

“I've been watching this [market] very carefully for a long time…the impact of technology is basically creating a huge authority shift from the producer and the distributor to the consumer. And as that authority has shifted, it's made the traditional business more complicated” Bob Iger, CEO, The Walt Disney Company

Migration & Labour Markets

“If you look at the migration numbers at the moment, it’s predominantly students and backpackers” Denita Wawn, CEO, Master Builders Australia

“We think we are going to need to do further rate increases, adding that the labour market is “extraordinarily strong” Jerome Powell, Chairman, US Federal Reserve

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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. It does not constitute an offer to purchase any security or financial product or service referred to herein. It does not take into account the investment objectives, financial situation or needs of any particular investor. Before making an investment decision, investors should consider obtaining professional investment advice that is tailored to their specific circumstances. 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.