CEO INSIGHTS – Week Ending 11 November 2022 By NAOS Asset Management

“Out of home entertainment whilst not immune, has proven to be much more resilient to economic shocks than other industries” Greg Young, CEO, Ardent Leisure Group 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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Entertainment & Leisure

“Based on consumer behaviour over the past year, it is clear that moviegoing enthusiasm remains strong and vibrant across all categories of films and audiences. We've now seen this validated quarter-after-quarter, genre by genre as long-standing records have been broken” Sean Gamble, CEO, Cinemark Holdings Inc [major international cinema chain]

“Out of home entertainment whilst not immune, has proven to be much more resilient to economic shocks than other industries” Greg Young, CEO, Ardent Leisure Group Ltd

Financial Markets & Cryptocurrency

“FTX [third largest cryptocurrency exchange facing a liquidity crunch] going down is not good for anyone in the industry. Do not view it as a “win for us”. User confidence is severely shaken. Regulators will scrutinise exchanges even more. Licenses around the globe will be harder to get” Changpeng Zhao, CEO, Binance [world’s biggest cryptocurrency exchange]

Consumer Spending

“We have a lot of confidence in the consumer. We haven't seen anything change. No signs of trading down. I think we referenced Europe has been different than the US. But beyond that, the consumer's been strong” Matthew Goldberg, CEO, TripAdvisor Inc

“I think people do get more spooked by the economic conditions…They weigh things up a bit more now. They look at the price of beer and some are deciding I’ll buy two six-packs instead of a carton” Tim Cooper, CEO, Coopers Brewery

“This [our results] is clear evidence that against some market trends, we have not perceived any signs of a slowdown in a global consumer demand or shopping behaviour during the third quarter” Yves Müller, CFO, HUGO BOSS AG

Retail

“The slowing consumer demand in major Western markets and the further deterioration of traffic trends in Greater China in September, has clearly led to a significant inventory buildup for us and the industry as a whole” Harm Ohlmeyer, CFO, adidas AG

Inflation

“We went through a period where businesses didn’t want to put up their prices because they were worried about losing market share. Now we’re in an environment where they are putting up prices and spending is still staying pretty high. And so, the Reserve Bank’s got a pretty tricky trade-off” Peter King, CEO, Westpac Banking Corporation

“We definitely are expecting inflation to slightly come down in the fourth quarter, right? We started to see that trend in the third quarter already” Gunther Plosch, CFO, The Wendy's Co [major US fast food chain]

Energy Markets

“Historically, from a household point of view, at this stage, we do not expect, once prices normalise, that there will be significant change on customers' price elasticity. So, once prices come back, I do not expect actually a lasting change in behaviours from customers” Marc Spieker, CFO, E.ON SE [one of the world’s largest energy utilities]

Housing Market

“Current market conditions are trending well below expectations, particularly in inner metro areas. The rapid pace of interest rate increases has impacted on market sentiment and listing volumes, with a noticeable deterioration since September, depressing the usual seasonal Q2 uplift” Jason Pellegrino, CEO, Domain Holdings Ltd

“And so, there's clearly there's too many agents out there now. There's clearly going to be a drop-off for the less productive agents because they're not going to be able to make a living doing it or even incremental revenue to offset their costs” Stephen Joyce, CEO, RE/MAX Holdings Inc [world's largest real estate agent network]

Domestic Economy

“We are not yet seeing increases in hardship or stressed assets” Peter King, CEO, Westpac Banking Corporation Ltd

Health & Beauty

“During lockdowns, hair clippers and long-term hair removal solutions were in high demand with men’s shavers and wet shave being quite soft. As restrictions have eased, men’s shavers and wet shave products have rebounded strongly with sales of beard trimmers also continuing to grow” Cameron Fox, CEO, Shaver Shop Group Ltd

Food & Beverage

“The long-standing affordability of poultry is an important factor that will underpin future demand growth for the sector. Chicken consumption has been steadily growing for the better part of the last 60 years, and with the significant pricing [advantage] that continues to be observed versus other land-based proteins, we believe the poultry sector is well placed to deliver future growth” Andrew Reeves, CEO, Inghams Group Ltd

Commodities

“In our full year 2022 results, delivered in August, I indicated that we experienced a sudden softening in market conditions in the later part of June. Throughout the 2023 first quarter, and consistent with other industry reports, we saw these pressures gathering momentum” Alistair Field, CEO, Sims Metals Ltd

“We expect the demand for critical minerals to remain strong in the year ahead” Sanjeev Gandhi, CEO, Orica Ltd

Travel

“In the past if you were to buy a ticket for December in March, you’d be able to get a good deal. But, today, people are buying, in March, tickets to travel in December already” Louis Arul, VP Southwest Pacific, Singapore Airlines Limited

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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.