CEO INSIGHTS – Week Ending 12 May 2023

“There has been much discussion, some of it was enlightened, some not so, about the potential impact of generative AI, and there is no doubt that it will profoundly affect the media business. Candidly, generative AI may pose a challenge to our intellectual property and to the future of journalism” Robert Thomson, CEO, News Corporation

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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Workplace / WFH

“I don’t know what happened…I can’t explain…I’ve not met a CEO, other than a few weird tech guys, that has ever said or thought they didn’t want to go back [to the office]. The thing that mystified me was why they just didn’t tell their people to come back” Bruce Flatt, CEO, Brookfield Corp

“The fact is, job growth is still pretty strong, wage growth is still pretty strong. And that’s not just in the U.S., that’s in Europe and the U.K. as well, as in many other parts of the world” Bill Winters, CEO, Standard Chartered Bank Plc

Recreation & Outdoors

“We've seen weakness across a number of categories in the outdoor space, given the pandemic was such a great and significant season for those kind of businesses” Helen Johnson-Leipold, CEO, Johnson Outdoors Inc [camping, fishing & outdoor equipment conglomerate]

Freight & Transport

“Inflation and a softening macro economy are squeezing profitability in many sectors and especially in transport” Richard Corrado, CEO, Air Transport Services Group Inc

“We're seeing shipping rates come down dramatically” Scott Wine, CEO, Case New Holland Industrial N.V.

Agriculture

“Commodity prices are softening with wheat, bean and corn prices depressed versus this time last year, but many farm input costs are down and farm incomes remain elevated" Scott Wine, CEO, Case New Holland Industrial N.V.

“The global grains stocks-to-use ratio is projected at a 25-year low, and we believe it will take multiple cropping cycles to replenish inventories” Kenneth Seitz, CEO, Nutrien Ltd

Chinese Economy

“I think more importantly down the road is that we see that the Chinese are back again in sports. All the marathons, 5Ks, 10Ks, half marathons are sold out, which means that people are moving again after 3 years of little sports activity” Bjorn Gulden, CEO, Adidas AG

 Retail & Apparel

“A new trend that you might be interested in is that we see actually that the differences between performance and lifestyle is disappearing...So again, the consumer in the end decides what the product is for. And I think you will start to see that distribution between fashion and performance is starting to be more loose” Bjorn Gulden, CEO, Adidas AG

Artificial Intelligence

“There won't be anything in AI that replaces the gene. I'll state that unqualifiedly” Warren Buffet, CEO, Berkshire Hathaway Inc

“This is certainly the biggest revolution and test since I came to Silicon Valley. It's certainly as big of a platform shift as the Internet, and many people think it might be even bigger” Brian Chesky, CEO, Airbnb Inc

“There has been much discussion, some of it was enlightened, some not so, about the potential impact of generative AI, and there is no doubt that it will profoundly affect the media business. Candidly, generative AI may pose a challenge to our intellectual property and to the future of journalism” Robert Thomson, CEO, News Corporation

Homebuilders

“It’s the grimmest I’ve ever seen in 45-odd years in the industry” Robert Lynch, Executive Chairman, Tamawood Limited

“And we can't discount the fact that everybody has had, I think, inflation fatigue. And when you go into, again, a big box retailer and everything that you see is some significant percentage higher from a cost standpoint than it was just a few years ago” Leroy Ball, CEO, Koppers Holdings Inc [global chemicals & materials company]

Consumer Behaviour

“Within US plant-based meat, our core subcategory of refrigerated, continues to experience significant challenges as inflationary pressures have driven a shift towards lower-priced animal proteins among consumers” Lubi Kutua, CFO, Beyond Meat Inc

Industrial & Residential Property

“Despite the global macroeconomic volatility, we have almost zero vacancy…Headwinds from cap rate expansion are being mitigated by continued growth in rents in most markets” Greg Goodman, CEO, Goodman Group Ltd

“While interest rate uncertainty continued to impact the Australian property market, conditions have improved with the stabilisation of house prices and more vendors returning to the market” Owen Wilson, CEO, REA Group Ltd

Medical & Biotechnology

“Then in the segment we call emerging biotech, which is simply smaller customers, customers that do not yet have a commercialised program in the market…That customer segment, in particular, continues to struggle…and really, it's a global phenomenon” Rainer Blair, CEO, Danaher Corp

Construction

“Activity in the apartment market is improving, as more projects have commenced this year, while non-residential activity is remaining strong, supported by a large pipeline of approvals” Julie Coates, CEO, CSR Ltd

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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.