CEO INSIGHTS – Week Ending 14 October 2022 By NAOS Asset Management

“In our experience during previous downturns in the economy, health club memberships are not the first to be cut, they are too important in our daily members’ lives…COVID has accelerated the shift from going to the pub after work to the importance of going to the gym and supporting health and wellbeing” Harry Konstantinou, CEO, Viva Leisure 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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Technology Sector

“We believe the job market has turned, and high value tech talent is reassessing the risk of being in a start-up or a cash burn business” Richard White, CEO, WiseTech Global Ltd

“There is a clear reduction in [staff] churn rates as talent look to a more stable environment during times of uncertainty, we are definitely seeing a return to a more normal I.T. world where availability and wages are falling back in line with the longer-term averages” Andrew Hansen, CEO, Hansen Technologies Ltd

Consumer Activity & Preferences

“The casualisation trend, we've talked about this for quite some time. It's no longer just a U.S. trend. It is a global trend. Our business skews to men, men are going back into the office wearing jeans” Chip Bergh, CEO, Levi Strauss & Co

“We think people are really going to spend on themselves as well as travel this Christmas” Scott Fyfe, CEO, David Jones

“We have lived in a combustible engine world but from the individual to corporate and ride-sharing platforms, [consumers] are demanding a different kind of automobile” Stephen Scherr, CEO Hertz Global Holdings Inc

Retail & E-Commerce

“I recognise we're not out of the woods yet. As in FY '23, consumer sentiment is at an all-time low considering the current cost of living crisis” Julian Dunkerton, CEO, Superdry plc

“The pandemic has impacted retail in many ways, but positively it has accelerated the growth and maturity of the transition to online shopping and the omni channel experience. In Australia, we are now at levels and experience consistent with other markets” Matt Spencer, CEO, Baby Bunting Group Ltd

Cybersecurity

“We are also blocking unprecedented levels of malicious activity from reaching our customers, including calls and SMS” Vicki Brady, CEO, Telstra Corp Ltd

Health & Wellness

“In our experience during previous downturns in the economy, health club memberships are not the first to be cut, they are too important in our daily members’ lives…COVID has accelerated the shift from going to the pub after work to the importance of going to the gym and supporting health and wellbeing” Harry Konstantinou, CEO, Viva Leisure Ltd

“With inflation at four-decade highs, consumers are expressing uncertainty about the future and seeking value. At the same time, we know that health and wellness will always be a priority and increasingly so after COVID-19” Rosalind Gates Brewer, CEO, Walgreens Boots Alliance Inc [world’s largest pharmacy group]

Business Investment

“Though the 5 recessions I've lived through if there's a regret of growth companies, I think it's that they haven't continued to invest through that period because that period is never as long as you think” Stephen Foots, CEO, Croda International plc [major multinational specialty chemicals manufacturer]

Tourism & Travel

“The challenging and continuously changing environment that travellers now face has shown the benefit that comes from your local travel agent’s knowledge and service. This cannot and will never by matched or replaced by bots and algorithms” Andrew Burnes, CEO, Helloworld Travel Ltd

“So there's still a massive amount of pent-up demand” Alan Joyce, CEO, Qantas Airways Ltd

“While we are mindful of macroeconomic headwinds, the travel industry is experiencing a countercyclical recovery. Global demand is continuing to ramp as consumers shift spend to experiences, businesses return to travel, and international markets continue to reopen. Demand has not come close to being quenched by a hectic [Northern Hemisphere] summer travel season” Edward Bastian, CEO, Delta Air Lines Inc

Supply Chain

“The irony for the auto market is that just as the industry is poised to start seeing volumes increase from supply-constrained recession-like low levels, the rapid movement in interest rates is reducing demand” Jonathan Smoke, Chief Economist, Cox Automotive [world’s largest automotive service organisation]

“We are starting to see price and cost inflation ease and supply chain challenges and stock shortages reduce” Market Statement, Coventry Group Ltd

Banking

“Deposit growth will likely slow reflecting the end of government COVID income support, negative real wages growth and greater spending opportunities from the re-opening of the economy” Market Statement, Bank of Queensland Ltd

Global Economy

“These are very, very serious things [macro factors] which I think are likely to push the U.S. and the world — I mean, Europe is already in recession — and they’re likely to put the U.S. in some kind of recession six to nine months from now” Jamie Dimon, CEO, JPMorgan Chase & Co

“The demand recovery in China, frankly, when you look at the numbers, we cannot really talk about recovery. Things are better than they were in Q2, for sure, but they are not back to normal” Jean-Jacques Guiony, CFO, LVMH Moët Hennessy Louis Vuitton SE

Energy Markets

“It appears that some people think [the energy transition] will be easy and cheap…it’s hard and expensive and likely to drive energy bills [up] in the near term” Andrew Richards, CEO, Energy Users Association of Australia

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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.