CEO INSIGHTS – Week Ending 18 November 2022 By NAOS Asset Management

“Pocketbooks are stretched, people have less discretionary income or less disposable income to spend on things — and so they’re looking for value.” John Rainey, CFO, Walmart Inc.

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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Domestic Economy

“It is hard to find any problems that are evident at the moment.” Matt Comyn, CEO, Commonwealth Bank of Australia Ltd

Housing & Renovations

"The facts are that we have more personal disposable income today than we had before the pandemic. And that’s primarily in the bank accounts of homeowners. And the facts are that we have still 1.5m to 2m homes under current demand because of the lack of home building coming out of the financial crisis in 2008, 2009." Marvin Ellison, CEO, Lowe's Companies., Inc.

Food & Beverage

"In this challenging macroeconomic environment with historically high inflation, consumer demand for protein remains relatively steady" Donnie King, CEO, Tyson Foods, Inc

“Now, in past recessions, beer consumption actually will marginally improve. It doesn't go down.” Mark Palmquist, CEO, United Malt Group Ltd.

Consumer Spending & Behaviours

"With high rates of inflation continuing to erode their purchasing power, many consumers this year have relied on borrowing or dipping into their savings to manage their weekly budgets. But for many consumers, those options are starting to run out. As a result, our guests are exhibiting increasing price-sensitivity, becoming more focused on and responsive to promotions and more hesitant to purchase at full price." Brian Cornell, CEO, Target Corp

“Pocketbooks are stretched, people have less discretionary income or less disposable income to spend on things — and so they’re looking for value.” John Rainey, CFO, Walmart Inc.

"Back during the COVID environment, you saw a greater amount of spend taking place in what we call the nesting category, home improvements, appliances, things of that sort. What you are seeing much more of now is a bent towards – spending towards experiences. So we're seeing good strength in airlines, lodging, restaurants." Sachin Mehra, CFO, Mastercard Inc.

Cryptocurrency

“It feels like we were in a nightclub and the lights just turned on.” Brian Chesky, CEO & Founder, Airbnb Inc

“Some of the business models and practices that look to have occurred are shocking. The sector now will go through a period of intense scrutiny and review, and on a global basis, I think that is a positive development because that, in time, will ensure there are adequate consumer protections." Matt Comyn, CEO, Commonwealth Bank of Australia Ltd

Media & Advertising

“Frankly, the economic picture ahead is dire especially for a company like ours that is so dependent on advertising in a challenging economic climate." Elon Musk, CEO, Twitter Inc

 "Live Australian commercial radio accounts for nearly three quarters of all listening on audio platforms that have advertising." Market Announcement, HT&E Limited

Mining Services

"Customer activity has required elevated levels of working capital to support customers and capture the opportunity...The fleet life extension is likely tied to the eventual evolution to electrification of mining fleets." Ryan Stokes, CEO, Seven Group Holdings Ltd

Auto-Industry

"Right now, the most economical way for folks to stay on the road is to fix the car they have with new car availability at lower levels, new – used car prices have been high, they're moderating a bit. And so we've seen through the course of the year that the most effective way for folks to stay on the road is to fix the car they have." Herbert Nappier, CFO, Genuine Parts Co. [Owner of Repco] 

Energy & Resources

“There is huge potential in green hydrogen but there is still a significant gap we have to close between it and conventional fuel sources.” Ian Learmonth, CEO, Clean Energy Finance Corporation

“Most of the developed world is buying batteries on a huge scale, so demand outstrips supply.” James Basden, Founder & Director, Zenobe Energy [UK Battery Storage Group]

Construction / Electric Cranes

“Biodiesel is a vital first step, but electric cranes take us into the next generation of emission reduction for cleaner, quieter construction sites.” Rebecca Hanley, Australia MD, Laing O’Rourke

“We understand the market environment is more challenging moving forward, so we continue to be cautious in our approach to risk management.” Greg Goodman, CEO, Goodman Group

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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.