CEO INSIGHTS – Week Ending 19 May 2023

“We make a lot of things, and we’re seeing the price of basics like steel and wood rise as much as 40 per cent…We don’t want to diminish what we do artistically, and we can’t pass these cost increases on to the consumer just as they’ve regained confidence to come back to the theatre” Fiona Allan, CEO, Opera Australia

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.  

If you do not already subscribe and wish to receive this weekly publication of “CEO Insights” via email please click here. 

Technology, Audio & Data Centres

“For an online-only business without physical stores or in-person sales staff, the potential for AI to significantly lower our CODB [cost of doing business] %, drive [sales] conversion and customer benefits is going to be material” Mark Coulter, CEO, Temple & Webster Ltd

“As more and more people embrace podcasts, streaming and voice-activated devices, the demand for high-quality audio content will continue to grow” Ciaran Davis, CEO, Here, There & Everywhere Ltd

“We have a lot of orders. We're getting a lot of demand for data centres” Akira Shimada, CEO, NTT Group [global tech services company & one of the largest data centre companies globally]

Out-of-Home Advertising

“As an industry, the continuing investment in creative innovation, such as 3D anamorphic video and content [2D images but viewers see it as 3D], is creating greater engagement with audiences. And the continued appeal of digital out of home, offering increased flexibility and new ways to buy…is allowing out of home to be compared and measured against all other digital media” Catherine O'Connor, CEO, oOh!media Ltd

Retail & Consumers

“Australians are rightfully keeping a close eye on cost-of-living reprieve, but so too are retailers – with discretionary spending beginning to significantly soften in the wake of inflation and consecutive interest rate rises” Paul Zahra, CEO, Australian Retailers Association

“Transaction value across our three core verticals remains strong albeit with some expected softening due to a slowdown in consumer discretionary spending” Jon Davey, CEO, Tyro Payments Ltd

Industrials

Another big opportunity is, of course, related to the booming heat pump market, as well as to the transition to low global warming potential refrigerants that is now gaining traction also outside Europe” Francesco Nalini, CEO, Carel Industries S.p.A [major manufacturer of HVAC solutions]

Agriculture & Geopolitical

“In terms of our free trade agreements around the world, market access is very, very strong. Thawing of the relationship in China also adds to the positive outlook for the market from our viewpoint” Mark Allison, CEO, Elders Ltd

“Demand for fertilisers, both domestically and globally, is underpinned by the global megatrends of rising populations, rising incomes and reduced arable land per capita” Jeanne Johns, CEO, Incitec Pivot Ltd

Building & Hardware

“We saw more pressure across the business compared to what we observed when we reported fourth quarter results a few months ago. While there was relative strength in project-related categories like building materials, plumbing and hardware, we had many departments with negative comps in the quarter and continue to see pressure in a number of big-ticket discretionary categories” Edward Decker, CEO, The Home Depot Inc

“Given the combination of a softening macro outlook, along with costs continuing to increase, we would expect challenges for builders to continue” Ross Taylor, CEO, Fletcher Building Ltd

Macroeconomic

“Tesla is not immune to the global economic environment. I expect things to be, just at a macroeconomic level difficult for at least the next 12 months” Elon Musk, CEO, Tesla Inc

“Interest rates are still in flux” Aaron Erter, CEO, James Hardie Industries

“We make a lot of things, and we’re seeing the price of basics like steel and wood rise as much as 40 per cent…We don’t want to diminish what we do artistically, and we can’t pass these cost increases on to the consumer just as they’ve regained confidence to come back to the theatre” Fiona Allan, CEO, Opera Australia

Renewables

“So the good news is that the macro environment is improving, further delivering a very promising outlook for our industry” Jose Luis Blanco, CEO, Nordex S.E. [one of the world's largest wind turbine manufacturers]

“It won’t just be one technology that will deliver cleaner, cheaper and reliable power. It won’t be just green or blue hydrogen, solar, onshore or offshore wind, gas with carbon capture, grid-scale batteries, or even biofuels – it will be all of the above” Morne Engelbrecht, CEO, Beach Energy Ltd

Pharmacies

“In the recent May federal budget, the government announced a policy change to facilitate 60-day dispensing on over 300 medicines. This is a significant change in policy that will impact the funding for pharmacies and most likely decrease foot traffic into stores” Vikesh Ramsunder, CEO, Sigma Healthcare Ltd

Small Business

“By our estimate, there are over 45 million small businesses globally that can take advantage of what Xero has to offer…Australia and New Zealand leads the world in small business cloud accounting adoption and continues to demonstrate strong growth” Sukhinder Cassidy, CEO, Xero Ltd

Mining & Resources

“Governments that massively increase regulation, or who introduce regulatory uncertainty, cannot then expect investors to be forthcoming, even when commodity prices are high” Gina Rinehart, Executive Chairman, Hancock Prospecting

For all enquiries please contact enquiries@naos.com.au

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.