CEO INSIGHTS – Week Ending 2 June 2023

“A big driver of our business is employment rates and employment has been pretty good and I would tell you just generally in our business, when employment's good, when people have jobs, when they're out and about, those are the kind of things that are really highly correlated with our business performance” Joshua Kobza, CEO, Restaurant Brands International Inc [Parent Company of Burger King]

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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Retirement & Commercial Property

“The penetration rate for land lease communities has declined as new supply has not kept pace with the ageing population and increasing demand from the emerging cohort of Gen X entering the 50 plus age bracket” James Kelly, CEO, Lifestyle Communities Ltd

“In recent times we have seen significant interest from both local and foreign capital providers in investing in Australian real estate through strategic partnerships. Australia’s growth potential, relative political and economic stability, and the ESG credentials of local companies are key motivators” Nathan Blackburne, CEO, Cedar Woods Properties Ltd

Mining, Geochemistry & Renewables

“This global race towards net 0 will require more mining capital expenditure, not less” Malcolm Deane, CEO, ALS Ltd

“Industrial energy storage, that technology hasn't been unlocked. It's a key part of what the world needs to unlock technology wise” Gary Nagle, CEO, Glencore Plc

“If we are pretending that we’re going to catch up and start making batteries here, I think we’re kidding ourselves.” Sanjeev Gandhi, CEO, Orica Limited

Freight, Trucking & Logistics

“Customers are asking for carbon-free freight” Gary Nagle, CEO, Glencore Plc

“In short, trucks and buses keep the world moving. This is true today, and it will also be true tomorrow. So this will not change. One thing will change, however. Tomorrow, trucks and buses will need to be emission-free” Martin Daum, CEO, Daimler Trucks [world’s biggest truck company]

International

“Intra-Asia travel demand forecast to rise 60% from 2019 to 2032, the highest of any region globally” Market Announcement, Qantas Airways Ltd

Capital Flows & Investment

“In the current macroeconomic environment, we believe for a variety of different reasons that those two countries offer incredible opportunities over the coming few years, we continue to look at investing further in both Japan and Australia” Filippo Gori, CEO Asia-Pacific, JP Morgan-Chase

Computers & IT

“The [computer] programming barrier is incredibly low. We have closed the digital divide. Everyone is a programmer now—you just have to say something to the computer” Jensen Huang, CEO, Nvidia Corp.

“In the last few months, sales cycles have elongated because customers are more reluctant to quickly commit to large projects or some will seek additional internal approvals at the time of the order” Antonio Neri, CEO, Hewlett Packard Enterprise Co.

Insurance

“And as we've seen a significant uptick in inflation through the course of last year, the written rate [customer cost for insurance coverage] has just lagged that” Inder Singh, CFO, QBE Insurance Group Ltd

Property Market

“We now have a full-blown rental crisis, which nothing will fix overnight. We need so much more supply to stabilise and bring the market back to normal. We need build-to-sell and build-to-rent – we need all of it” Tim Gurner, Owner, Gurner Group

“Housing supply is a major issue at present and without clear moves to significantly increase supply, demand will inevitably push up prices further and faster,” Ross McEwan, CEO, National Australia Bank Ltd

Food & Beverage

“A big driver of our business is employment rates and employment has been pretty good and I would tell you just generally in our business, when employment's good, when people have jobs, when they're out and about, those are the kind of things that are really highly correlated with our business performance” Joshua Kobza, CEO, Restaurant Brands International Inc [Parent Company of Burger King]

“So despite the challenging environment in the first half of 2023, we expect that the market conditions in second half, especially in terms of destocking, will have returned in line with our previous experiences” Gabriele Del Torchio, CEO, Guala Closures Group [major multinational manufacturer of bottle caps]

“Further to the H1 FY23 Trading Update in February 2023, macroeconomic factors, including rising interest rates and inflation have continued to impact consumer spending patterns across the grocery retail sector and e-commerce channel” Market Statement, Maggie Beer Holdings Ltd

Consumer Spending

“I’d say that now the honeymoon is very much over. It was also one of the only times at least in the last few decades that I can recall where value wasn’t as important for households when they had very high levels of accumulated savings, very low interest rates, and value was not as important” Rob Scott, CEO, Wesfarmers 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.