CEO INSIGHTS – Week Ending 26 May 2023

“I think there's a ton of [AI] hype right now, and I think there's a lot of companies being started that are going to fail because of that hype. I think the technology industry is very trendy and very fashionable and jumps from one thing to the next, the next, the next” Jack Dorsey, CEO, Block 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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Global Payments & Trade

“I think decoupling would be disastrous economically between the U.S. and China or China and the European Union. If you really look at the trade flows, both ways, they play a mutually valuable role” John Donahoe, CEO, Nike Inc

“Firstly, we are playing in a huge market that grows every year and is largely dominated by major banks who are more expensive and less well liked by their clients than the new entrants. More and more customers are taking up the specialist service in every region as evidenced by the growth rate of all the new entrants, whether they are public or private” John Malcolm, CEO, OFX Group

Aviation

“More parts of the aviation supply chain are returning to normal...That’s combining with lower fuel prices to help put downward pressure on fares, which is good news for customers” Alan Joyce, CEO, Qantas Airways Ltd

Travel

“[In] the corporate market, we're expecting to see a stronger rebound in FY '24 from the corporate market because it is still trading in the broadest global sense dramatically below where it was in the pre-pandemic environment” John Guscic, CEO, Webjet Ltd

“There's a lot of travel within China, and we're doing quite well in that market. But for the most part, there's not a lot of travel going in and out of China. And China has typically accounted for about 20% of the total travel market internationally, and it's still near 0” Brian McGee, CFO, GoPro Inc

Technology & Software

“I think there's a ton of [AI] hype right now, and I think there's a lot of companies being started that are going to fail because of that hype. I think the technology industry is very trendy and very fashionable and jumps from one thing to the next, the next, the next” Jack Dorsey, CEO, Block Inc

“I think if you think about technology trends, you think about the cost of compute, the cost of transport, the cost of service, those have all come down massively with technological advantage. The one thing that has not come down is the cost of software” Daniel Schulman, CEO, PayPal Holdings Inc

Events, Experiences & Social Media

“There are generational factors that are causing people to be excited about experiences over possessions. There is the whole influencer, social media sharing, creator economy that feeds into the live event experiences…the creator economy [is] continuing to grow” Charles Baker, CFO, Eventbrite Inc

Consumer Preferences

“Ten years ago wine and beer had a very clear lead. Not as much anymore, definitely spirits are catching up to beer and wine” Luiz Schmidt, CEO, Bacardi Ltd

Consumer Spending

“Trading conditions in the second half of FY23 have been impacted by an increasingly cautious consumer environment…Our key Mother’s Day period was softer than anticipated, which compounds the trend of subdued and volatile sales observed over the course of this calendar year so far” Peter King, CEO, Dusk Candle Group Ltd

“In addition to overall discretionary spend seeing some pressure, those spending dollars also appear to be directed more towards services and away from products, as consumers are forced to be more choiceful on how to spend their money” Mary Dillon, CEO, Foot Locker Inc

“I would say our core consumer is resilient and we are seeing that around the world in Asia, in Europe and in North America as well” Patrice Louvet, CEO, Ralph Lauren Corp

Food & Beverage

“The number of restaurants today that also have a retail aspect of what they do, just so that they could survive through the past few years is immense” Jack Dorsey, CEO, Block Inc

“Energy is one of the fastest-growing categories in the non-alcoholic ready-to-drink [sector]” Naya Kalogeraki, COO, Coca-Cola Hellenic Bottling Company AG [world's third-largest Coca-Cola bottler]

Households

“The risk is that if large portions of your society don’t own their home, if that translates into higher discretionary spending, not saving, then when the music stops and you’re in retirement, then neither do you have your home nor a savings pool. That is a really challenging environment” Renato Mota, CEO, Insignia Financial Ltd [formerly IOOF]

“In the US, we estimate that roughly 100,000 appliances break every day” Marvin Ellison, CEO, Lowe’s Companies Inc

Agriculture & Textiles

“Our agri-food production sector is now the nation’s highest employer, providing 600,000 jobs, many in country areas…Food production is not only our biggest industry, but it’s our biggest manufacturing sector” Anthony Pratt, Chairman, Visy Industries

“Chinese wool processors are expecting that the 50 per cent of Australian wool which now stays in China, will increase each year. Chinese consumers are buying local brands and [clothing by] local designers…This is a massive shift from where things were 10 to 15 years ago when it seemed everybody in China wanted the Burberry check and Louis Vuitton imagery” John Roberts, CEO, Australian Wool Innovation

Minerals & Resources

“There had already been an arms race for critical minerals. The launch of the IRA [USA Inflation Reduction Act] effectively just added a lot more fuel to that fire…it just ratcheted up the intensity massively” Dale Henderson, CEO, Pilbara Minerals 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.