CEO INSIGHTS – Week Ending 27 November 2020 By NAOS Asset Management

“Long before the pandemic started, we were witnessing a shift away from the traditional sit-down family dinner. Anyone who has kids has experienced this. Many activities, not enough time and dinner was whatever could be eaten between activities. The pandemic brought the sit-down family dinner back. Meals previously eaten on the go have become family activities” Jim Snee, CEO, Hormel Foods Corporation [multinational processed foods conglomerate]

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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Food & Beverage

“I think we are at the very beginning, for meat and dairy substitutes, of their market growth – they are still tiny compared to the overall meat and dairy markets. In the most developed countries, it’s 5%of meat or dairy – some predictions say it could go to 50%.” Hanneke Faber, President, Foods & Refreshment, Unilever

“Long before the pandemic started, we were witnessing a shift away from the traditional sit-down family dinner. Anyone who has kids has experienced this. Many activities, not enough time and dinner was whatever could be eaten between activities. The pandemic brought the sit-down family dinner back. Meals previously eaten on the go have become family activities” Jim Snee, CEO, Hormel Foods Corporation [multinational processed foods conglomerate]

Tourism & Leisure

“Regional tourism is very, very strong. Holiday parks with their open space make social distancing very easy to do. This has been a real positive for the whole industry” Grant Wilckens, CEO, G'Day Parks [Australia's largest holiday/caravan park owner and operator]

“If you look at the leisure industry, that is airline, hotel, gambling…All those industry specialists are saying that it will take three years and more to recover, then [based on this] we believe that maybe the surge that we had this summer will be a bit reduced. But we have a pretty good runway in front of us” José Boisjoli, CEO, Bombardier Recreational Products Inc [owner of Sea-Doo, Ski-Doo & other RV brands]

Aviation

“The history books will record 2020 as the industry's worst financial year, bar none. Airlines cut expenses by an average of a billion dollars a day over 2020 and will still rack up unprecedented losses” Alexandre de Juniac, CEO, International Air Transport Association [IATA]

“[A lack of national cohesion on borders] Is kryptonite for the tourism industry. No one knows what is going to happen from one day to the next” Geoff Culbert, Chief Executive Officer, Sydney Airport Ltd

Transport & Logistics

“Building on the V-shaped recovery in the September quarter, we continue to see consistent improvement in terms of mobility and miles driven, and this bodes well for the replacement demand of tyres, both in terms of passenger vehicles as well as truck and bus” Sean Keohane, CEO, Cabot Corporation [multinational chemicals company/supplier of chemicals for tyre industry]

Workplace & Employment

“I do believe there will be more change in the next two years than in the last 10 years…Almost every company on the planet is and will have to reimagine their business. Quite simply, different work needs to get done and work needs to get done differently” Gary Burnison, CEO, Korn Ferry Inc

“At the beginning of the pandemic, we heard an awful lot about how effective it is using technology to work from home…But what we're also hearing now is how important it is to be in the office for creativity, the team working, the projects for coaching and development” Dominic Blakemore, CEO, Compass Group PLC [world’s largest contract food service company]

“Printing volumes continue to be significantly below where they were before the pandemic” Enrique Lores, CEO, HP Inc

Retail

“Fundamentally it seems like the consumer is relatively strong” Katrina O'Connell, CEO, GAP Clothing Inc

Domestic Economy

“It doesn’t look like the economy is going to be anything other than very strong in the immediate future” Gerry Harvey, Chairman, Harvey Norman Holdings Ltd

Residential Property

“With the scheduled end of the Job Keeper and deferred mortgage programs still yet to be determined, along with other macro factors impacting consumer confidence, there is still material uncertainty as to whether the momentum evidenced in the first half of FY21 will be maintained in the second half results” Eddie Law, CEO, McGrath Ltd

“The major lenders have seized the opportunities presented by favourable funding conditions and have aggressively targeted market share growth with generous cash back offers and very competitive fixed rates for new customers. This has seen the major lenders regain market share from the non-majors. They now hold 60.1% of the market, up from circa 52% in the same period last year” David Bailey, CEO, Australian Finance Group [AFG] Ltd

Technology

“COVID has resulted in the acceleration of technology in every aspect of our lives and there will be no turning back. This is a fundamental shift” Frank Calabria, CEO, Origin Energy

“With 5G, data driven insights, automation and embedded intelligence, we will see an explosion of edge computing [computing done at the location it is needed] in smart cities, transportation, factories, hospitals and schools around the world” Jeff Clarke, COO, Dell Technologies Inc

Energy & Resources

“Renewables are plunging in cost so fast, gas will never get a look in. This isn’t about politics. It’s about economics and realism” Mike Cannon-Brookes, Co-CEO, Atlassian Inc

Chinese Economy

“If you look at China right now where things are pretty much back to normal, you will see our businesses are performing well there, people are socializing outside the home again” Ivan Menezes, CEO, Diageo PLC [multinational alcohol company]

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. 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.