CEO INSIGHTS – Week Ending 28 April 2023

“Along with surfacing content from friends and family, now more than 20% of content in your Facebook and Instagram Feeds are recommended by A.I. from people groups or accounts that you don't follow” Mark Zuckerberg, CEO, Meta Platforms 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.  

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

Soft Commodities

“Global pulp prices have begun to fall from highs reached early in the 2023 calendar year and there are rising pulp and papers stocks at Chinese ports due to lower-than-expected global trading activity” Market Statement, Midway Ltd

Commodity, Mineral Shortages

“Our customers continue to buy all the copper we can produce and seek more. As we move forward, copper miners will be required to expand production to meet demand” Richard Adkerson, CEO, Freeport-McMoRan Inc [one of the world’s biggest copper producers]

“So today, even with our excellent production outcomes, we find that demand still is ahead of our ability to service everyone who would like to buy Lynas NdPr [Neodymium and Praseodymium which are used in magnets]” Amanda Lacaze, CEO, Lynas Rare Earths Ltd

Post-COVID Normalisation

“Now the other dimension of labour [shortages], which is quite frustrating is, absenteeism…It's worse since COVID. So, I don't know if people just feel like they can take sick leave even more, but there's certainly an absenteeism issue that we're seeing. And I know the rest of the industry is suffering the same” Paul Flynn, CEO, Whitehaven Coal Ltd

“I think travel generally will be pretty much back to pre-COVID levels by this Christmas or early next year” Graham Turner, CEO, Flight Centre Ltd

“Market job volumes are normalising from post-COVID highs and are being further impacted by softening consumer demand” Roby Sharon-Zipser, CEO, Hipages Group Holdings Ltd

Inflation/Deflation

“The first signs of a decline in inflation on some commodity prices are being felt” Nicolas Hieronim, CEO, L'Oréal S.A.

“Also, as availability of raw materials returns to pre-pandemic levels, we expect our earnings to start benefiting from moderate deflation from recent historic inflation highs” Timothy, Knavish, CEO, PPG Industries Inc [major multinational paint & coatings company]

Health & Beauty

“Beyond the return to social life, the craze for perfume from the United States to China reflects the desire for affordable luxury and well-being routines. People everywhere want to feel good and smell good. This trend is expected to continue over the long term” Nicolas Hieronim, CEO, L'Oréal S.A.

Construction

“[We] have increased the cement price significantly in all key markets” Jan Jenisch, CEO, Holcim Group [leading global building materials company]

“We used to build a home in 16 weeks, it takes 32 weeks today” Tarun Gupta, CEO, Stockland

Housing

“We are seeing in our business, the sharpest – and this is nationally – the sharpest volume correction we have seen in modern Australian history. That is because we’ve seen the sharpest interest rate rises in modern Australian history and interest rates are doing their job at that level. Volumes have corrected around 40 per cent to 60 per cent” Tarun Gupta, CEO, Stockland

Energy & Geopolitical

“Our solar business is benefiting from the renewable energy transition and order rates have been increasing, leading to a record global backlog that is 3x higher than 1 year ago” Stephen Kaniewski, CEO, Valmont Industries [major multinational manufacturing company]

“Indeed, energy security remains a top priority for most countries and is driving structural investments that are governed primarily by national interest. The extent of these investments is resulting into a broad-ranging growth outlook, comprised predominantly of resilient long-cycle projects” Olivier Le Peuch, CEO, Schlumberger Ltd [world’s largest oilfield services company]

Macroeconomic

“[After a] firm start to 2023, global economic activity is expected to slow markedly over the coming quarters as the full impact of the rapid and simultaneous tightening in global monetary policy over the past year filters through to the real economy” Market Statement, Monetary Authority of Singapore

Travel

“Travelling domestically is still expensive because tourism operators need to pay off debts and are still facing staffing shortages. Dean Long, CEO, Australian Federation of Travel Agents

Social Media & Technology

“Along with surfacing content from friends and family, now more than 20% of content in your Facebook and Instagram Feeds are recommended by A.I. from people groups or accounts that you don't follow” Mark Zuckerberg, CEO, Meta Platforms Inc

Discretionary Spending

“As we wrap the bulk of our boat shows, results were better than expected…We believe these shows are a good signal of consumer interest, particularly in premium products. Our internal boater sentiment survey suggests boat participation and purchase consideration are above prior year, with Google search trends slightly down” David Foulkes, CEO, Brunswick Corporation [largest maker of recreation boats in the world]

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.