CEO INSIGHTS – Week Ending 28 October 2022 By NAOS Asset Management

“The preference for contactless payments that grew over the last two years continues. More than half of the in-person switched purchase transactions are now tapped, up from approximately one-third pre-pandemic. And this trend will be bolstered by the adoption of new technologies such as Tap on Phone” Michael Miebach, CEO, Mastercard 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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Consumer Behaviour

“The current trading environment remains positive with consumer confidence proving robust in the home category” Mark Ronan, CEO, Adairs Ltd

“While current trading remains strong, the Group expects higher mortgage rates and increased cost of living expenses will begin to impact consumer spending” Anthony Hegarty, CEO, Super Retail Group Ltd

“I think that is why we are already starting to see consumers be more value conscious” Rob Scott, CEO, Wesfarmers Ltd

Consumer Staples

“We are seeing lower demographics buying less fresh produce and meat and buying more canned and frozen foods” Steven Cain, CEO, Coles Group Ltd

Supply Chain

“Windshields – we usually have two or three spare parts but, right now, they are a restricted item worldwide. We would have been able to replace that in 12 hours, maybe 24 hours at a stretch, but it took us nearly seven days to source and put it on, so you lose that aircraft for seven days” Alan Joyce, CEO, Qantas Airways Ltd

“Supply chain issues continue to ease gradually” Richard Kyle, CEO, The Timken Company [global industrial bearings manufacturer]

“This year, we anticipate our volumes will peak later in December compared to last year, as we expect consumers will return to more pre-pandemic shopping behaviours” Carol Tomé, CEO, United Parcel Service Inc

Healthcare

“If we’re not careful…we’re going to bankrupt Western civilisation unless we find a more efficient way of providing health care to everybody. Our current systems, it takes too long to see a doctor. Costs too much to go to the hospital. We’re really straining the budgets of our Western democracies. We’ve got to do a better job” Larry Ellison, CTO/Founder, Oracle Corporation

Commercial & Industrial Property

“The office is a key driver for culture, collaboration and innovation and quality workspaces remain in demand by companies seeking to differentiate themselves in order to attract talent” Darren Steinberg, CEO, Dexus

“Looking ahead, sales activity remains healthy as the secular trends driving data centre demand remain in place…But the world is changing. We are seeing sales cycle lengthen and global uncertainty extends decision times” Arthur Stein, CEO, Digital Realty Inc [one of the world’s largest data centre companies]

Finance & Payments

“We are moving towards a world of decentralised, embedded finance, where customers don’t walk into a branch, they live at the checkout, in an ecosystem – that is where they interact” Larry Diamond, CEO, Zip Co Ltd

“The preference for contactless payments that grew over the last two years continues. More than half of the in-person switched purchase transactions are now tapped, up from approximately one-third pre-pandemic. And this trend will be bolstered by the adoption of new technologies such as Tap on Phone” Michael Miebach, CEO, Mastercard Inc

Consumer Electronics

“The short story is that the industry is volatile…and consumer confidence appears to be tepid” Bracken Darrell, CEO, Logitech International S.A.

“Fitness is a more competitive segment due to the advanced [quality of] wellness wearables” Clifton Pemble, CEO, Garmin Inc

Technology

“I think [our metaverse investment] it's some of the most historic work that we're doing that I think people are going to look back on decades from now and talk about the importance of the work that was done here” Mark Zuckerberg, CEO, Meta Platforms Inc

Inflation

“It's a tough question to answer just because I don't know exactly what happens with inflation…probably [it] starts to come back down, which then would imply that core price has peaked” James Fish, CEO, Waste Management Inc [largest waste company in the world]

Global Economy

“Over the last few months, I've visited markets around the world hearing from employees, franchisees and restaurant teams about how the challenges we face globally impact our restaurants locally...There is increasing uncertainty and unease about the economic environment” Chris Kempczinski, CEO, McDonald’s Corporation

Building & Renovations

“Looking ahead, we anticipate gradual moderation in inflation. Volumes have begun to contract since September in both regions [Aus & USA]. We see softening demand continuing into the second half” Peter Wilson, CEO, Reece Group Ltd

“As we move into an uncertain macroeconomic environment, we expect tradies to face increased competition for jobs” Roby Sharon-Zipser, CEO, Hipages Group Ltd

Renewables

“If you want to go to renewables, you need a 50-year or 75-year plan – you can’t do it in the next 10 years” Lindsay Partridge, MD, Brickworks 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.