CEO INSIGHTS – Week Ending 30 September 2022 By NAOS Asset Management

Everything is going digital. How we work, how we learn, how we rest, how we care for each other, how we worship, how we live in society and in community together” Patrick Gelsinger, CEO, Intel Corporation

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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Cybersecurity

“We’re seeing an industrialisation of cyber threats. They’re taking the same professional approach to cyberattacks and making money or gaining information out of them as any professional business is in trying to the best at what they do. It’s crazy and sad, but that’s the reality of the world we’re in” Brian Grant, ANZ Director, Thales Cloud Protection & Licensing ANZ [division of major multinational Thales Group]

Retail & Consumer Behaviour

“I have a feeling that fashion somehow is morphing with entertainment. Which on one side is exciting, on the other frightening” Giorgio Armani, CEO, Giorgio Armani S.p.A

“NIKE's growth is strengthened quarter-by-quarter by the expanded definition of sport, by the societal movement toward comfort and health and wellness” John Donahoe, CEO, NIKE Inc

Inflation

“What we did not anticipate, to be perfectly honest with you, was the tremendous inflation of costs that hit us squarely last year” Raj Subramaniam, CEO, FedEx Corporation

Macroeconomic

“You need to take a long-term view through conditions like this” Sundar Pichai, CEO, Alphabet Inc [parent company of Google]

“We are feeling the impact that the economic uncertainty is having on our customers” Andrew Owen, CEO, MillerKnoll Inc [one of the world’s largest office furniture manufacturers]

Demographics

“In Australia, we’ve seen our young people demonstrate their passion, care and commitment to protecting their future dramatically increase” Michael Boyle, CEO, HP Australia

Labour Markets & Employment

“Employment levels at our existing clients have continued to increase as they're finding more people to fill those positions” Martin Mucci, CEO, Paychex Inc [leading global HR & payroll service provider]

“I'd say, easing a bit, but that's relative. It is still a very challenging environment. But maybe not quite as challenging as it was six months ago, eight months ago, but still quite challenging” Todd Schneider, CEO, Cintas Corporation [world’s largest clothing uniform company]

Construction & Infrastructure

“I think there might be some moderation of the total quantum of [Aus gov infrastructure] spend and I think there might be some things re-profiled” Adrian Dwyer, CEO, Infrastructure Partnerships Australia [infrastructure industry body]

Technology

“Everything is going digital. How we work, how we learn, how we rest, how we care for each other, how we worship, how we live in society and in community together” Patrick Gelsinger, CEO, Intel Corporation

“The macro environment for auto remains a mixed picture with varying dynamics across regions and OEMs. The Chinese market, where BlackBerry has won a number of designs recently, appears to be bouncing back...In North America and in Europe, however, there appears to be a short-term contraction” John Chen, CEO, BlackBerry Ltd

Commodities

“There is only one fuel which goes up in abundance and down in price – that’s renewables. If you look at fossil fuel, the more you buy it, the more expensive it becomes” Andrew Forrest, Executive Chairman, Fortescue Metals Group

“All the urgency over the past two years— ‘give me everything you can’—that’s basically over. Lumberyards are not scared of the price going up…The sexy lumber world is coming to an end, unfortunately” Michael Goodman, Director, Sherwood Lumber Corp [US timber company]

Payments & Lending

“There's no amount of technology innovation and no amount of risk management that could force the consumer to change their mindset. They've been waiting for someone to come along with this [BNPL] product in the past couple of years, and the explosive growth the category has shown really reflect the underlying consumer demand” Michael Linford, CFO, Affirm Holdings Inc [major US BNPL provider]

“We are beginning to see the signs of stress for a certain subset of our consumers” Michael Linford, CFO, Affirm Holdings Inc [major US BNPL provider]

Travel & Leisure

“All three of our Australian resorts had record years and I think that some was pent up demand because of COVID impacts in Australia” Kirsten Lynch, CEO, Vail Ski Resorts Inc

“RV [caravans] sales demand remains strong globally and in Australia our forward order book for new retail deliveries remains high and at attractive selling margins” Luke Trouchet, CEO, Apollo Tourism & Leisure Ltd

Commercial & Industrial Property

“The biggest [industrial property rent] increases are occurring in Sydney, especially in the west, where the vacancy rate is close to zero, and in Melbourne. Rental growth is also pretty strong in Brisbane” Ian Barter, CEO, Frasers Property Industrial

“A post-lockdown release of pent-up leasing demand has almost exclusively landed in the prime office market” David Cannington, Head of Research & Strategy, Investa Property Group

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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.