CEO INSIGHTS – Week Ending 31 March 2023

“Ready-to-eat is really sort of like after meal kits, the next frontier and direct-to-consumer food solutions…The growth curve that this vertical is going through is very much reminiscent of where meal kits were trading in 2016, 2017” Dominik Richter, CEO, HelloFresh SE

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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Corporate Sector

“We see 2 common themes. First, all strategies continue to lead to technology, particularly cloud, data, AI and security…And second, companies remain focused on executing compressed transformations to achieve lower cost, stronger growth, more agility and greater resilience faster” Julie Sweet, CEO, Accenture

“Over the past 18 months, we have certainly talked a lot about the pandemic serving as an accelerator for business jet adoption...Historically, the large [jet size] category has remained very stable through economic cycles, and this trend continued to this day” Éric Martel, CEO, Bombardier Inc

Travel & Leisure

“Demand trends are improving across all regions as we exit the [Northern Hemisphere] winter period” Josh Weinstein, CEO, Carnival Cruise Corp

Media & Advertising

“I think brands matter…The more choice people have, the more important brands become because of what they convey to consumers” Bob Iger, CEO, The Walt Disney Company

Food & Pet Food

“Ready-to-eat is really sort of like after meal kits, the next frontier and direct-to-consumer food solutions…The growth curve that this vertical is going through is very much reminiscent of where meal kits were trading in 2016, 2017” Dominik Richter, CEO, HelloFresh SE

“I mean the trend towards humanisation [of pet food] is quite strong and remains quite strong. And so, we really don't see a lot of trade down to private label, for example, or lower-priced brands” Jeffrey Harmening, CEO, General Mills Inc [one of the world’s largest pet food companies]

Inflation

“So we continue to have ingredient inflation, not at the level that we had last year” Dominik Richter, CEO, HelloFresh SE

Healthcare & Hospitals

“Coming into this year, we are saying you will see that gradual increase in surgeries going from 90% pre-pandemic levels to 95%. So it's still not 100%...At some point, that has to go above 100%. Otherwise, I think we're going to have a different health crisis in the world” Monish Patolawala, CFO, 3M Co.

Consumer Spend & Trends

“I think the consumer is somewhat out of control…They’re used to shopping, they’ve got used to going out to restaurants, got used to spending money…The aspirational demand for these products is just still out of control” Solomon Lew, Chairman, Premier Investments Ltd

“That discretionary spending [drop] has also put an impact on retailers who may have misread the signal. So you're seeing [inventory] destocking” Monish Patolawala, CFO, 3M Company

“We continue to capitalise on the long-term consumer trends, healthy and flavourful cooking, increased digital engagement, trusted brands and purpose-minded practices” Lawrence Kurzius, CEO, McCormick Company [world’s leading flavour, seasoning & spices company]

Technology

“Innovation is developing rapidly in China and I believe it will further accelerate” Tim Cook, CEO, Apple Inc

“Canva, Atlassian and WiseTech spend a hell of lot of money on R&D, and all three companies are massive exporters, which gets dollars into Australia. The return on investment of R&D for WiseTech, or Canva, or Atlassian and a number of others, massively creates an export economy for Australia” Richard White, CEO, Wisetech Global Ltd

Macroeconomic

“The GFC was fundamentally a crisis around the quality of assets and the loans that banks make, and that’s not what the risk is here. This is a different issue. This is really to do with the global war on inflation and how central banks are raising rates very quickly in order to combat that, and that has casualties” Shayne Elliott, CEO, ANZ Bank Ltd

Banking & Lending

“It’s the most competitive market I’ve seen in mortgages in my career” Peter King, CEO, Westpac Banking Corp.

Transport

“Australian rail freight companies have no control over the condition of the track infrastructure they operate on or global technological developments in locomotives and rolling stock” Paul Scurrah, CEO, Pacific National

Property

“You don’t have to be Einstein to work out when interest rates go up, there’ll be pressure on asset pricing, but it’ll be very differentiated. Very little good kit [properties] in any sector ever gets sold in down markets because there are few institutionally stressed people” David Harrison, CEO, Charter Hall

“The housing market has probably been more robust, certainly from an asset valuation. Nothing’s really changed in the last few weeks” Matt Comyn, CEO, Commonwealth Bank of Australia Ltd

Energy & Resources

“Australia’s international competitiveness is being challenged by a number of factors, including royalty increases, energy price caps, workplace policies and uncertainties around key aspects of carbon policy” Gary Nagle, CEO, Glencore plc

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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.