CEO INSIGHTS – Week Ending 9 December 2022 By NAOS Asset Management

“When China relaxes restrictions and reopens then the issue of access to Russian air spaces becomes a killer question for European carriers. I think we have to look to the reopening of Russian air space so the European carriers can access Asia” Willie Walsh, Director General, International Air Transport Association [IATA]

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

“We have a correlation between economic crisis and increased consumption of champagne. It’s happened every single time” Kyla Kirkpatrick, CEO, Emperor Champagne

“I do think the consumer is pretty healthy. And for all indications of our own business, we are not seeing any kind of trade down. In fact, we've actually seen stronger performance even at the higher end of our portfolio” Lawson Whiting, CEO, Brown-Forman Corp [one of the world’s largest spirits & wine groups]

Travel

“I know this isn’t an answer that a lot of people would like to hear, but the realities of the industry are very important. If the oil price increases, then ticket prices will have to increase to reflect that increase” Willie Walsh, Director General, International Air Transport Association [IATA]

“When China relaxes restrictions and reopens then the issue of access to Russian air spaces becomes a killer question for European carriers. I think we have to look to the reopening of Russian air space so the European carriers can access Asia” Willie Walsh, Director General, International Air Transport Association [IATA]

Luxury

“[In] good times people buy chocolate to celebrate and say thank you. Next year there may be some tightening of the belts, but people want to afford a little luxury” Michael Schai, CEO, Lindt & Sprüngli Australia & New Zealand

Commodities & Resources

“Australia has a source of energy [in the Perth Basin] which is equivalent to gas costs coming out of Qatar and Russia, and that generates a strong impact, in terms of the competitiveness of people who consume that energy for their end products” Stuart Nicholls, CEO, Strike Energy Ltd

Macroeconomic

“I don't see indications of a recession or any demand slowdown” Gregory Brown, CEO, Motorola Solutions Inc

“I think importantly, just given some of the inflationary pressures that are in the marketplace today…that those inflationary pressures will suggest that rates will be higher for longer, meaning that it's unlikely if we're in a recession that we're going to see a lot of rate cuts anytime in the near future” Gary Shedlin, CFO, BlackRock Inc

“The path to achieving the needed decline in inflation and achieving a soft landing for the economy remains a narrow one” Philip Lowe, Governor, Reserve Bank of Australia

“You’ve actually got most of the macro factors working against business in many respects at the moment” Jason Preston, Chairman, McGrathNicol [Advisory and Restructuring Firm] 

Consumer Credit

“And the only place we see any levels of stress, which is primarily from the high inflation of fuel and food and those kind of things, is it the subprime consumer. So the near-prime and prime consumers are very strong. And we haven't seen any impact on our volume as a result of a slowdown. We don't see an economic slowdown” Mark Begor, CEO, Equifax Inc

Healthcare

“All 3 of these [our] business areas are benefiting from very favourable market trends, growing in aging populations, an increasing prevalence of chronic conditions following this and increased disposable income. And we know that people with a high disposable income tend to be more interested in hygiene and health” Magnus Groth, CEO, Essity AB [world’s leading hygiene & health conglomerate]

Workplace & H.R

“Secondly, as it relates to [office lease] renewals, there is a big backlog of renewals. And one thing we know is that occupiers are in fact, taking space, some of them on a defensive basis [thinking] we don't know how much we're going to need, but we know we're going to need some, so we are going to take space” Robert Sulentic, CEO, CBRE Group Inc

“Executive Search [recruitment for executive level positions], we've been now seeing this, as you know, for several months. There's been a moderation from the very heightened levels that we saw 1.5 years ago” Gary Burnison, CEO, Korn Ferry Inc

Cryptocurrency

"Crypto is a sideshow and you guys spend too much time on it...crypto tokens are like pet rocks...I don't understand why people allow these things...I think the regulator should stop beating up on banks and focus on things like crypto” Jamie Dimon, CEO, JPMorgan Chase & Co

Supply Chain

“The champagne shortage is real” Kyla Kirkpatrick, CEO, Emperor Champagne

“You can actually go into a car dealership and buy a car. A few months ago there was no chance of that” Andrew Irvine, CEO Business Bank, National Australia Bank 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.