NAOS Asset Management

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. This week's insights come from the CEOs of Coca-Cola Amatil, Harvey Norman, Flight Centre, Sandfire Resources, and more.

Interest Rates

“We haven't seen interest rates be influential for some time now.”

Peter Birtles, CEO, Super Retail Group

“Recent rate cuts might have had some impact, but I don't think we've seen the same impact that we might have when interest rates were higher.”

Richard Goyder, CEO, Wesfarmers

"If consumers get a little nervous when rates are so low they may start wondering about the strength of the economy."

Hilton Brett, CEO, RCG Corporation 

"Nobody cares . It’s like an ant on a log who's been given a steering wheel going down a river. The log is just taking him down river."

Mike Kane, CEO, Boral

Federal Election

“There's no doubt that the federal election didn't help consumer confidence.”

Graham Turner, CEO, Flight Centre

"We saw the couple of weeks around the election being a little softer but outside of that, we've maintained pretty strong growth. We feel there's pretty good momentum."

Peter Birtles, MD, Super Retail Group

Domestic Economy

“Petrol prices are still reasonably low, interest rates are low, house prices are high, and unemployment is low.”

Hilton Brett, CEO, RCG Corporation

“We have seen very differential growth in different parts of the country – the old two-speed economy seems to have re-emerged.”

Brad Banducci, MD, Woolworths 

“We still see the east coast being busy for some time. It certainly will be busy for the next 12 to 18 months or even two years. It gets foggy after that.”

Martin Brydon, CEO, Adelaide Brighton

“This is the new normal – we are in a low growth environment for some time to come… We're going to see low wage growth; we already have households pretty heavily geared, and there are concerns about employment.”

Alison Watkins, CEO, Coca-Cola Amatil

“I think the commentators place a very large store on that (housing boom), I think it’s important, but I don’t think it’s as important as they do. I think the fact that Australia’s population increases by a million every three and a bit years is much more important because that’s another million people we are servicing three and half years from now. And let’s say they already have got a house, or stop building houses, then they start renovating houses.''

Gerry Harvey, Founder, Harvey Norman

Health Care

“The federal government announced changes to its residential aged care funding in the MYEFO in November 2015 and the Federal Budget 2016, which commenced in FY17. For the company, there would be minimal impact resulting from these changes in FY17. The changes are more significant in FY18 and FY19.”

Ross Johnston, CEO, Regis Healthcare

“The federal government announced on budget night that it would establish a private health sector committee to look at ways of not just strengthening the industry, but also to look at how we can collectively encourage growth in participation in the sector… which remains at 47% of the Australian population.”

Christopher Rex, MD, Ramsay Health Care

“Volumes of admissions and operations continue to trend upwards as expected due to the demographic factors which are driving an inevitable increase in the demand for health care services. A growing population and ageing population, as I say, inevitably will drive up demand for the services that we offer.”

Christopher Rex, MD, Ramsay Health Care

“One of the unfortunate aspects of ageing is that we may be living longer lives, but we're not necessarily living a healthy life and incidence of chronic disease in society continues to grow significantly.”

Christopher Rex, MD, Ramsay Health Care

Resources

“The outlook for East Coast gas supply and demand, and the long spoken about gas shortage is approaching”

Matthew Kay, CEO, Beach Energy

“I think while we've seen a bit of a subdued market, the pendulum has swung very hard in one direction. If we had something to buy, we would be buying copper; we're very enthusiastic about copper in the medium to longer term.”

Karl Simich, MD, Sandfire Resources

“The market is subdued… if there is a cycle and we're going through a circle we're towards the bottom of that cycle rather than top or half way; we are certainly somewhere towards the bottom of that.”

Karl Simich, MD, Sandfire Resources

“If you took a very balanced view of what is occurring out there in the copper sector, the fundamental demand is running at somewhere between 22 million and 25 million tonnes a year; you still see a consistent demand flow long-term, on long-term averages and that will continue. There's no significant substitution for the metal. So I think fundamentally demand is still there. We've seen a little bit of ebb and flow in supply, but to try and maintain supply for that demand in the medium to longer term will be difficult.”

Karl Simich, MD, Sandfire Resources

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