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.

With the impacts of COVID-19 at the forefront of governments and businesses attention, the 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.

Chinese Supply & Manufacturing

Dig Howitt, CEO, Cochlear Ltd

“With regard to China, after a delay to surgeries during February, a small but growing number of surgeries have recommenced over the past few weeks, although they remain well below the previous run rates. Cochlear’s Chinese suppliers have resumed production of components”

David Layton, Co-CEO, Partners Group Holding AG (US$100bn global private equity firm)

“The indicators in our China portfolio have been climbing up since then . One of our China assets has fully recovered back to pre-coronavirus levels and others are still building back to where they were before the crisis started”

Global Logistics

Joe Almeida, CEO, Baxter International Inc (global healthcare company)

“But today, the way we're seeing the shipping lanes clearing up, we're getting products into our factories”

Patrick Miller, CEO, Commercial Vehicle Group Inc (global parts provider for heavy duty vehicles)

“We had trouble getting logistic companies to pick up shipments and the ports were slow for a while, but now it is returning to normal levels. We are encouraged by what we've seen in recent weeks in China”

Global Construction

Patrick Miller, CEO, Commercial Vehicle Group Inc

“As a reminder, demand for our construction equipment products is driven by the level of large-scale infrastructure development projects such as highways, dams, hospitals, airports and industrial development as well as mining, forestry and commodities industries around the world. We estimate the construction market we serve in North America, Asia and Europe may decline 10% to 15%”

Mike Kane, CEO, Boral Ltd

“While we have not yet seen a significant deterioration in demand for our products as a result of direct and indirect COVID-19 impacts, other than in our USG Boral China business, we are now starting to see signs of impacts in our other markets. We expect market conditions will worsen”

Foreign Exchange

Market Announcement, OFX Group Ltd

“Volatility related to market uncertainty from COVID-19 has stimulated trading activity across both the Consumer and Corporate segments. This has resulted in strong turnover and transaction volumes in February and March to date”

Financial Markets

John Pearce, CIO, UniSuper

“In a normally functioning market we're comfortable lending our shares as we genuinely believe it adds to market efficiency. However, we are now in a market gripped by panic, we believe that restricting the ability to short sell is in the best interests of promoting a more orderly market”

Travel & Accommodation

Chris Nassetta, CEO, Hilton Hotels & Resorts

“Hilton has been around 100 years. We’ve never closed a hotel that wasn’t going to be demolished or rebuilding. The bulk of our hotels in the major cities are closing as we speak”

Healthcare

Dig Howitt, CEO, Cochlear Ltd

“We are now seeing a growing number of health authorities either recommend or enforce surgery deferrals”

Automotive

Frank Witter, CFO, Volkswagen AG

“Let's be clear. Nobody knows at this point the severity and duration of corona. Nobody can reliably quantify the knock-on effects”

“The automotive industry is transforming at a very rapid pace, for example, within the areas of mobility services and digitalization. Therefore, we are continuously looking into options to strengthen our core business”

Telecommunications & Technology

Bevan Slattery, Chairman, Megaport Ltd

“We are seeing significant traffic increases across the network and are working with various video-conferencing organisations and their clients to make the user experience even better. It is expected this trend will only intensify over the coming months and even years as organisations see the benefits of being in the cloud”

Satya Nadella, CEO, Microsoft Corp

“There's going to be really a fundamental structural change in how we transcend some of these geographic boundaries”

Domestic Infrastructure

Joe Barr, CEO, John Holland Pty Ltd

“I won’t sugar coat it, tier one contractors in Australia are not making any money, and governments across Australia keep having successive project cost blowouts. We are in the midst of Australia’s biggest infrastructure boom, but as an industry, we are teetering on the brink of collapse”

“While they have projects worth hundreds of billions in planning along the east coast, it is unclear if there will be an industry left to build them”

Printing Industry

Jim Continenza, Executive Chairman, Eastman Kodak Company

“Shrinking volume and margins of traditional print threatens the survival of many printer that got to become more efficient, more flexible, faster and leaner”

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