Get it right, and you are almost guaranteed smooth sailing for the year ahead; get it wrong, and life becomes much harder. The rule applies to both reporting companies and their investors.The sharemarket’s big run – well ahead of profit expectations – has left a fragility over share prices, only now being exposed.
We’ve heard from a bunch of big retailers – JB Hi-Fi, Endeavour Group, Coles, Wesfarmers – consumers are now shopping for value, buying cheaper TVs, booze and rethinking heading out to restaurants in favour of cooking at home. It was interesting how the sell-side homed in on Rio Tinto’s copper exposure; the first question on the call, from Goldman Sachs’ Paul Young, went straight to where the market is thinking.
While some transitions were smooth – NAB’s the smoothest – they all create the chance for a reset. Often, the best way of doing that is via the new chief executive’s long-term incentive plan, and making sure that it reflects what investors actually want to see. Whether AI is overblown or not, it is something every large company management team has to think about. Some are using it more than others.