• Buoyed by improvement in direct and finance costs, OMNI Industries Limited (OMNI) profits jumped by 57.5% during Q3 2024. This allowed the company to report earnings of $145.92Mn (+13.1%) for the nine months ended September 30, 2024.
• During the period, OMNI’s cost of goods sales (COGS) declined by 19.1% to J$795.01Mn, aided by lower demurrage costs^[1] and a reduction in financing costs given the company’s proactive debt reduction efforts, which resulted in lower interest expenses for the period.
• However, the outturn was tempered by higher operating expenses (+32.5%) due to higher professional fees, marketing, and other expenses related to the companies’ initial public offer (IPO) on June 11, 2024.  While most of these were one-off expenses, and should not affect the company in subsequent quarters, the company did face higher haulage, factory, and export‐related costs, which also contributed to the increase in operating expenses.
• Furthermore, dampened by adverse weather conditions, including Hurricane Beryl, total revenue fell by J$60.19Mn or 3.8% year to date (YTD). Of note, construction supplies remain the primary revenue driver for the company, accounting for 53% of total revenue; as such, the cement shortage on the Island, which affected the construction industry, contributed to depressed top-line growth.
• That said, the dip in revenues and higher operating expenses were not enough to disrupt the company’s performance.
• Since the start of the year, OMNI has successfully achieved several key objectives, including listing on the Junior Market of the Jamaica Stock Exchange (JSE); reducing outstanding debt through prepayments, commissioning a Moulding Machine in September 2024 while advancing the acquisition of additional high‐efficiency equipment, and expanding product offerings by leveraging its new equipment capabilities.
• Looking ahead, these strategic shifts and acquisitions should allow the company to manage financing costs while further augmenting its capabilities to allow greater production, which should fuel topline growth and overall earnings.
• OMNI’s stock price has risen by 8.0% since listing on the JSE. The stock closed Wednesday’s trading session at $1.08, with a P/E ratio of 16.09x, lower than the Junior Market Distribution Sector average (excluding outliers)^[2] of 20.45x.

(Sources: JSE & NCBCM Research)

^[1] Demurrage is a fee that must be paid when cargo remains at a port or terminal for longer than the agreed free time period specified in a shipping contract

^[2] The outliers are Derrimon, RPL, Fosrich, PTL, CAC, and Jetcon,

• The Ministry of Agriculture, Fisheries and Mining has received approximately J$10Mn in irrigation infrastructure support and farming supplies to boost agricultural resilience in Hounslow, St. Elizabeth.
• The donation, which GraceKennedy (GK) Foods handed over at the National Irrigation Commission (NIC) Hounslow pump house on November 1, included J$6.2Mn to purchase a generator and more than J$3Mn of direct support to farmers through the provision of fertilisers, irrigation supplies, and seedlings. This formed part of ongoing public-private partnerships in support of Hurricane Beryl's recovery efforts.
• Portfolio Minister Hon. Floyd Green, who received the donation on behalf of the farming community, indicated that the lack of electricity, following Hurricane Beryl in July, left farmers struggling to restart their operations. Therefore, the new generator will ensure that the NIC Hounslow pump house can remain operational, even in the event of future power outages.
• The agricultural sector plays a crucial role in Jamaica’s economic growth and is a key driver of domestic inflation. Initiatives such as these that support and strengthen the resilience of the framing community not only help to improve productivity in the sector but can lead to lower prices for agricultural goods and consumer prices in general, through more robust supplies of produce and faster recovery and normalization of supplies after an adverse weather event.

(Sources: JIS & NCBCM Research)

• The Central Bank of The Bahamas projects that the economy will continue to grow, though at a more “subdued” pace this year and in 2025.
• The economy expanded over the first three quarters of 2024; however, indicators show that growth has slowed compared to 2023. Central Bank Governor John Rolle noted that these trends align with the expected leveling off of gains following the economy’s recovery from the pandemic.
• The indicators reflect slower growth in tourism earnings due to constrained capacity in the stopover segment and moderation in the otherwise healthy cruise trends. Therefore, while visitor arrivals rose by 16.3% over the first nine months of the year, it is less than half the growth rate seen in 2023. This rise was primarily driven by a 19.8% boost in sea arrivals. Air arrivals, which reflect high-yield stopover visitors, grew by less than 1.0% over the first three quarters, compared to a 20.9% expansion in the same period last year.
• With recovery to pre-pandemic volumes, the sector now faces constrained hotel room capacity, which has only marginally increased accommodation prices in 2024, according to Governor Rolle. Although the vacation rental market expanded as a buffer, this segment experienced slight declines in both average prices and occupancy compared to 2023. If this trend continues, it could dampen new investments in vacation rentals.
• That aside, foreign investments should support sustained construction activity, and that, along with tourism, should drive employment growth.
• Governor Rolle also highlighted that “the economy continued to benefit from lower inflation in imported goods and services”. Notably as at early November, external reserves were estimated at $2.68Bn, compared to approximately $2.51Bn at the same point last year. The Central Bank forecasts a possible decrease in external reserves for 2024 due to increased private sector spending on imports.
• This continues to be in line with the Central Bank’s posture to encourage accelerated lending to the private sector. Moreover, there has also been increased capital raising efforts in the private sector that are also stimulating investment-related imports. Even still, the coverage provided by the external reserves is expected to remain more than adequate to support the fixed exchange rate. 

(Sources: Eyewitness News & Central Bank Bahamas)

• Guyana and Suriname could supply 12M metric tonnes of liquefied natural gas annually at a competitive price by the next decade, according to a report by global renewables, energy and natural resources data provider Wood Mackenzie.
• LNG demand is expected to spike by the end of the decade as industries switch from highly polluting coal to gas, which can cut greenhouse gas emissions by as much as half.
• With this in mind, Guyana and Suriname have emerged as hotbeds for oil and gas exploration, with energy majors such as Exxon Mobil, and TotalEnergies, committing billions of dollars for new projects.
• Suriname's offshore Block 52 and Guyana's offshore Haimara cluster are estimated to hold 13 trillion cubic feet (tcf) of discovered non-associated gas^[1], according to the report by the commodities research group. Together, the countries could deliver the potential LNG at a breakeven cost of $6 per million British thermal units, Wood Mackenzie analysts said.
• Importantly, the new gas projects could provide supplies at a time when the global market still needs 105 million metric tonnes per annum of LNG to fill the gap between supply and demand by 2035, the report added.
• If realised, the LNG project could provide substantial economic benefits for both Guyana and Suriname by diversifying their energy exports beyond oil and supporting long-term growth. However, these developments are still not certain as there are some questions related to the commercial structure of the projects and fiscal terms, the report said.

(Source: Reuters)

^[1] Non-associated gas refers to natural gas sourced from a conventional gas field that has no crude oil or has such minimal amounts that it cannot be economically extracted.

• U.S. President-elect Donald Trump's impending return to the White House appears to put the Federal Reserve on a slower and shallower path for interest rate cuts, with a slew of new policies embraced by the Republican leader poised to juice the economy and stall or reverse, the slowdown in inflation.
• U.S. central bankers are still widely expected to cut the Fed's benchmark interest rate by a quarter of a percentage point to the 4.50%-4.75% range when they wrap up their two-day policy meeting on Thursday.
• Futures contracts tied to the Fed's policy rate are also pricing in a December rate cut, though with slightly less confidence than previously, as the central bank recalibrates borrowing costs to inflation that's now much closer to its 2% target and to a cooling labor market.
• However, in a shift that could be consequential for businesses and households looking to refinance debt or borrow anew, traders are now betting the Fed will cut its policy rate only twice in 2025, lowering it to the 3.75%-4% range and likely taking until July to do so.
• If those bets bear out, the end of the Fed's current rate-cutting campaign would come more than a year sooner, and its policy rate would be a full percentage point higher than most Fed policymakers had projected after their initial rate cut in September.
• Trump campaigned on promises to fix what he sees as an ailing economy and plans to impose higher tariffs, reduce taxes, and launch an immigration crackdown to do that. Economists say those policies are likely to lead to faster economic growth and a tighter labor market that, along with the higher import costs, would put upward pressure on prices. Several Wall Street economists on Wednesday cited those risks as they penciled in fewer Fed rate cuts next year.

(Source: Reuters)

• Newly elected U.S. President Donald Trump will face fiscal challenges that could threaten the country's standing in the global debt markets, hurting investor appetite for the nation's debt securities, and pushing government borrowing costs higher.
• U.S. budget deficits and government debt levels were largely projected to surge under either candidate in the Nov. 5 election, according to several estimates, although Democrat Kamala Harris was expected to add less debt than Trump.
• The prospect of rising government debt levels as Trump's odds improved in recent weeks helped send U.S. government bond yields higher, as many believe his trade and tax policies will reignite inflation and worsen the U.S. fiscal picture. A key hurdle for the new administration will likely be the reinstatement of the federal debt ceiling on Jan. 2, which was suspended in 2023 following protracted negotiations with Congress.
• Washington regularly sets a limit on federal borrowing, which must be approved by a majority of lawmakers. Debt limit disputes in the past have pushed the country to the brink of default and dented its credit rating - a scenario that could be on the cards again in the event of a divided government.
• Barring a quick resolution, the Treasury Department will likely need to use its cash reserves and so-called extraordinary measures - or an array of accounting maneuvers - to fund the government until the so-called X date, when it will no longer be able to pay all its bills. Some analysts estimate that could be in the second half of next year.
• Even without accounting for the likely extension of all or most of the tax cuts, Trump signed into law when he was president in 2017, which expire at the end of next year, government debt held by the public could nearly double over the next decade from $26 trillion at the end of last year, according to forecasts of the nonpartisan Congressional Budget Office.

(Source: Reuters)

• Tourism Minister Hon. Edmund Bartlett has underscored the need for a stronger and more cohesive tourism strategy across Commonwealth nations to leverage the immense potential for economic and social development.
• Speaking at the International Tourism and Investment Conference (ITIC)¹ Global Tourism Investment Summit in London, England, Minister Bartlett called Commonwealth countries to join forces in making tourism a transformative driver of inclusive growth. He pointed to the Commonwealth’s 2.7Bn population across 56 diverse nations as a potent platform for economic collaboration and its youthful demographic with 60% below the age of 29 as a “… powerful force for innovation, adaptability, and growth in tourism”.
• Minister Bartlet also pointed to the Commonwealth’s projections for a combined GDP of $20.0Tn by 2029 reflects not only the economic scale but the diversity among member nations, from large economies like India and the UK to smaller island states.
• Intra-commonwealth trade, which reached $854Bn in 2022, is projected to exceed $1 trillion by 2026, offering vast potential for growth in sectors such as tourism, food trade, foreign direct investment and services.
• Minister Bartlett also advocated for using tourism as a soft power tool to strengthen the Commonwealth’s standing globally and pointed to the immediate positive revenue contributions of tourism to local economies.
• He encouraged the Commonwealth Secretariat to lead the charge in enhancing visitor facilitation, open skies agreements, visa liberalization and technology integration to boost connectivity among member states.

________________________________

¹The ITIC Global Tourism Investment Summit is an annual gathering that brings together key stakeholders, including tourism ministers, industry leaders and potential investors, to discuss investment opportunities in sustainable tourism.

(Source: JIS)

• Industry, Investment and Commerce Minister, Senator the Hon. Aubyn Hill, has welcomed the expansion of the Jamaica Packaging Industries (JPI) operations in Jamaica, with its new 130,000-sq. ft. complex located at 693 Spanish Town Road.
• This is the latest investment by the company, resulting in the consolidation of its manufacturing, distribution and retail sales operations under one roof. The investment increases JPI's production capacity by 250%.
• Minister Hill noted that the company’s expansion augurs well for domestic industries, providing locally produced corrugated packaging¹, given that an estimated 60% of cartons used in Jamaica were imported over the last year.
• “They have put in enough capacity to make sure they can make enough to cover that 60% and to cover more later as the market grows. We are looking for this expansion to employ a lot more people. This is an important new investment in the Jamaican manufacturing landscape,” he said.
• Notably, the investment covers property, plant, machinery and equipment, which includes a state-of-the-art corrugator; a high-speed folder gluer machine capable of high-quality printing, slotting, glueing, and folding of cartons; a modern die-cut machine capable of producing more complex display cartons and display trays; and an effluent treatment plant.
• Chairman of JPI, Conrad George, said the facility, located on Kingston’s major industrial belt, is a strategic move that will be beneficial to the country and its local manufacturing, distribution and export sectors.

_________________________________

¹Corrugated packages are made up of a few layers of material rather than just a single sheet like cardboard. These packages are typically resilient and lightweight and are good when shipping a significant number of packages.

(Source: JIS)

• Trinidad and Tobago’s Finance Minister Colm Imbert has announced that EximBank's forex window has been reopened, with a US$25Mn monthly allocation. In a release on November 3, Imbert noted that the decision to resume the window from November 1 was made by the Cabinet after a comprehensive review by his ministry.
• The window was created in 2020 in response to the COVID-19 pandemic and ran until September 2024. The foreign exchange (FX) facility consumed US$30Mn monthly since its inception.
• Additionally, the government will allocate US$25Mn a month to EximBank for the window, a reduction of US$5Mn from the previous iteration, noting that the forex window for export manufacturers is not being adjusted and will remain.
• The government is also reviewing the role and impact of locally manufactured products, which substitute for imports and will consider greater access to forex for inputs for local consumption. "Further details of this aspect of forex distribution will be announced after consultation with stakeholders."
• Business groups have welcomed the reintroduction of a restructured forex window from the EximBank for essential imports and economists have joined them in rejecting the idea of a "floating" foreign exchange solution to the country's shortage.
• Amid continuing tension about foreign exchange availability, there is a broader trend among local banks being forced to adapt due to FX shortages impacting the banking sector over recent years. Most recently, Scotia Bank T&T announced last week that effective December 1, 2024, it would reduce the maximum US dollar spending limit per calendar month on its credit cards to US$5,000 and US$2,000 until further notice and that the ScotiaCard Visa debit card would no longer offer overseas point-of-sale purchases.
• The decision drew public criticism amid outcries from business owners struggling to access foreign exchange.

(Sources: Trinidad and Tobago Newsday & Trinidad and Tobago Guardian)

• The Dominican Republic’s tourism sector reached a historic milestone with 8,362,285 visitors from January to September, the highest number ever recorded for this period.
• Tourism Minister David Collado announced the figures, highlighting 580,617 visitors in September alone with 468,916 arriving by air and 111,701 by sea. This marks a 55% increase over September 2019 and 21% over 2022.
• So far in 2024, the country has welcomed 6,430,400 air travellers and 1,931,896 cruise passengers. Minister Collado noted this total visitor count reflects a 45% rise from 2019, a 36% increase from 2022, and a 10% increase from 2023. He projects the year will end with 11.5Mn visitors, setting a new record.
• Leading tourist source markets include the United States (39%), Canada (9%), and Colombia (8%). Punta Cana Airport received the most visitors at 56%, followed by Las Américas (27%) and Cibao (12%).

(Source: Dominican Today)