• After a first-quarter dip and modest second-quarter growth, Lasco Distributors Limited (LASD) experienced an 18.50% decline in profits for its third quarter ending December 2024 (Q3 2025) to $329.53Mn due to higher operating expenses and a reduction in “other operating income”. Subdued earnings in Q1 and Q3 meant that LASD’s earnings were down for the nine months ended March 2025. The overall performance was weighed down by higher operating expenses. 
• In Q3, LASD’s earnings declined, despite a 5.7% rise in revenues to $7.73Bn. This growth was fueled by gains across all business divisions of the Company as demand for its portfolio continues to grow given the initiatives targeting its Pharmaceutical Business and the expansion of its export markets. Costs of sales also rose 6.6%, resulting in only a marginal increase in gross profit (+1.7%).
• This gross profit increase did not translate to year-on-year net profit improvement. Increased costs related to sales and promotions, employee expenses, technology upgrades, and depreciation pushed operating expenses higher by 2.26%. Additionally, financing costs surged (from $0.122Mn to $7.21Mn), further weakening its performance.
• As a result, LASD reported lower Q3 net profits of $329.53Mn (-18.5%), which, contributed to 9M net profits of J$1.05Bn (-12.5%).
• Despite the decline in performance, in the short term, the company plans to implement contingency measures to improve inventory levels, while mitigating the effects of supply challenges to meet demand. These actions, combined with disciplined cost management, could drive future topline growth and improve profitability. LASD also remains committed to its investment and growth strategies, which emphasize portfolio innovation, expanded capabilities, and stronger consumer communication and engagement.
• LASD’s stock price has appreciated marginally (0.47%) since the start of the year, closing Monday’s trading session at $4.31. Currently, the stock trades at a P/E ratio of 11.6x, below the Main Market Manufacturing and Distribution Sector average of 14.3x.

(Sources: JSE & NCBCM Research)

• Consumer prices fell 0.3% in January 2025, with the All-Jamaica Consumer Price Index (CPI) falling from 143.5 in December 2024 to 143.1 in January 2025.
• This downward adjustment was primarily driven by a 1.3% reduction in the heavily weighted index for the division ‘Food and Non-Alcoholic Beverages’, influenced mainly by a 7.4% fall in the ‘Vegetables, tubers, plantains, cooking bananas and pulses’ class. Lower prices for some agricultural produce, as production improved, was the primary driver of the falloff in this subgroup.
• Also contributing to the downward movement in the CPI for January was a 0.3% decline in the index of the ‘Housing, Water, Electricity, Gas and Other Fuels’ division due to lower electricity rates which led to a decline in the ‘Electricity, Gas and Other Fuels’ group.
• Reflecting the lower consumer prices during the month, the point-to-point inflation rate for January 2024 to January 2025 declined to 4.7% from 5.0% in December. The divisions making the largest contribution to the point-to-point inflation rate were ‘Food and Non-Alcoholic Beverages’ (+7.4%), ‘Housing, Water, Electricity, Gas and Other Fuels’ (+2.0%), and ‘Restaurants and Accommodation Services’ (+6.2%).
• The latest CPI reading continues to support the Bank of Jamaica’s (BOJ’s) expectations that inflation will remain anchored within its target range of 4%-6% over the next eight quarters. The BOJ’s stable inflation outlook supported its 25 basis points (bps) cut to 6.00% on December 20^th. The next policy decision will be on the 20th of February and the market expects an additional 25bps cut.

(Sources: STATIN & NCBCM Research)

• According to the Eastern Caribbean Central Bank (ECCB¹), the Eastern Caribbean Currency Union (ECCU) saw notable growth in 2024, and is projected to have a positive economic outlook for 2025, ranging between 3.5% and 4.5%. Expansion in the tourism industry, post-hurricane reconstruction efforts, and large-scale infrastructure investments across member countries are expected to drive the expansion.
• The ECCB's positive growth projections for the ECCU come amid a global environment marked by economic uncertainty, with risks such as inflation and geopolitical tensions posing challenges to international markets. However, the ECCU’s credit conditions, coupled with efforts in infrastructural projects and financial sector reforms are seen as opportunities for enhanced regional stability.
• The forecast was part of the Governor's Report presented during the 110th meeting of the Monetary Council of the Eastern Caribbean Central Bank (ECCB) held on February 14, in St Kitts.
• Among key highlights of the meeting was the continued strength of the Eastern Caribbean dollar (EC$), with reserves at EC$5.5Bn as at February 2025. The region's banking sector remains stable, and liquidity remains robust, with strong capital reserves supporting ongoing growth, the ECCB said.
• The ECCU's fiscal situation also showed signs of improvement in 2024, with increased economic activity and stronger fiscal management leading to an increase in funds raised through the Regional Government Securities Market.
• Looking forward, the ECCB stated next steps include addressing critical challenges such as high intra-regional air connectivity costs, which hinder trade and regional competitiveness.

(Source: Caribbean Loop News)

^[1]The Eastern Caribbean Central Bank (ECCB) is the central monetary authority established in 1983 to oversee the Eastern Caribbean Currency Union (ECCU), which comprises eight member countries sharing the Eastern Caribbean dollar (EC$) as their common currency.

• Brazil's central bank monetary policy director Nilton David said on Monday that the base scenario for policymakers is to proceed with an upcoming 100 basis-point interest rate hike, as the bank had previously indicated.
• In his first public speech as director, David stated that the level of confidence in the monetary tightening "must be slightly higher" amid beyond-normal uncertainties marked by tail risks seen in the international geopolitical scenario.
• Speaking at an American Chamber of Commerce event, the director said the central bank aims to minimize risks to meet its 3.0% inflation target. Consumer prices in Latin America's largest economy rose 4.56% in the 12 months to January, with policymakers projecting an acceleration to 5.2% this year, David noted.
• In December, policymakers accelerated monetary tightening with a 100 basis-point rate hike and signaled two more increases of the same size in response to robust activity and a sharp depreciation of the country's currency.
• The central bank followed the guidance in January, pushing interest rates to 13.25% and penciling in another 100 basis-point increase for March, but leaving further steps open.
• Since then, economic data has supported a slowdown in activity, while the Brazilian real has strengthened some 8% against the U.S. dollar year-to-date, easing rate hike bets reflected in the yield curve, which in January had pointed to rates surpassing 16% later in 2025.
• A central bank weekly survey with economists now projects rates peaking at 15.25% in June before edging down to 15% by year-end.

(Source: Reuters)

• The Trump administration's pledge to contain long-term U.S. Treasury yields has strengthened bond market expectations that a long-desired regulatory shift on bank leverage requirements could be finally looming. Some traders are betting regulators may soon focus on a review of the Supplementary Leverage Ratio (SLR), a rule requiring big U.S. banks to hold an extra layer of loss-absorbing capital against U.S. government debt and central bank deposits.
• The possible policy change would mean banks would not need to set aside as much extra money when they hold safe assets like Treasuries. This could eventually help push U.S. Treasury yields lower, some investors and analysts said, by giving banks more leeway to hold Treasuries and likely boosting demand.
• Spreads of swap rates over Treasury yields have widened in recent days, a sign that investors are starting to anticipate a review of the rule. Interest rate swaps allow traders to hedge interest rate risk by exchanging a floating rate for a fixed rate, or vice versa.
• The anticipation comes after U.S. Treasury Secretary Scott Bessent said last week that President Donald Trump's administration was focused on containing 10-year Treasury yields, a building block of global financial markets and a benchmark for consumers' borrowing costs.
• The SLR was introduced as part of regulatory efforts following the 2008 global financial crisis. Over time, however, many Treasury market participants have come to see it as a major obstacle to banks providing liquidity to traders, particularly at times of heightened volatility. The Bank Policy Institute (BPI), a trade association representing large U.S. banks, said in a recent paper that a recalibration of the ratio would be crucial to preserving market functioning, particularly given the prospect of rising government debt issuance due to large budget deficits.

Source: (Reuters)

• China's central bank governor said on Sunday a stable yuan currency has been key to global financial and economic stability and Beijing will continue to let the market play a decisive role in deciding the exchange rate.
• People's Bank of China Governor Pan Gongsheng told a conference in Saudi Arabia that while most currencies have fallen against the dollar, the yuan has remained stable. "Recently, a number of factors have pushed up (the) dollar index, and non-dollar currencies have mostly depreciated. But RMB (yuan) has remained largely stable despite the high market volatility," Pan highlighted at AlUla Conference for Emerging Market Economies.
• He also noted that China was increasingly prioritising consumption, implementing pro-consumption policies such as increasing household income and providing subsidies. China has emphasised that boosting consumption is a top economic priority in 2025, moving away from an over-reliance on investment to stimulate domestic demand and address potential export challenges.
• Pan also said in his speech that China will adopt a proactive fiscal policy and an accommodative monetary policy, and strengthen counter-cyclical policy adjustments.

(Source: Reuters)

• For the 12 months ended December 31, 2024, OMNI Industries recorded a 20.30% decline in net profit, primarily due to lower year-over-year revenues and increased operating expenses.
• The falloff in revenues was due to adverse weather conditions from June to December 2024 and a cement shortage, both of which negatively impacted the construction industry and by extension, OMNI’s topline performance compared to 2023. The broader economic environment also remained sluggish, with negative growth recorded over the past few quarters, which also contributed to lower demand in its revenue lines.
• A faster decline in input costs relative to revenues caused gross profit to increase by 9.22% to J$871.54Mn. However, this improvement was overshadowed by a sharp rise in operating expenses, which grew by 24.39% to J$703.35Mn. Selling expenses rose 57.71% year-over-year to J$160.82Mn, driven by higher haulage and export-related costs.
• Factory expenses also increased by 19.00% to J$234.78Mn, mainly due to higher repair and maintenance costs, along with depreciation expenses related to new equipment commissioned in the fourth quarter. As a result, operating profit declined by 24.95% to J$175.87Mn for the period.
• The increase in operating expenses, combined with declining topline performance, outweighed reductions in both cost of sales and net finance costs, resulting in a 20.30% drop in net profit, which closed at J$120.27Mn.
• As part of its strategic retooling initiative, OMNI is acquiring new equipment aimed at driving cost efficiencies and reducing expenses in the short term while optimizing operational performance moving forward.
• OMNI’s stock price has fallen 0.92% since the beginning of the calendar year. The stock closed Thursday’s trading session at J$1.08 and currently trades at a P/E ratio of 22.45x, above the Junior Market Distribution Sector Average of 21.77x.

(Sources: OMNI Industries Limited & NCBCM Research)

• The number of vessels that passed through the Panama Canal, the world's second busiest waterway, fell to an average of 32.6 per day for a total of 1,011 ships in January, the first month-on-month decline in almost a year. Following a severe drought between late 2023 and early 2024 that forced passage restrictions, the canal saw a solid increase in transits during 2024 to a total of 1,059 ships in December, according to statistics by the Panama Canal Authority.
• However, the demand recovery was not enough to fill the 36 passage slots that remained on offer since September, the data showed, amid toll increases that led to some shippers opting for longer routes to Asia. In February last year, the total number of transits fell to 662 ships from 702 in January. But from February onwards, traffic increased almost 60% through the end of the year.
• In the fiscal year that ended in September, the canal reported a 5% fall in toll revenue to $3.18Bn amid the drought. In the fiscal years ended between 2020 and 2023, the canal's toll revenue had increased almost 26% to $3.35Bn, according to the canal's annual report.
• U.S. Secretary of State Marco Rubio earlier this month visited Panama City and met the canal's top officials to discuss tolls and the presence of Chinese businesses near the waterway, which some Washington politicians and government officials have identified as a security risk for its operation. Following Rubio's visit, the U.S. and Panama governments had a public dispute over tolls to be paid by U.S. military vessels, which have priority of passage through the canal, according to a 1977 neutrality treaty signed when the U.S. agreed to return the canal to Panama.
• Panama's president, Jose Mulino, said Washington was spreading "lies and falsehoods" when it claimed that U.S. government vessels would be able to pass through the canal without paying. The comments exacerbated tensions between the two countries after the U.S. had cited progress on military cooperation and strategies on China's expansion in Panama.

(Source: Reuters)

• Heritage Petroleum CEO Erik Keskula says asset improvement is needed for the company to get the most out of its mature fields. He made the comments while speaking during a panel on the second day of the T&T Energy Conference, which took place at the Hyatt Regency, Port-of-Spain.
• Keskula said innovation and technology can be used to access such improvement, explaining, “Utilising things like wireless and remote monitoring to reduce the mean time to respond when a well goes down or a facility goes down, but working closely with the members of the community, partnerships with our service companies to do that and these assets, actually have some advantages.”
• However, he noted that when working in these mature areas there are two advantages - being a bridge to big projects as the existing infrastructure is already in place and the capital has already been spent for that infrastructure so they tend to be less capital intensive, meaning the economics can look a little bit better and be delivered faster.
• Keskula also added that as work continues to improve, recovery factors with technology and modernisation, there remains real opportunity to leverage those mature fields to be “the bridge for the big projects on the horizon.
• Meanwhile, Mala Baliraj, chair of the Energy Chamber of T&T, who spoke on day one of the conference, noted that the industry is rapidly changing and the skills needed in the sector are being transformed through digitisation, automation and artificial intelligence. She advised there must be greater focus on programmes that invest heavily in training new young people entering the industry, as well as retraining the existing workforce.
• The issue of improving the ease of doing business is also crucial if we are to create the climate for investment in production, decarbonisation and people, she highlighted.

(Source: Trinidad& Tobago Guardian)

• U.S. producer prices increased solidly in January, offering more evidence inflation was picking up again and strengthening financial market views that the Federal Reserve would not be cutting interest rates before the second half of the year.
• The broad rise in producer inflation reported by the Labour Department on Thursday, February 13, 2025, followed on the heels of news on Wednesday that consumer prices accelerated by the most in nearly 1 and a half years in January. Some details of the report, however, suggested a more moderate increase in January in the key inflation measures tracked by the U.S. central bank for its 2% target than had been anticipated in the wake of the strong CPI data.
• The producer price index for final demand rose 0.4% last month after an upwardly revised 0.5% gain in December, the Labor Department's Bureau of Labor Statistics (BLS) said. Economists polled by Reuters had forecast the PPI to rise 0.3%.
• In the 12 months through January, the PPI advanced 3.5% after increasing by the same margin in December. With January's PPI report, the BLS updated weights to reflect price movements in 2024, and seasonal adjustment factors, the model that the government uses to iron out seasonal fluctuations from the data. The rise in the PPI was across goods and services.
• With the CPI and PPI data in hand, economists' estimates for the increase in the core PCE price index in January ranged from 0.2% to 0.3%. That was lower than the 0.4% gain most had forecast after the CPI data. Core inflation climbed 0.2% in December. It was forecast to increase by 2.6% year-on-year in January, down from the 2.7% estimated following the CPI report. Annual core inflation was 2.8% in December.
• "The Fed still can declare, therefore, that progress in returning inflation to its 2% objective is still being made," said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics.

(Source: Reuters)