LatAm Earnings Set for Rebound Despite 2024 Challenges

Latin American companies are projected to experience a 16% earnings rebound next year after facing a 24% decline in 2024, driven by currency depreciation. While most sectors anticipate growth, consumer discretionary sectors face a future contraction. The regional equity markets have underperformed against broader emerging markets this year.

Latin American companies are poised for a 16% rebound in earnings in 2025, according to JPMorgan's calculations, after a challenging 2024. Analyst Cinthya Mizuguchi noted that the region saw an estimated 24% contraction in earnings this year, with most countries except Colombia expected to achieve double-digit growth next year.

Currency depreciation significantly impacted earnings expectations, but the outlook for 2025 is more optimistic. A strong dollar has strained emerging markets, with the greenback gaining nearly 5% against a basket of currencies since the start of the year. Despite this, sectors like energy, industrials, financials, technology, healthcare, and telecom are forecasted for double-digit growth.

The consumer discretionary sector, however, may see a 9% contraction in 2025 following a 136% rise this year. Earnings in Brazil and Mexico are expected to grow by 15% and 14%, respectively. On an equity index level, the regional MSCI index fell 25%, with Brazil and Mexico down 27%, contrasting with a 5% rise in the broader MSCI emerging market index.

(With inputs from agencies.)