🕟 Fries and shine

Good Afternoon. On this day in 1927, The Jazz Singer premiered, helping turn synchronized sound into a commercially successful feature-film business. Most of the movie was still silent, but its talking sequences helped change what audiences expected from a night at the theater.

Today’s businesses are working on their own upgrades. Lamb Weston’s stronger North American volumes support a better outlook, while building-products makers lean on pricing and productivity. The question is whether those improvements can keep covering higher costs as customers feel more squeezed.

—Rosie, Wyatt, Evan & Conor

🔥 What’s Hot: 🔥

🥶 What’s Not: 🥶

🔢 Big number: $105.6 billion — America’s August goods-and-services trade deficit, as imports grew faster than exports.

Lamb Weston has a better view of the year ahead, even with a difficult quarter behind it. The frozen-fries maker raised its fiscal 2027 adjusted earnings outlook to $3.05–$3.35 a share, from $2.95–$3.25, after results exceeded its own expectations. Stronger North American demand and savings helped offset pressure elsewhere.

The news: Quarterly sales rose 1% to $1.67 billion. North American volumes increased 7%, and the company said its factory optimization work improved utilization by about ten percentage points. International volumes fell 6%, with Europe a particular challenge. Reported net income dropped 55% to $29 million, while adjusted earnings edged up to 75 cents a share. Those are different measures of the quarter’s performance.

What’s next: Lamb Weston is ending production at its Broekhuizenvorst site in the Netherlands and shifting orders elsewhere in its network. The stronger outlook depends on savings and North American momentum continuing to offset higher input and freight costs and weaker European demand.

Source: Lamb Weston

America bought considerably more from abroad in August, and export growth didn’t keep pace. The goods-and-services trade deficit widened to $105.6 billion, from a revised $92.8 billion in July. The monthly increase was 13.7%, according to today’s joint release from the Census Bureau and Bureau of Economic Analysis.

The news: Imports increased 4.3% to $420.8 billion, while exports rose 1.4% to $315.2 billion. Higher goods imports drove the change, including crude oil, gold and semiconductors. The services surplus stayed around $31 billion. The figures are adjusted for seasonality but not for price changes, so a larger dollar total doesn’t necessarily mean an equally large increase in the physical amount shipped.

Big picture: The gap describes the difference between purchases and sales across borders; it isn’t a company profit statement. Gold also receives a different treatment in GDP accounting. September’s release, due November 4, will help show whether August’s import increase persists beyond one month.

Source: Bureau of Economic Analysis

RPM found enough pricing power and operating savings to put up another record quarter. The maker of coatings, sealants and building materials reported $2.22 billion in sales, up 4.8%, and adjusted earnings of $1.98 a share, up 5.3%. Growth wasn’t equally strong across its businesses, though.

The news: Organic sales increased 3.1%, with acquisitions adding another 1.6%. Performance coatings and consumer products helped offset a slowdown in construction products, where healthcare and education projects were delayed and some materials were harder to obtain. Manufacturing, purchasing and overhead savings helped absorb raw-material inflation. Adjusted EBITDA, a profit measure that excludes several accounting costs, rose 4.5%, while reported net income increased 12.6%, to $256.4 million.

Bottom line: RPM expects sales and adjusted EBITDA to grow by mid-single-digit percentages for the full fiscal year. The next quarter’s forecast is more modest, at low-to-mid-single-digit growth. Its construction-products business needs delayed demand and material availability to improve before the whole company can share equally in the gains.

Source: Business Wire

Affirm is expanding distribution through a payment platform that already serves merchants. Ant International’s Antom will let its US merchants enable Affirm through their existing portal this month, bringing another pay-over-time option to checkout. The partnership is about making the service easier for sellers to add and customers to find.

The news: Eligible shoppers can choose approved biweekly or monthly payment plans with the full cost disclosed upfront. Affirm says it charges no late or hidden fees, but that doesn’t mean every loan is interest-free. The release includes an example with a 15% annual percentage rate, alongside six-month interest-free options. Approval, available terms and purchase amounts remain subject to eligibility checks and merchant restrictions.

What’s next: The companies plan to make the service available to UK customers this year and expand into other markets later. For now, the concrete development is US merchant access. The announcement doesn’t disclose a revenue guarantee; more checkout availability still has to translate into approved purchases and repeat use.

Source: Affirm

Apogee’s revenue growth came with a useful reminder to look beneath the total. The architectural building-products company reported $391.1 million in quarterly sales, up 9.2%, helped by an acquisition, pricing and a more favorable product mix. Overall volume was lower, so the result doesn’t describe a broad construction-demand surge.

The news: Kalwall contributed $16.4 million of sales. Pricing and productivity improvements, including Apogee’s Fortify program, helped offset higher materials and manufacturing costs. Gross margin rose to 24.6%, from 23.1%. Adjusted earnings increased to $1.17 a share, from 98 cents, while reported earnings slipped to $1.07 from $1.10. Lower other income, including the absence of a prior-year nonrecurring tax-credit benefit, was part of the reported earnings comparison.

Big picture: Apogee raised its annual adjusted earnings forecast to $3.00–$3.40 a share, from $2.70–$3.25. Management’s confidence rests on better execution in a mixed demand environment. Continued pricing discipline, acquisition integration and productivity matter as much as simply selling more glass and building products.

Source: Apogee Enterprises

Australia’s consumers are feeling worse about their finances as fuel costs and borrowing rates rise. The Westpac–Melbourne Institute Consumer Sentiment Index fell 4.7% to 80.4 in October, from 84.4 in September. Sydney-based Westpac’s latest report describes broad pressure across the households it tracks.

The news: Average national pump prices moved back above A$2.30 a liter, while the central bank’s latest increase took the cash rate to 4.6%. Responses deteriorated sharply after the rate decision: the portion surveyed beforehand scored 86.9, compared with 67.2 among those surveyed afterward. That weaker figure belongs to a subgroup, not the full October survey. More than 80% of consumers expect mortgage rates to rise over the next year.

Bottom line: A household budget can be stretched even without a job loss. Westpac says the immediate concerns are mainly living costs and interest rates, though unease about employment is growing. The combination leaves less room for discretionary purchases, making consumers’ financial expectations an important check on hopes for stronger retail demand.

Source: Westpac IQ

India’s services industry ended September on a stronger note, but one better month didn’t erase the slowdown across the quarter. The HSBC services purchasing managers’ index rose to 55.2, from 54.1 in August. A reading above 50 indicates expansion, and September’s result was the strongest in three months.

The news: Demand for financial, consumer and digital services supported growth. New business increased at its fastest pace since June, while export-order growth slowed to its weakest in nearly three years. Hiring growth also eased. Input-cost inflation reached a ten-month low, and the prices firms charged customers increased at their slowest rate since June. Those details point to stronger domestic demand alongside less help from overseas orders.

What’s next: The July–September average was still the weakest since the quarter ended March 2022. Business confidence improved but remained subdued by historical standards. Further gains in domestic orders, accompanied by steadier hiring and exports, would make September’s improvement more convincing as a sustained recovery.

Source: Reuters

Canada’s goods-trade surplus widened sharply in August, helped by higher exports to the United States and lower imports. The surplus reached C$4.2 billion, from C$787 million in July, marking a sixth consecutive monthly surplus. This is merchandise trade in Canadian dollars, rather than America’s combined goods-and-services measure above.

The news: Canadian exports rose 2.5% overall, while imports fell 2%. Shipments to the United States increased 8.1%, but exports to other countries declined 8.5% after July’s record high. Energy exports also rose. The US had announced additional tariffs in July that took effect at the end of August, creating an incentive for some importers to bring shipments forward before the extra costs arrived.

Big picture: Statistics Canada says tariff announcements may affect shipment timing; the release doesn’t establish that tariffs explain every export gain. September data, due November 4, will help reveal what happened after the new rules took effect. A strong month before a deadline can leave a softer comparison afterward.

Source: Statistics Canada

Q: Why did the man run around his bed?

A: Because he was trying to catch up on his sleep.

Capacity rationalization: Reducing or reorganizing production facilities to better match demand and lower the cost of maintaining excess capacity.

In a sentence: Lamb Weston’s plan to close a Netherlands production site and move orders elsewhere is capacity rationalization.

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