1. Latin American Business Outlook Part of the Global Business Outlook A joint survey effort between Duke University, Fundação Getúlio Vargas and CFO magazine Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 1

2. Top Concerns for Latin American CFOs Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 2 1.Economic Uncertainty 2.Government policy 3.Currency risk 4.Inflation 5.Employee productivity 6.Weak demand for your product/services 7.Corporate tax code (domestic) 8.Access to capital 9.Regulatory requirements 10.Cost of borrowing

3. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 Business Optimism Index Global Trends Country / Region Mar 2015 Response 3 Notes: Presented data are the mean value for each region or country, Scale from 0-100 Country Business Optimism Index Own-Firm Business Optimism Index Own Company CFO own-country optimism remains low, optimism about own-company is much higher.

4. Expected Increase in Product Prices Notes: Presented data are the mean values for each region or country. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 4 Product Prices Latin American Inflationary expectations are the second highest among all regions this quarter, behind Africa. Global TrendsMar 2015 Outlook Inflation expectations stay flat in Latin America  Latin American CFOs expect the prices of their firm’s products and services to increase by 2.4% in the next 12 months  CFOs in Europe, US and Asia expect a low level of inflation or deflation. Inflation expectations high in Brazil  Of responding countries, Brazil has the highest inflationary expectations  Prices are expected to increase slowly in Chile.

5. Expected Growth in Sales Revenue Global TrendsMar 2015 Outlook Revenue Notes: Presented data are the mean value for each region or country. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 5 Latin American CFOs expect a 5.0% increase in revenues during 2015, similar to other regions Latin American revenue growth up  Expectations declined from last quarter, when L.A. CFOs expected revenue growth of about 9%  Latin American revenue growth expected to be slightly lower than Africa but greater than other regions. Chilean companies expect fastest growth  Among responding L.A. countries, revenues in Chile will grow the fastest, followed by Peru and Ecuador

6. Global Trends Capital Spending Mar 2015 Outlook Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 6 Expected Increase in Capital Spending Notes: Presented data are the mean value for each region or country. Latin American capital spending is expected to increase just 1.6% in the next 12 months Capital spending plans remain weak  Latin American expects business spending to increase by only 2%, below spending in other parts of the world Business spending varies within Latin America  Capital spending will grow strongly in Chile but decline in Brazil and Peru.  Business spending is strong in the Europe and Asia.

7. Global TrendsMar 2015 Outlook Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 7 Expected Change in Earnings Notes: Presented data are the mean public company value for each region or country. Earnings Earnings expectations significantly decline from last quarter in Latin America Earnings growth falls to 3.1% this quarter  Latin American earnings growth fell from 11.2% in 2014Q4 to 3.1% this quarter  European earnings growth decreases. US and Asian earnings growth expect to stay flat Weaker earnings in surveyed Latam countries  Chile and Peru expect earnings to grow  Earnings expectations are negative in Brazil

8. Global Trends # FT Employees Mar 2015 Outlook Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 8 Moderate Increase in Fulltime Employment Notes: Presented data are the mean value for each region or country #FT=Number of Fulltime Employees Latin American CFOs do not expect to increase fulltime domestic employment in 2015 Employment growth moderates in Latin America and Europe  While Latam CFOs expect little employment growth in the next year, Europe hiring plans are even weaker  Europe expects little if any growth; Africa expects strong employment growth Employment declines expected in most of L.A  Brazil, Peru and Chile all expect reductions in fulltime employment.  Employment will grow slightly in Mexico

9. Global Trends Wages & Salaries Mar 2015 Outlook Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 9 Expected Wage and Salary Increase Notes: Presented data are the mean value for each region or country Wages and salaries are projected to increase by 6.5% in Latin America, slightly lower than Africa. Rapid wage growth in emerging economies  Latin America, Asia, and Africa all expect wages to rise more than 5%, which is higher than the overall inflationary expectations in their own region  The US and Europe expect wages to grow by around 3% Wages to soar in Brazil  In line with high product market inflation, companies in Brazil expect to increase wages and salaries by 7.6% in 2015  In Peru, Chile and Mexico, wage are also likely to increase.

10. Merger and Acquisition Activity Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 10 As a region, plans for Latin American M&A activity trail that of other regions. About 13% of Latam CFOs expect their firms to make an acquisition in the next year World-wide, slightly more than one-fourth of companies expect to acquire assets of another firm  M&A activity is comparatively lower in Latin America, with only around 10% of firms expecting to acquire. M&A activity will be highest in Europe and Asia.  European firms are the most likely to plan an international acquisition. Among surveyed Latam firms, CFOs in Peru are the most likely to make a cross-border acquisition.

11. Where will cross-border acquisitions occur? Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 11 International acquisitions in Latin America will target companies operating in North American targets, followed by companies in other L.A. countries and European countries Latam acquisitions mostly North American or regional, overlooking Asia:  Latin American CFOS express very little if any interest in acquiring Asian firms, focusing instead on the Americas  Firms in the U.S. and Canada represent the region most likely to plan to acquire a Latin American target.  Most regions focus their international acquisitions on firms in their own continent

12. Composition of the Board of Directors Across the World 12 What is the target (current) composition of your board for men, women and minorities? United StatesEurope Asia Latin America Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015

13. Return on Assets (ROA) 13 Profit growth varies by country in Latin America Profit margins are expected to rise in all regions, relative to 2014 profits  CFOs in Latin America generally expect modest ROA improvement, especially in Peru and Chile

14. Duke/FGV CFO Survey in Latin America Press Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 14 The Latin American Business Outlook is frequently reported in the press

15. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 15 Duke/FGV CFO Survey in Latin America Press The Latin American Business Outlook is frequently reported in the press

16. Latin American Business Outlook Part of the Global Business Outlook A joint survey effort between Duke University, Fundação Getúlio Vargas and CFO magazine Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 16

17. OLD SLIDES 17 Latin American Business Outlook Duke University / FGV / CFO Magazine Sep 2012

18. From December 2014 18 Latin American Business Outlook Duke University / FGV / CFO Magazine Sep 2012

19. Important Qualities of Board Directors Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 19 Industry and C-level managing experience are expected qualities of board directors  In addition to industry experience and as a C-level manager, companies like directors who are outside- the-box thinkers.  People skills are also sought after. What are the most important qualities for members of your board of directors? (Choose 3)

20. Composition of the Board of Directors Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 20 Only 6.8% of Latin American firms have specific goals or guidelines for the mix of men/women/minorities on the board.  Many boards fall short of their gender and minority targets. What is the target (current) composition of your board for men, women and minorities?

21. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 Percentage of Millennial Employees 21 To the best of your knowledge, approximately what percentage of your company's employees are “Millennials” (under the age of 35)? Asia has the highest percentage of Millennial workers, followed by Latin America.  In Asia, around 44% of the workforce are Millennials, followed by 41.8% in Latin America.  US and Europe have the lowest level of Millennial workers, fewer than 30%.  Chile has the lowest proportion of Millennial workers within L.A.

22. Advantages of Employing Millennials Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 22 Millennials are valued for their technological and creative abilities  Employing Millennials can save firm costs in terms of salary.  Few firms consider Millennials to be more efficient workers. What are the primary advantages of employing Millennials under age 35?

23. Challenges Related to Employing Millennials Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 23 Firms consider Millennials to be less loyal to the company and more interested in individual professional development than in the company  Millennials require more management oversight and demand changes in corporate culture  Around 10% of firms concerned about the Me-first attitude of Millennials. What are the primary challenges related to employing Millennials (under age 35)?

24. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 Make Changes to Retain or Recruit Millennials 24 Has your company made any changes in an effort to retain or recruit Millennials (under age 35)? Asia and Latin America have implemented the most changes to recruit or retain Millennials.  More than 60% of Asian and Latin CFOs say they have made changes in an effort to retain or recruit Millennials, consistent with the fact that Millennials are a larger proportion of workforce in these regions.  US, African, and European firms are less accommodating to Millennials.

25. Changes Made to Retain or Recruit Millennials Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 25 Firms redefine work hours and implement social responsibility policies for Millennials.  Firms redefine work hours to be more flexible, implement social responsibility policy and redefine company culture to retain and recruit Millennials.  Firms also implement new training and mentoring programs for Millennials. Has your company made any of the following changes in an effort to retain or recruit Millennials (under age 35)? Among firms that have made changes:

26. From September 2014 26 Latin American Business Outlook Duke University / FGV / CFO Magazine Sep 2012

27. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 Percentage of Workforce Earning Minimum Wage 27 Approximately what percentage of your primary workforce currently earns minimum wage? Asia has the highest percentage of workers earning minimum wage, followed by Africa.  Asia has more than 37% of the workforce earning minimum wage, followed by Africa’s 15.1%  About 8% of Latin America workers earn minimum wage, similar to the US and Europe.  Brazil has the lowest proportion of workers earning minimum wage.

28. Effect of Increasing Minimum Wage Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 28 Increasing the minimum wage would have multiple, offsetting effects  Firms would shift away from labor towards machines and pass the higher wages along to consumers in the form of higher product prices.  Higher wages would also increase worker productivity and employee turnover For your primary workforce, what would be the effect on your firm if the required minimum wage per hour were to increase by 40%? Would your company...

29. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 Labor-Reducing Capital Investments 29 Has your company made or are you planning to make capital investments aimed at reducing the amount of labor needed at your company? Latin America has the highest intention to switch to labor-saving technologies  55% of the Latin CFOs say they have made or plan to make capital investment aimed at reducing the amount of labor needed, in effect shifting from labor towards robots  African CFOs have the least intention to switch to labor-saving technologies, perhaps reflecting low African wages. Protective labor laws reduce labor-saving techniques in Europe.

30. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 Political Contributions 30 Does your company make political contributions? (Reported data are for firms located in countries that allow corporate political contributions) Most firms in emerging economies do not make political contributions  More than 50% of the European firms make political contributions, according to the survey respondents.  Latin American firms has the lowest rate of making political contributions.

31. Reasons for Making Political Contributions Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 31 What are the most important reasons that your company makes political contributions?

32. Managing Corporate Tax Exposure Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 32 Companies overwhelmingly agree that managing corporate tax exposure is important  Taxes affect business strategies and where to locate operations Do you Agree or Disagree the following statements about managing your company's corporate tax exposure.

33. From June 2014 33 Latin American Business Outlook Duke University / FGV / CFO Magazine Sep 2012

34. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 Intention to Deploy Cash Reserves 34 Is it likely that your firm will begin to deploy its cash reserves during the next 12 months? Most firms in emerging economies expect to use their cash reserves in the coming year  Due to good long-run investment opportunities, 72% of Latin American firms will deploy cash reserves  Only about half of US and European companies will spend out of cash reserves in the coming year

35. If deploying cash reserves, on what? Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 35 72% of Latin American firms plan to spend their cash reserves in the next 12 months. Among these firms …  More than half will use the cash for business spending and investment, one-fourth to make acquisitions  Nearly 40% will use excess cash to pay down debt.  More than one-fourth need cash to cover operating losses or purchase raw materials

36. If not deploying cash, why not? Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 36 28% of Latin American firms are NOT planning to spend cash reserves. Among these firms …  Nearly 30% say they lack excess cash to spend; another 30% say they have alternative sources of funds  Nearly 30% also indicate that they need to hold their cash reserve in case a liquidity need arises

37. Explicit Target for Cash 37 Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 As your firm decides how much cash to hold, do you have an explicit "target" or "range" for the amount of cash and marketable securities to hold? About half of LA and Asian firms indicate that they maintain a specific target for how much cash to hold  Though not shown on this graph, if cash drifts below the target, they quickly try to increase cash holdings  If cash accumulates above the cash target, most LA firms move only slowly to decrease cash holdings

38. 38 Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 Russian Business Connections in Latin America Has your company reduced your Russian-related activity? Though not shown on this graph, Latin American businesses are the least exposed to Russia in the world  Left: Among surveyed firms, none indicated they have pulled out of Russia, only a few evaluating  Right: Few Latin American firms indicate that severe sanctions on Russia would harm their prospects What would the impact be on your country's economy if severe financial sanctions were imposed (including restrictions in intra- bank transactions through the SWIFT system) on Russia as a result of activity in Ukraine?

39. Labor Unrest 39 Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 Do you expect labor unrest (e.g,. strikes, work stoppages) to affect your country's economy over the next 12 months? Three-fourths of Latin American firms expect labor unrest during the next 12 months  LA concerns about labor unrest are by far the highest in the world; few US firms share this concern  Though not shown on this graph, Brazil (85%) has the highest concern about labor unrest of any surveyed country in the world

40. What is the cause of labor unrest? Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 40 General problems associated with slowing economic growth are the biggest cause of labor unrest in LA  Wage pressures, in part due to high inflation, are the second biggest cause of unrest.  Working conditions are not a major concern in LA. Though not on the graph, poor working conditions lead to labor unrest in China. If you expect labor unrest (e.g,. strikes, work stoppages) to affect your country's economy over the next 12 month, the unrest is driven by?

41. From Mar 2014 41 Latin American Business Outlook Duke University / FGV / CFO Magazine Sep 2012

42. Merger and Acquisition Activity Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 42 As a region, Latin American M&A potential activity trails that of the US, Europe & Asia. About 23% of Latam CFOs expect their firms to make an acquisition in the next year World-wide, slightly more than one-fourth of companies expect to acquire assets of another firm  M&A activity is comparatively lower in Latin America, especially in Peru where only 16% of firms expect to acquire. M&A activity will be highest in Europe and lowest in AFrica.  European firms are the most likely to plan an international acquisition. Among surveyed Latam firms, CFOs in Chile are the most likely to make a cross-border acquisition.

43. Where will cross-border acquisitions occur? Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 43 International acquisitions in Latin America will target companies operating in another Latam country, followed by North American targets. Latam acquisitions mostly regional, overlooking Asia:  Latin American CFOS express very little if any interest in acquiring Asian firms, focusing instead on the Americas  The U.S./Canada is the region most likely to plan to acquire a Latin American target.  Most regions focus their international acquisitions on firms in their own continent

44. Effects of Tighter U.S. FED Monetary Policy Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 44 What effect, if any, has the U.S. Federal Reserve Bank's plan to taper its quantitative easing program had on your company's optimism about its business prospects for 2014? Emerging economics are more wary of U.S. monetary tightening than are U.S. companies  Only 1-in-5 U.S. companies expects direct negative effects from the FED tightening monetary policy  More CFOs in emerging regions are wary of FED tightening, probably because higher U.S. interest rates may lead to either higher emerging economy interest rates and/or depreciated emerging country currencies

45. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 Effects of Uncertain Economic Conditions 45 Does Uncertainty about Economic Conditions Affect Your Business Planning? Growing uncertainty about economic conditions slows hiring and spending plans  Because Latin American CFOs have grown more uncertain about economic prospects, many are adopting a “wait and see” attitude in their own business plans  More than half of Latam companies have reduced hiring and spending plans due to economic uncertainty

46. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 Effects of Uncertainty About Government Policies 46 Does Uncertainty about Government Economic Policies Affect Your Business Planning? Growing uncertainty about government policies reduces hiring and business spending  Because Latin American CFOs have grown more uncertain about future government policies, many are adopting a “wait and see” attitude in their hiring and capital spending plans  Though not shown in this graph, concerns about government policies are acute in Chile and Brazil

47. Corporate Culture Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 47 In both Latin America and in the U.S., customer-orientation and integrity are two primary aspects of corporate culture More similarities than differences in Corporate Culture  Still, Latin American CFOs put somewhat more emphasis on results (near-term and strategic) and somewhat less emphasis on customer orientation and integrity.

48. Planned Changes to Corporate Culture Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 48 Latin American CFOs plan to put more emphasis on strategic (long-term) results  Nearly 30% of Latam companies indicate that they will increase strategic focus, while nearly 25% say more focus on customer orientation  Though not shown in the graph, most Latam CFOs say that it is very important for their employees to understand the corporate culture. What is the primary focus of changes in corporate culture among Latin American firms?

49. Real Estate Bubbles? Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 49 Approximately 50% of Latin American CFOs believe there is a real-estate bubble in the region compared to 70% in Asia, and 90% in China Real Estate Bubbles are significant concerns in Latin America and Asia  More than half of CFOs in Brazil and Peru indicate that they believe there is a real estate bubble in their home countries. A bursting bubble like what occurred in the U.S. in 2008-2010 could slow economic growth  An astounding 90% of Chinese CFOs believe China has a real estate bubble, and (though not shown in the graph) 30% think the Chinese bubble will burst in 2014