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 Jun 2015 1

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

3. Business Optimism Index Global Trends Country / Region Jun 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 optimism remains high in Mexico, very low in Brazil. Latin American Business Outlook Duke University / FGV / CFO Magazine Jun 2015

4. Expected Price Increases Notes: Presented data are mean or median values for each region or country. 4 Product Prices Latin American inflationary expectations vary by country, averaging 3.2% Global TrendsJun 2015 Outlook L.A. inflation expectations higher than in most regions of the world  Latin American CFOs expect the prices of their firm’s products and services to increase by 3.2% in the next 12 months  CFOs in Europe, US and Asia expect low inflation or even deflation. Inflation expectations high in Brazil  Of responding countries, Brazil has the highest inflationary expectations  Prices are expected to increase slowly in Chile. Latin American Business Outlook Duke University / FGV / CFO Magazine Jun 2015

5. Expected Growth in Sales Revenue Global Trends Revenue Notes: Presented data are the mean or median values for each region or country. 5 Latin American CFOs expect a 3.9% increase in revenues during 2015, similar to other regions besides Asia Latin American revenue growth down slightly  Revenue expectations are down slightly from last quarter’s 4.2% expected revenue growth  Revenue growth will be the weakest in Europe. Ecuador and Mexico expect fastest growth  Among responding L.A. countries, revenues in Ecuador will grow the fastest, followed by Mexico.  Brazil expects revenues to decline over the next year, which is problematic given high inflation Latin American Business Outlook Duke University / FGV / CFO Magazine Jun 2015 Jun 2015 Outlook

6. Global Trends Capital Spending 6 Expected Increase in Capital Spending Notes: Presented data are the mean or median values for each region or country. Latin American capital spending will be flat overall, pulled down by Brazil and Chile Capital spending plans remain weak  Latin American expects business spending to stay constant, below spending in other parts of the world.  Business spending is strong in the United State, Africa and Asia. Business spending varies within Latin America  Capital spending will grow strongly in Peru and Mexico  Spending expected to be flat or decline in Brazil and Chile. Latin American Business Outlook Duke University / FGV / CFO Magazine Jun 2015 Jun 2015 Outlook

7. Global Trends 7 Expected Change in Earnings Notes: Presented data are the mean public company value for each region or country. Earnings Earnings expectations continuously decline from last quarter in Latin America Earnings growth falls to negative this quarter  Latin American earnings growth fell from 6.2% in 2015Q1 to near zero this quarter.  African earnings are expected to drop sharply. US, European, and Asian earnings growth expect to remain moderate. Weaker earnings in surveyed Latam countries  Mexico, Peru, and Ecuador expect earnings to grow  Earnings expectations are negative in Brazil, Chile and Colombia. Latin American Business Outlook Duke University / FGV / CFO Magazine Jun 2015 Jun 2015 Outlook

8. Global Trends # FT Employees 8 Little Change in Fulltime Employment Notes: Presented data are the mean value for each region or country #FT=Number of Fulltime Employees Latin American CFOs expect no increase in fulltime domestic employment in 2015 Flat employment in Latin America  Latam CFOs expect little employment growth in the next year.  Other regions expect employment growth around 2.2%, with Asia growing the fastest Employment growth varies across L.A.  Brazil and Chile expect reductions in fulltime employment.  Employment will grow strongly in Mexico, at an expected rate of 7.9%. Latin American Business Outlook Duke University / FGV / CFO Magazine Jun 2015 Jun 2015 Outlook

9. Global Trends Wages & Salaries 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 4.2% in Latin America. Rapid wage growth in emerging economies  Asia and Africa 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%. Real wage growth is negative in Brazil  With product market inflation of 7.7% and wage growth of 5.2%, wages will not keep up with inflation in Brazil. Real wages will be flat in Peru.  In Chile, Mexico and Colombia, wages are likely to increase. Latin American Business Outlook Duke University / FGV / CFO Magazine Jun 2015 Jun 2015 Outlook

10. Latin American Business Outlook Duke University / FGV / CFO Magazine Jun 2015 Hacking and Corporate Data Security 10 To your knowledge, have hackers ever successfully penetrated your systems in an attempt to steal, change, or make public important data? Over 80% firms in all regions have experienced hacker activities in some ways  82% of US firms have been hacked, which is the lowest hack rate in the world  87.3% of Latin American firms have been hacked, trailing only Europe (92%).

11. Actions Taken in Latin America to Deter Hacking Latin American Business Outlook Duke University / FGV / CFO Magazine Jun 2015 11 Latin American firms have taken action to fight hacking  Many firms have installed new software to strengthen data security, others have require employee training and have purchased hardware.  Latam firms much less likely than U.S. firms to attempt a ‘friendly hack’ to determine system weaknesses (18.9% for US vs 5.9% for Latam)

12. Latin American Business Outlook Duke University / FGV / CFO Magazine Jun 2015 Probability of Recession 12 For your country, what do you think is the likelihood of a recession by the end of 2015? Latin America has the highest likelihood of recession, followed by Africa.  Brazilian CFO’s think their country is extremely likely to experience recession in 2015.  Other than Chile, other Latam countries think their likelihood of recession is greater than the U.S.

13. Focus of CFO 13 Latin American Business Outlook Duke University / FGV / CFO Magazine Jun 2015 What should be the focus of the CFO to best serve all stakeholders? Most Latin America CFOs believes that focusing on Budget and Forecast will best serve all stakeholders  Liquidity management and capital allocation are also very important  For the most part, CFOs think the focus should be forward-looking, not focused on historic data

14. Return on Assets (ROA) 14 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 expect lower ROA improvement than the rest of the world, with Brazil expecting the worst return on assets. Latin American Business Outlook Duke University / FGV / CFO Magazine Jun 2015

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

16. 16 Duke/FGV CFO Survey in Latin America Press The Latin American Business Outlook is frequently reported in the press Latin American Business Outlook Duke University / FGV / CFO Magazine Jun 2015

17. Latin American Business Outlook Part of the Global Business Outlook A joint survey effort between Duke University, Fundação Getúlio Vargas and CFO magazine 17 Latin American Business Outlook Duke University / FGV / CFO Magazine Jun 2015

18. OLD SLIDES 18 Latin American Business Outlook Duke University / FGV / CFO Magazine Sep 2012

19. From December 2014 19 Latin American Business Outlook Duke University / FGV / CFO Magazine Sep 2012

20. Important Qualities of Board Directors Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 20 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)

21. Composition of the Board of Directors Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 21 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?

22. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 Percentage of Millennial Employees 22 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.

23. Advantages of Employing Millennials Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 23 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?

24. Challenges Related to Employing Millennials Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 24 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)?

25. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 Make Changes to Retain or Recruit Millennials 25 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.

26. Changes Made to Retain or Recruit Millennials Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 26 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:

27. From September 2014 27 Latin American Business Outlook Duke University / FGV / CFO Magazine Sep 2012

28. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 Percentage of Workforce Earning Minimum Wage 28 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.

29. Effect of Increasing Minimum Wage Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 29 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...

30. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 Labor-Reducing Capital Investments 30 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.

31. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 Political Contributions 31 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.

32. Reasons for Making Political Contributions Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 32 What are the most important reasons that your company makes political contributions?

33. Managing Corporate Tax Exposure Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 33 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.

34. From June 2014 34 Latin American Business Outlook Duke University / FGV / CFO Magazine Sep 2012

35. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 Intention to Deploy Cash Reserves 35 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

36. If deploying cash reserves, on what? Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 36 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

37. If not deploying cash, why not? Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 37 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

38. Explicit Target for Cash 38 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

39. 39 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?

40. Labor Unrest 40 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

41. What is the cause of labor unrest? Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 41 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?

42. From Mar 2014 42 Latin American Business Outlook Duke University / FGV / CFO Magazine Sep 2012

43. Merger and Acquisition Activity Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 43 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.

44. Where will cross-border acquisitions occur? Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 44 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

45. Effects of Tighter U.S. FED Monetary Policy Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 45 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

46. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 Effects of Uncertain Economic Conditions 46 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

47. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 Effects of Uncertainty About Government Policies 47 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

48. Corporate Culture Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 48 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.

49. Planned Changes to Corporate Culture Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 49 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?

50. Real Estate Bubbles? Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2015 50 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

51. Slides from March 2015 51 Latin American Business Outlook Duke University / FGV / CFO Magazine Sep 2012

52. Merger and Acquisition Activity 52 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 Mexico and Peru are the most likely to make a cross-border acquisition. Latin American Business Outlook Duke University / FGV / CFO Magazine Jun 2015

53. Where will cross-border acquisitions occur? 53 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 Latin American Business Outlook Duke University / FGV / CFO Magazine Jun 2015

54. Composition of the Board of Directors Across the World 54 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 Jun 2015