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FACTS AND FIGURES

FACTS AND FIGURES. Territory : 8.5 million sq. km Population : 194 Million. 5th largest country. An emerging C class of 95 million people now consuming products and services Strategic place in Latin America Access to a 550 millions consumers 'market. (Latin America) Natural resources

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FACTS AND FIGURES

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  1. FACTS AND FIGURES • Territory: 8.5 million sq. km • Population : 194 Million. 5th largest country. • An emerging C class of 95 million people now consuming products and services • Strategic place in Latin America • Access to a 550 millions consumers 'market. (Latin America) • Natural resources • The largest nation in terms of arable land in the world • Amongst the largest producers and exporters of agricultural goods worldwide. (25% of GDP) • GDP: 2 Trillion USD : 8th largest economy Brazil is the regional super power of South America. All the countries In Europe,can be rearranged and fit inside Brazil. 16% of worldwide biocapacity is in Brazil GDP growth per geographical area Source: Worldmapper Source: FMI outlook May 2011

  2. BRAZIL TODAY 1900-1980 – The take off • Industrialization • Highest worldwide growth (~7%) • Modernization and big projects Brazil is taking a privileged position in the worldwide scenario 1980-1994 – The crisis • Stagnation (< 2%) • Hyperinflation • Social Crisis 1995-2010 – The re-take-off • Economic stabilization • Growth (4%) • Reduction of poverty • Global insertion THE COUNTRY OF THE FUTURE THE ETERNAL COUNTRY OF THE FUTURE THE COUNTRY OF THE PRESENT

  3. BRAZIL TODAY • Political stability and democratic government • Fernando Henrique Cardoso > Luiz Inácio Lula da Silva > DilmaRoussef: focus on taking the Brazil out of the 3d world with a balanced economy. . • Stabilized and performing economy • large federal reserve • Robustness of the financial system (as proved in 2008 financial crisis) • Structural improvement by reforms and actions • PPP (Public-Private Partnerships): Initiative to finance infrastructure projects with both private and public capital • Fiscal reform: project for unification of the indirect taxes • Judicial system reform • Will to eradicate the culture of corruption • DilmaRoussef´s actions are providing transparency against corruption Political stability, performing economy and improvement programs

  4. BRAZIL TODAY The country still faces several challenges • Bureaucracy • Complexity to create a start up in Brazil: From 6 months to one year (vs 13 days in OCDE countries) • Administrative burden: Cost of lawyers; “despachantes” (middle men) • Slow, ineffective justice • Excessive government presence • Corruption • Public sector: 28 Billion USD/ year • Tax System • Complex (more than 50 different taxes) , inconstant, high rates (48% of GBP) • High social charges • High value of Real and Cost of credit • Loss of competitiveness • High cost of life (Big Mac Index: 3d position!) • Lack of infrastructure • Education • Unesco International Standard classification of Education: 88th. • “Plano Nacional de Educação 2001-2010”: Only 33 of 294 objectives achieved Source: Ubifrance, “s´implanterauBrésil” ; Exame

  5. BRAZIL OUTLOOK, AGENDA Brazil Today Strategic Sectors Foreign Investments Cultural aspects Cases of success and failure Interim Management in Brazil

  6. STRATEGIC SECTORS • Oil and Gas • 10% of the PIB • Sefl-sufficient • OPEP since 2008 • Production growth 2009-2011: 59% • 6th largest producer in the world • Petrobras: • Budget for investments 2010-2014: USD 224 billion • 8th biggest market value: USD 165 billions • Demand for 2010-2020: 28 drilling probes; 143 platforms • Electricity • Hydroelectricity • 80% of Brazilian production • Sector growth: 7%/ year • Potential to multiply the productionby 3 • Nuclear • Presence of uranium in Brazil • 2 nuclear power plants • Wind and solar • 2011: 0,8% of Brazilian production. Forecast for 2021: 8%

  7. STRATEGIC SECTORS • Biofuels • Ethanol: 2nd largest producer • 30% of worldwide production • 90% of vehicles registered are flex fuel (2009) • 90 million hectares of arable land unused • 18% of worldwide freshwater resources • Water and sanitation • Investment needs 2010-2030: USD 113 to 170 Billion • Operation of public and private companies with possibilities of PPP • Waste collection and treatment • 2009: 60 million tons of waste produced/ 90% collected/ 65% treated • Aug 2010: “National policy of solid wastes” law: end of open dumps and obligation to create landfills. • Information and Communication Technologies: • Software: 20% growth / year/ USD 14,5 billion • Aug/2010 KPIs: • Mobile phones: 224 million (115% penetration) • Broadband: 15,2 million subscribers • Pay TV: 11,6 million users (25% growth/ year) • Recognized universities/ R&D Technological poles

  8. STRATEGIC SECTORS • Agriculture • Largest producer of coffee (36% of worldwide production) • Largest producer of orange • Largest exporter of: Sugar; soya; meat (Beef: 1,3 million T.; Pork: 0,5 million T.; Poultry: 3,5 million T.); tobacco; banana; ethanol. • 3d largest producer of corn ; pineapple; pepper • Largest reserve of arable land: 90 million hectares. • 26% PIB; 36 % of labor force • Health • 6500 hospitals; 60% private • 9% of PIB • Recognized expertise in plastic, heart and dental surgeries • Largest Latin America market for equipment (USD 21 Billion in 2009; growth rate 16%) • Strong presence of generic drugs (90% of drugs have generic equivalents) • Amazon biodiversity • Biotechnologies • 320 companies • USD 2,7 billion (2009) • Amazon biodiversity

  9. STRATEGIC SECTORS • Automotive • Production: 3,6 million vehicles (2010) • 4th largest producer • Fiat; Ford; GM; VW: 75% market share • Strategic country for Renault and PSA • Growth 2010-2014: private cars :11,6%/Year ; Utilitarian: 20,1%/ year. (Source: Data monitor) • Forecast: USD 130 Billion (2014) • Infrastructure • Roads: 3rd largest network: 1,7 million km; 12% paved • Ports: underdeveloped; huge potential; 87 private terminals/ USD 689 million being invested • Trains : 9th largest network: 30.000 km; needs estimated: 52.000 km; bullet train project : SP-Rio • Airports: on-going investments below actual needs. • World Cup 2014 • 12 cities • USD 2,2 Billion for construction of 5 news stadiums and renovation of 7 stadiums • Olympic Games 2016: • Sport infrastructure: USD 3 billion for renovation and construction of installations; • USD 12,5 billion for other infrastructure: Buses; airports renovation; development of subway and trains

  10. STRATEGIC SECTORS • Aeronautic, defense and security • Defense • Budget 2012: R$ 16,5 Billions • Strategic projects: Submarines; KC 390 Cargo airplane; EC 725; Operation and maintenance of SISCEAB (Sistema de Controle do Espaço Aéreo Brasileiro ) • Security • 5th largest market worldwide • Sport Events • U$ 4.2 Billions investments on security • DCNS • Agreement DCNS – Brazilian government • Building of 4 non nuclear and one nuclear submarines • Overall contract 6.8B€. • EADS • JV EADS D&S -Odebrecht • Helibras • Unique helicopters manufacturer of Latin America • 2012: begins production of EC 225/EC 725. • 3 new service centers. • Embraer • World's 3d largest civil aircraft manufacturer • Creation of a Defense and Security Unit

  11. STRATEGIC SECTORS • Consumer goods • Growth of C class: 95 million people; 46% of national income • Cosmetics: 3rd market worldwide (after Japan and USA). 2009: USD 12,9 billion • Hotels: Still missing hotels/ investments ongoing [?] ; Accor leader. • Luxury: • 2002 -2010 Class A revenue grown 48% • Promising sector. Growth rate 20%/ year over last 5 years • Evolution of millionaires forecasted 2010-2017: 330%

  12. BRAZIL OUTLOOK, AGENDA Brazil Today Strategic Sectors Foreign Investments Cultural aspects Cases of success and failure Interim Management in Brazil

  13. FOREIGN DIRECT INVESTMENTS • Brazil: Modern and each time more open to foreign countries • Brazil: 4,3% of global Foreign Direct Investments in 2010 (4th largest) • Investment Grade from Standars & Poors in 2008 and Moody´s in 2009 • 850 of the 1000 world’s largest corporations are present in Brazil, by joint-venture or with subsidiary. • Since privatization programs in 2000, FDI above 15 Billion USD/ year (expect 2002/3) [?] • Growth of FDI in primary sector (Oil & Gas) Direct Investment in Brazil per origin. 2009 Source: Banco Central do Brasil, Oct 2010

  14. FRENCH INVESTMENTS • The presence of French companies in Brazil’s FDI is important • 37 of the CAC 40 companies have at least one subsidiary in Brazil • 450 subsidiaries of French companies in Brazil • 60% in SP ; 20% in Rio (Others in Minas Gerais and Paraná) • All sectors are present (out of civil construction) How do french corporations invest in Brazil? Source:Ubifrance/ Crescendo Consultoria,

  15. BRAZIL OUTLOOK, AGENDA Brazil Today Strategic Sectors Foreign Investments Cultural aspects Cases of success and failure Interim Management in Brazil

  16. CULTURAL ASPECTS AND CHALLENGES Source: BataniaTanure/ P.Evans/ Vladimir Puck – People management in Brazil – Adapatation Crescendo for IFBAE

  17. BRAZIL OUTLOOK, AGENDA Brazil Today Strategic Sectors Foreign Investments Cultural aspects Cases of success and failure Interim Management in Brazil

  18. SUCCESS CASE: ACCOR BRASIL 1976 -2006 • Latin America leader in Hotel industry • 140 hotel – 25. 500 rooms • 1st largest (LA and world) in services • 4 million users/ day service tickets in Brazil • 1st largest in Brazil for corporate meals • 800.000 meals en 1.400 restaurants • 1st largest in Latin America for business trips • 1.000.000 passengers per year in Brazil 1976 2006 U$ 200.000 Leader in all of its activities Source: PresentationFirmin Antonio CCFB 29/09/2010

  19. SUCCESS CASE: ACCOR BRASIL 1976 -2006 • 2 decisive pillars for ACCOR success: • A robust and rigorous strategic plan • “Plan the future, to resist to periods of uncertainty, valuing people and team work, and, above all, be always attentive to opportunities to continue investing to grow” • To succeed in Brazil our company had to: • THINK BIG • HAVE ROBUST BASE • BE CLIENT ORIENTED • BE MODERN AND FLEXIBLE • LIVE IN PERMANENT CHANGE • Adopted the Balanced Score Card as strategic tool • A strong corporate culture • The corporate culture makes the difference to motivate people • Corporate project built on 3 pillars: Profit; Service; People (PSP) • “Technology and products can be copied or bought, but culture is unique” • “live a human adventure in the corporate adventure” Source: PresentationFirminAntonio CCFB 29/09/2010

  20. FAILURE CASE: EDF/LIGHT 1996 - 2006 Chronology of the facts: 1996: EDF in association with CSN and 2 American utilities win Light privatization bid. 1999: Light begins to have losses after Real depreciation 2001/2: CSN, AES and Houston decide to sale its shares 2006: EDF decides to sell the Light control to CEMIG/AG/Pactual consortium 2009: Share value multiplied per 8 in 3 years after a turnaround. Performance evolution 1997-2002 Source: Balances Light/ CVM/ Crescendo presentation IFBAE

  21. FAILURE CASE: EDF/LIGHT 1996 - 2006 • Some causes of failure: • Thinking that the French ambassador could solve the principal questions of institutional relationship of the corporation in Rio • It took a very long time to understand the social context and to react against the phenomenon of “gatos” in Rio´s favelas that resulted in huge losses. Non Technical Losses (PNTs) went as far as representing 23 of total billing. • Lack of corporate project and good management practices • Old habits of the public owned Light were maintained (Lack of meritocracy) • Lack of long term alignment of shareholders. It was a short-term opportunistic alliance • Organizational structure divided in bins • Lack of preparation of key managers • French expatriates unprepared for Brazilian cultural challenge. Source: Crescendo presentation IFBAE

  22. OTHER EXAMPLES OF SUCCESS OF FRENCH COMPANIES 1. Tropicalization of the offer 2. Long term vision 3.Penetration of historically closed markets 4.Tropicalization of the management

  23. BRAZIL OUTLOOK, AGENDA Brazil Today Strategic Sectors Foreign Investments Cultural aspects Cases of success and failure Interim Management in Brazil

  24. INTERIM MANAGEMENT IN BRAZIL • “Are you ready for your Brazil Country Manager to earn more than the CEO of the corporation?” • Exame. Sept. 2011C Interim management: The mostcostefficientsolution for transitionsituations Source: Exame Sept 2011

  25. Corporate Background

  26. Recent Projects (1/2)

  27. Recent Projects (2/2)

  28. Fee Structure

  29. Engagement Methodology Engagement Phase 1 • High level assessment • Initial proposal /contract Assignment Review • Diagnosis • Immediate role take-over • Emergency / short-term initiatives and decisions • Action plan • Full retainers Conclusion Phase 2 • Situation and baseline agreed • Targets, metrics and plan agreed • Final contract • Full role incorporation and accountability • Engagement of organization in the plan • Project Management setup • Deployment of tools and necessary resources • Intermediary checkpoints and adjustments • Reduced/negotiated retainers • Performance Bonuses • Targets achieved • Schedule and costs respected • Completion Bonus • Disengagement or new scope 1-3 weeks 4-6 weeks 1-2 weeks 6 - 18 months

  30. True Partnership Approach – Sharing the Risks Conclusion Phase 1 Phase 2 Up to 2 times the sum of the reduction in retainers Reduced Retainers (normally 50%) + Performance Bonuses Full Retainers Completion Bonus

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