Latin American Business Outlook Part of the Global Business Outlook

1. Latin American Business OutlookPart of the Global Business Outlook A joint survey effort between Duke University, FundaçãoGetúlio Vargas and CFO magazine Latin American Business Outlook Duke University / FGV / CFO Magazine Sept 2014

2. Top Concerns for Latin American CFOs Latin American Business Outlook Duke University / FGV / CFO Magazine Sept 2014

3. Business Optimism Index In stark contrast to one year ago, Latin America is now the least optimistic region in the world Global Trends Sept 2014 Response • Country Business Optimism Index Country / Region • Own-Firm Business Optimism Index Own Company Notes: Presented data are the mean value for each region or country, Scale from 0-100 Latin American Business Outlook Duke University / FGV / CFO Magazine Sept 2014

4. Expected Increase in Product Prices Inflationary expectations decreased among Latin American CFOscompared to last quarter, after three quarters of increasing expectations. Global Trends Sept 2014 Outlook Product Prices Inflation expectations decrease in Latin America • Latin American price expectations are lower this quarter (3.1%), relative to last quarter’s survey • CFOs in Africa also expect inflation to temper, US CFOs expect stable product prices. Inflation expectations lower in Latin America • Of responding countries, Argentina has the highest inflationary expectations, followed by Brazil and Uruguay • Prices are expected to increase slowly in Peru and especially in Chile and Mexico. • European CFOs expect low inflation Notes: Presented data are the mean values for each region or country. Latin American Business Outlook Duke University / FGV / CFO Magazine Sept 2014

5. Expected Growthin Sales Revenue Sales growth expectations decrease significantly from last quarter, with Latin American CFOs expecting a 5.5% increase in revenues over the next 12 months Global Trends Sept 2014 Outlook Revenue Latin American revenue growth down • Expectations down from last quarter, when L.A. CFOs expected revenue growth greater than 9% • Latin American revenue growth will be only slightly larger than Europe and be less than other regions. Asia companies expect fastest growth • Asia has the highest sales revenue growth, followed by the US. • Among responding L.A. countries, revenues in Peru will grow the fastest, followed by Brazil, Mexico and Uruguay. Notes: Presented data are the mean value for each region or country. Latin American Business Outlook Duke University / FGV / CFO Magazine Sept 2014

6. Expected Increase in Capital Spending Latin American capital spending is expected to increase 2.2% over the next 12 months. Global Trends Sept 2014 Outlook Capital Spending Capital spending growth rebounds but still low • Latin American spending plans increase significantly to 2.2% but is still below other regions of the world • Capital spending plans are stable in other regions. Business spending weak across Latin America • Capital spending will grow strongly in Peru but will remain flat in Brazil and Chile. • Business spending strong in the US and Asia. Notes: Presented data are the mean value for each region or country. Latin American Business Outlook Duke University / FGV / CFO Magazine Sept 2014

7. Expected Change in Earnings Earnings expectations continue to decline in Latin America, with no growth for the region overall over the next 12 months, varying widely across countries. Global Trends Sept 2014 Outlook Earnings Year-long negative earnings trend in Latin America • Latin American earnings growth has fallen from 13.4% in 2014Q1 to flat this quarter • European earnings growth decreases. US, Asia, and Africa expect strong growth in earnings. Weaker earnings in surveyed Latam countries • Brazil and Chile expect earnings to be lower next year, relative to this year. • Within L.A., earnings in Peru and Mexico will be relatively strong over the next year. • US earnings growth will be greater than 10% Notes: Presented data are the mean public company value for each region or country. Latin American Business Outlook Duke University / FGV / CFO Magazine Sept 2014

8. Moderate Increase in Fulltime Employment Latin American CFOs expect to increase fulltime domestic employment by 3.1% over the next 12 months. Global Trends Sept 2014 Outlook # FT Employees Employment growth moderates in Latin America • While Latam CFOs expect modest employment growth in the next year, workforce increases should still outpace Europe, the U.S. and Asia • Europe expects little if any growth; Africa expects strong employment growth Employment growth continues in Brazil • Brazil expects high growth in fulltime employment, Peru is slightly lower. • Employment will grow about 3% in Mexico and Uruguay but barely grow in Argentina Notes: Presented data are the mean value for each region or country #FT=Number of Fulltime Employees Latin American Business Outlook Duke University / FGV / CFO Magazine Sept 2014

9. Expected Wage and Salary Increase Wages and salaries are projected to increase by 7.1% in Latin America, similar to Africa and Asia. Historical Responses Sept 2014 Outlook Wages & Salaries Rapid wage growth in emerging economies • Latin America, Asia, and Africa all expect wages to rise by more than 6%, which is higher than the overall inflationary expectations in LA and Africa • The US and Europe expect wages to grow by less than 3% Wages to soar in Uruguay and Brazil • Companies in Brazil expect to increase wages and salaries by 6.8% over the next year. • In Peru and Chile, wage hikes will be around 4%, while Mexican wage growth will be near zero Notes: Presented data are the mean value for each region or country Latin American Business Outlook Duke University / FGV / CFO Magazine Sept 2014

10. Percentage of Workforce Earning Minimum Wage 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. Latin American Business Outlook Duke University / FGV / CFO Magazine Sept 2014

11. Effect of Increasing Minimum Wage 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... 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 Latin American Business Outlook Duke University / FGV / CFO Magazine Sept 2014

12. Labor-Reducing Capital Investments 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. Latin American Business Outlook Duke University / FGV / CFO Magazine Sept 2014

13. Political Contributions 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. Latin American Business Outlook Duke University / FGV / CFO Magazine Sept 2014

14. Reasons for Making Political Contributions What are the most important reasons that your company makes political contributions? Latin American Business Outlook Duke University / FGV / CFO Magazine Sept 2014

15. Managing Corporate Tax Exposure Do you Agree or Disagree the following statements about managing your company's corporate tax exposure. Companies overwhelmingly agree that managing corporate tax exposure is important • Taxes affect business strategies and where to locate operations Latin American Business Outlook Duke University / FGV / CFO Magazine Sept 2014

16. Return on Assets (ROA) Strong profit growth expected in parts of Latin America Profit margins are expected to rise in all regions, relative to 2013 profits, buy not in Peru and Chile • ROA expectations have declined in Peru and Chile • CFOs in Latin America generally expect modest ROA improvement Latin American Business Outlook Duke University / FGV / CFO Magazine Sept 2014

17. 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 Sept 2014

18. 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 Sept 2014

19. Latin American Business OutlookPart of the Global Business Outlook A joint survey effort between Duke University, FundaçãoGetúlio Vargas and CFO magazine Latin American Business Outlook Duke University / FGV / CFO Magazine Sept 2014