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 Mar 2014

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

3. Expected Increase in Product Prices Inflationary expectations have risen among Latin American CFOs, who expect the prices of their products to rise by 4% over the next 12 months Global Trends Mar 2014 Outlook Product Prices Inflation expectations increase around the world • Latin American price expectations jumped this quarter, relative to last quarter’s survey • Only in Africa do CFOs expect greater product price inflation Inflation expectations vary by country • Price increases are expected to approach or exceed 5% in Chile and Brazil, less than 4% in Peru • European companies expect prices of their products to barely rise Notes: Presented data are the mean value for each region or country. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2014

4. Expected Increase in Sales Revenue Expected growth in sales revenue has moderated, with Latin American CFOs expecting an 8% increase in revenues over the next 12 months Global Trends Mar 2014 Outlook Revenue Latin America expects 8% growth in revenues • One year ago, Latin American CFOs expected revenues to increase by more than 10% • While now only 8%, Latin American revenue growth will be nearly the highest in the world • Asia and Africa have also moderated, while European expectations are recovering Emerging economies still expect fastest growth • Sales growth will vary by country but overall is highest in Latin American and Asian countries • Among responding countries, revenues in Chile will grow the fastest, followed by Brazil and Peru Notes: Presented data are the mean value for each region or country. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2014

5. Expected Increase in Capital Spending Latin American capital spending expectations have decreased slightly, with 4.2% growth expected in the next 12 months. Global Trends Mar 2014 Outlook Capital Spending Capital spending expectations fall slightly to 4.2% • Latin American spending plans soften, compared to 6% growth expected in previous quarters • Capital spending plans in Africa have soared and have recovered in Europe Chile and Peru remain strong, Brazil weakens • Capital spending in Chile and Peru will grow 10%, compared to 3% in Brazil • Business spending also expected to soften in Asia Notes: Presented data are the mean value for each region or country, except medians are shown for Latin American earnings in Mar 2013 and Mar 2014. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2014

6. Expected Increase in Earnings Earnings expectations continue moderate decline in Latin America, with 6% growth expected over the next 12 months. Global Trends Mar 2014 Outlook Earnings Four quarters of weaker Latam earnings forecasts • Latin American earnings growth has fallen nearly in half versus double digit growth that was expected one year ago • European earnings growth has recovered from recession lows Weaker earnings in surveyed Latam countries • Brazil, Chile, and Peru expect earnings to grow between 5% and 7% over the next year • Asian earnings growth to be weaker at 5% Notes: Presented data are the mean value for each region or country, except medians are shown for Latin American earnings in Mar 2013 and Mar 2014. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2014

7. Expected Increase in fulltime Employment Latin American CFOs expect to increase fulltime domestic employment by 2.2% over the next 12 months. Global Trends Mar 2014 Outlook # FT Employees Employment growth slows in Latin America • While Latam CFOs expect less employment growth in the next year, workforce increases should still outpace Europe and the U.S. • Europe and Asia expect little if any growth Employment growth stron in Peru • Among surveyed countries, only Peru expects the number of fulltime employees to increase by more than 5% • Latam employment growth much higher than in other emerging economies such as Asia Notes: Presented data are the mean value for each region or country, except medians shown for Latin America in Mar 2013. #FT=Number of Fulltime Employees Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2014

8. Expected Increase in Wages and Salaries Projected wages and salaries are expected to increase by 5-6% in Latin America, exceeded only by wage expectations in Africa and Asia Historical Responses Mar 2014 Outlook Wages & Salaries Rapid wage growth in emerging economies • Latin America, Asia, and Africa all expect wages to rise by more than 5% • The US and Europe expect wages to grow by less than 3% Wages to soar in Brazil • Companies in Brazil expect to increase wages and salaries by 7% over the next year, in part to keep up with inflation • In Peru and Chile, wage hikes will be less than 5% Notes: Presented data are the mean value for each region or country, except medians shown for Latin America in Mar 2013. #FT=Number of Fulltime Employees Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2014

9. Business Optimism Index Latin America no longer the most optimistic region, falling to average worldwide optimism Global Trends Mar 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 Mar 2014

10. Merger and Acquisition Activity 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. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2014

11. Where will cross-border acquisitions occur? 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 Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2014

12. Effects of Tighter U.S. FED Monetary Policy 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 Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2014

13. Effects of Uncertain Economic Conditions 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 Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2014

14. Effects of Uncertainty About Government Policies 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 Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2014

15. Corporate Culture 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. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2014

16. Planned Changes to Corporate Culture What is the primary focus of changes in corporate culture among Latin American firms? 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. Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2014

17. Real Estate Bubbles? 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 Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2014

18. Return on Assets (ROA) Strong profit growth expected in Africa and parts of Latin America Profit margins are expected to rise in all regions, relative to 2013 profits • Peru and Chile expect strong ROA growth in 2014 but will still trail robust African ROA growth • CFOs in Brazil expect only modest ROA improvements Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2014

19. Duke/FGV CFO Survey in Latin America Press The Latin American Business Outlook is frequently reported by the press Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2014

20. Duke/FGV CFO Survey in Latin America Press The Latin American Business Outlook is frequently covered in the press Latin American Business Outlook Duke University / FGV / CFO Magazine Mar 2014

21. 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 Mar 2014