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 June 2014

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

3. Expected Increase in Product Prices Inflationary expectations continue to increase among Latin American CFOs, who expect the prices of their products to rise by 6.1% over the next 12 months Global Trends June 2014 Outlook Product Prices Inflation expectations increase in Latin America • Latin American price expectations jumped this quarter, relative to last quarter’s survey • CFOs in Africa expect inflation to temper, US CFOs expect stable product prices, Europe/Asia expect near-zero inflation or even deflation. Inflation expectations vary by country • Prices are expected to increase are expected to approach or exceed 5% in Peru and Brazil, even more in Chile • European and Asian companies expect prices of their products to barely change. Notes: Presented data are the mean values for each region or country. Latin American Business Outlook Duke University / FGV / CFO Magazine June 2014

4. Expected Increase in Sales Revenue Sales growth expectations are up slightly from last quarter, with Latin American CFOs expecting a 9.6% increase in revenues over the next 12 months Global Trends June 2014 Outlook Revenue Latin America expects 9.6% growth in revenues • Expectations down vs. one year ago, when L.A. CFOs expected revenue growth greater than 10% • Latin American revenue growth will trail only Africa as the highest in the world • As we saw on the previous slide, some of this revenue growth is due to high inflation Emerging economies expect fastest growth • Sales growth will vary by country but overall is highest in Latin American and Asian countries • Among responding L.A. countries, revenues in Peru will grow the fastest, followed by Brazil and Chile Notes: Presented data are the mean value for each region or country. Latin American Business Outlook Duke University / FGV / CFO Magazine June 2014

5. Expected Increase in Capital Spending Latin American capital spending expectations have decreased significantly and are now expected to decrease (-2.8% growth) over the next 12 months. Global Trends June 2014 Outlook Capital Spending Capital spending growth falls significantly to -2.8% • Latin American spending plans soften significantly to -2.8%, compared to 3-5% growth expected in previous quarters • Capital spending plans have decreased in Africa and have increased in the US and Asia Business spending weak across Latin America • Capital spending in Peru will grow, but will decrease 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 June 2014

6. Expected Increase in Earnings Earnings expectations continue to decline in Latin America, with 4.8% growth expected over the next 12 months. Global Trends June 2014 Outlook Earnings Four quarters of weaker Latam earnings forecasts • Latin American earnings growth has fallen by more than half versus double digit growth that was expected one year ago • European earnings growth recovering from recession lows Weaker earnings in surveyed Latam countries • Brazil and Chile expect earnings to grow less than 5%, below inflationary expectations • Earnings in Peru expected to grow by 9% • US earnings growth also weak at 4% Notes: Presented data are the mean public company value for each region or country, except private companies also included for Chile and Peru in Mar 2014. Latin American Business Outlook Duke University / FGV / CFO Magazine June 2014

7. Expected Increase in fulltime Employment Latin American CFOs expect to increase fulltime domestic employment by 2.3% over the next 12 months. Global Trends June 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 expects little if any growth; Asia and Africa expect strong employment growth Employment growth continues in Brazil • Among surveyed LA countries, only Brazil expects decent fulltime employment • Chile and Peru expect little change in the number of fulltime domestic employees 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 June 2014

8. Expected Increase in Wages and Salaries Projected wages and salaries are expected to increase by 6.8% in Latin America, similar to Africa and Asia. Historical Responses June 2014 Outlook Wages & Salaries Rapid wage growth in emerging economies • Latin America, Asia, and Africa all expect wages to rise by more than 6%, generally keeping up with inflation in LA and Africa • 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 7.4% over the next year. • In Peru and Chile, wage hikes will be less than 5% 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 June 2014

9. Business Optimism Index Latin America no longer the most optimistic region, falling below the US and Asia Global Trends June 2014 Response • Regional/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 June 2014

10. Intention to Deploy Cash Reserves 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 Latin American Business Outlook Duke University / FGV / CFO Magazine June 2014

11. If deploying cash reserves, on what? 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 Latin American Business Outlook Duke University / FGV / CFO Magazine June 2014

12. If not deploying cash, why not? 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 Latin American Business Outlook Duke University / FGV / CFO Magazine June 2014

13. Explicit Target for Cash 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 Latin American Business Outlook Duke University / FGV / CFO Magazine June 2014

14. Russian Business Connections in Latin America 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? 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 Latin American Business Outlook Duke University / FGV / CFO Magazine Sep 2012

15. Labor Unrest 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 Latin American Business Outlook Duke University / FGV / CFO Magazine June 2014

16. What is the cause of labor unrest? 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? 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. Latin American Business Outlook Duke University / FGV / CFO Magazine June 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 June 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 June 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 June 2014