Latin American Business Outlook Part of the Global Business Outlook A joint survey effort between Duke University Fundação Getúlio Vargas CFO magazine El IMEF PyME Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2016

Top Concerns of Latin American CFOs 1. Economic Uncertainty 2. Government policy 3. Weak demand for product/services 4. Corporate tax code (domestic) 5. Currency risk 6. Regulatory requirements 7. Cost of benefits 8. Rising wages and salaries 9. Employee productivity 10. Access to capital Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2016

Business Optimism Index Low overall Latin American CFO optimism, varying by country. Optimism up in Brazil, down in Mexico. Global Trends Dec 2016 Response Country Business Optimism Index Country / Region Own-Firm Business Optimism Index CFOs in Latin America have become less optimistic about financial conditions in their home countries, with the average declining by approximately 10 points on a 100 point scale Latam CFOs no longer most optimistic in world Latam optimism has fallen below that in Asia and now equals US optimism Latam optimism still higher than in Europe and Africa Mexican CFOs are most optimistic Among Latam CFOs, those in Mexico, Peru, and Chile are most optimistic Brazilian optimism has fallen almost as low as in Argentina CFOs are relatively optimistic about the futhre for their own firms in Latin America and elsewhere around the world, with own firm optimism equalling about 65 on a 100 point scale Slide edge in emerging own-firm optimism CFO optimsm about their own firms is highest in Asian, Latin America, and in Africa US and European own-firm optimsm is not far behind Own firm-optimism highest in Mexico, Chile, Peru CFOs in Brazil are fairly optimistic about their own firms CFOs in Argentina, Eduador, and Colombia are less optimistic 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 Dec 2016

Expected Product Price Inflation Latin American inflationary expectations increase, still high in Brazil Global Trends Dec 2016 Outlook Product Prices Dec 2016: All mean Colombia: median=2.5 Inflationary expectations high in Africa, low to moderate elsewhere Latin American CFOs expect moderate price increases, driven by high inflation in Brazil. CFOs in Asia and the US expect low inflation, Europe expects flat prices Inflation expectations highest in Brazil Of responding countries, Brazil has the highest inflationary expectations Import prices drive some of the Latin American price inflation. Notes: Presented data are the mean or median values for each region or country. Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2016

Expected Growth in Sales Revenue Overall, CFOs in Latin America expect growth in sales revenue. Global Trends Dec 2016 Outlook Revenue Dec 2016: Ecuador median=-30% Colombia median = 2.5% Latin American revenue growth increases Revenue expectations increases from last quarter Latin American revenue growth expectations trail US and Europe Peru and Mexico expect most rapid revenue growth Overall Latin American revenues pulled down by Chile and Mexico Brazil and Peru expects rapid sales growth, due in part to relatively high inflation Notes: Presented data are the mean or median values for each region or country. Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2016

Capital Spending Plans Latin American capital spending growth will be modest in 2017 Global Trends Dec 2016 Outlook Capital Spending Dec 2016: Ecuador use median, Mean=-20 Columbia use median, Mean = 13.8 Peru uses mean, median = 1.5 Modest capital spending plans Latin American CFOs expect modest business spending growth Business spending is still weak in the US, and expectation have decreased in Europe Business spending varies within Latin America Brazil and Chile anticipate growth in capital expenditures Spending expected to decline in Mexico and Ecuador. Notes: Presented data are the mean or median values for each region or country. Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2016

Expected Change in Earnings Earnings are expected to decrease in Latin America after raising up in the last quarter Global Trends Dec 2016 Outlook Earnings Dec 2016: All mean Median for the four countries shown: -8 -5 3.5 -1.5 Negative Latam earnings growth Latin American earnings are expected decrease in 2017. Other regions expect earnings to increase Negative earnings growth in Latin America Falling earnings expectations in Brazil and Mexico pull down average for all of Latin America Earnings are expected to grow in Peru and Chile Notes: Presented data are the mean public company value for each region or country. Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2016

Fulltime Employment Outlook Latin American CFOs expect to reduce fulltime domestic employment over the next year Global Trends Dec 2016 Outlook # FT Employees Dec 2016: Ecuador use median=mean Negative employment outlook in Latin America L.A. CFOs expect negative employment growth in 2017. Asia and US expect moderate increases in employment Employment growth varies across L.A. Expected employment reductions in Brazil and Mexico pull down average for all of Latin America Employment in Peru and Colombia is expected to grow 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 Dec 2016

Notes: Presented data are the mean value for each region or country Expected Wage and Salary Increases Latin American wages and salaries are projected to increase by 4.5% over the next year Global Trends Dec 2016 Outlook Wages & Salaries Dec 2016: Dec 2016 Ecuador median=0, mean = -4.8 Rapid wage growth in Africa and Asia Africa and Asia expect wage growth of nearly 7% in 2017 Europe expects the lowest wage growth US wages to grow 3.2% Wage growth in Brazil keeps up with inflation All participating Latam countries expect positive wage growth except Ecuador Notes: Presented data are the mean value for each region or country Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2016

Political uncertainty How would you rate the degree of political uncertainty or political risk in your country? This is from 16Q3-10 Africa has the highest degree of political risk, followed by Latin America 93% of African CFOs think their country’s political risk is moderate-to-high, compared to 90% for Latam Within Latin America, Brazil has the highest political uncertainty, and Peru has the lowest Due to the upcoming election and Washington gridlock, the US also faces high political risk Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2016

Which political uncertainties are the source of business caution? This is from 16Q3-11 90% of Latin American CFOs rate political risk as moderate-to-high. The biggest concern is government gridlock and dysfunction. Half of Latin American CFOs indicate that concern about these issues has caused their firms to plan cautiously Concerns about potential tax reforms and regulations also cause firms to become cautious Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2016

Has borrowing exposed firms to greater financial risk? Corporate debt loads increase financial risk Has the amount of debt taken on by other firms in your industry over the past three years… Has borrowing exposed firms to greater financial risk? Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2016

Debt funds used primarily for spending and hiring How has new debt been used over the past three years? Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2016

Will debt burden limit future investment opportunities? Will the current debt burden of your peer firms limit their ability to pursue future investment opportunities? Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2016

Floating versus fixed rate debt Do firms have the correct mix between floating and fixed rate debt? Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2016

Career Paths of CFOs  What is the probability that you will be a CEO in 5 years? 1-in-5 Latin American CFOs expect to be a CFO in 5 years. Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2016

Does being a CFO prepare you to be a CEO?  75% of Latin American CFOs believe that their current job tasks adequately prepare them to be a CEO someday. Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2016

Return on Assets (ROA) Profit growth in Latin America is moderate compared to US and Africa Profit margins are expected to increase in all regions in 2017 CFOs in Latin America expect profits to grow as measured by ROA Despite substantial risk in Africa, CFOs there expect high ROA Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2016

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 Dec 2016

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 Dec 2016

Latin American Business Outlook Part of the Global Business Outlook A joint survey effort between Duke University Fundação Getúlio Vargas CFO magazine El IMEF PyME Latin American Business Outlook Duke University / FGV / CFO Magazine Dec 2016