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

Top Concerns of Latin American CFOs 1. Economic Uncertainty 2. Government policies 3. Employee productivity 4. Currency risk 5. Weak demand for product/services 6. Access to capital 7. Regulatory requirements 8. Cost of benefits 9. Data security 10. Corporate tax code

Business Optimism Index Latin American CFO optimism decreases from last quarter. Global Trends June 2018 Outlook Sep 2017 Outlook Country Business Optimism Index Country / Region 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, Ecuador, and Colombia are less optimistic Own Company Own Company Notes: Presented data are the mean value for each region or country, Scale from 0-100

Expected Product Price Inflation Latin American companies expect moderate price increases Sep 2017 Outlook Global Trends June 2018 Outlook Product Prices Product Prices 18Q1: Peru using median, mean=-0.01 Inflationary expectations moderate in Latin America Asian CFOs expect the highest price increases among all the regions CFOs in Europe expect the lowest inflation Inflation expectations highest in Chile Prices expected to moderate in Brazil Import prices drive some of the Latin American price inflation Notes: Presented data are the mean or median values for each region or country.

Expected Growth in Sales Revenue Latin America sales revenue expectations drop Sep 2017 Outlook Global Trends June 2018 Outlook Revenue Revenue 18q2: Ecuador using the median, mean=18 Mexico using the mean, median=5.3 Latin American revenue growth decreases Revenue expectations decrease from last quarter Europe expected revenue growth to raise Peru and Chile expect most rapid revenue growth Overall Latin American revenues pulled down by Mexico and Ecuador Notes: Presented data are the mean or median values for each region or country.

Capital Spending Plans Latin American capital spending expectations lower this quarter Sep 2017 Outlook Global Trends June 2018 Outlook Capital Spending Capital Spending 18q2: Peru using median, mean=11 Capital spending plans rebound but still low Latin American CFOs expect slow spending growth Business spending is slowing down in US and Asia Business spending varies within Latin America Peru and Chile anticipate moderate growth in capital expenditures Flat spending expected in Brazil, weak in Mexico Notes: Presented data are the mean or median values for each region or country.

Expected Change in Earnings Earnings expected to increase Sep 2017 Outlook Global Trends June 2018 Outlook Earnings Earnings 18q2: Chile using median, mean=20% Mexico using median, mean=-2.6% Latam CFOs expect strong earnings Europe have the lowest earnings expectations for 2018 Latam expects moderately strong earnings growth Robust earnings growth in Latin America Brazil, Peru and Chile have the strongest earnings expectations Earnings are expected to grow moderately in Mexico Notes: Presented data are the mean or median values for each region or country.

Fulltime Employment Outlook Latin American CFOs expect moderate fulltime employment growth in 2018 Sep 2017 Outlook Global Trends June 2018 Outlook # FT Employees # FT Employees 18q1: peru using median, mean=-4.86 Weak employment outlook in Latin America Asia and Latam CFOs expect rising employment growth in 2018. Employment growth stays strong in the US Employment growth varies across L.A. Employment outlook in Brazil pulls down the average for all of Latin America Employment strongest in Chile and Mexico Notes: Presented data are the mean value for each region or country #FT=Number of Fulltime Employees

Expected Wage and Salary Increases Latin American wages and salaries are projected to increase by 4% in 2018 Sep 2017 Outlook Global Trends June 2018 Outlook Wages & Salaries Wages & Salaries Dec 2016: Dec 2016 Ecuador median=0, mean = -4.8 Wage growth expectations vary across regions Africa expects wages to grow 5.9% in 2018, which is the highest among all regions Europe expects the lowest wage growth Latin American wages to grow 4% All participating Latam countries expect 3+% wage growth, lowest in Peru Wage growth in Brazil beats inflation Notes: Presented data are the mean or median values for each region or country.

Borrowing Cost and Leverage Ratio What is your current long-term borrowing interest rate and debt-to-assets ratio?

Projected Borrowing Cost and Leverage Ratio Low Interest Rate Case There is a 1-in-10 chance that your long-term borrowing rate will be as low as X in June 2019: At this borrowing rate, what do you expected expect your debt-to-assets ratio and your planned growth in capital spending will be in June 2019? Mexico is removed because it looks very weird for the high interest rate case

Projected Borrowing Cost and Leverage Ratio Best Guess Case You expect that in one year your long-term borrowing interest rate will be X in June 2019: At this borrowing rate, what do you expected expect your debt-to-assets ratio and your planned growth in capital spending will be in June 2019?

Projected Borrowing Cost and Leverage Ratio High Interest Rate Case There is a 1-in-10 chance that your long-term borrowing rate will be at least this high in June 2019: At this borrowing rate, what do you expected expect your debt-to-assets ratio and your planned growth in capital spending will be in June 2019?

Data security To your knowledge, have hackers ever successfully penetrated your systems in an attempt to steal, change, or make public important data?

Data security During the past year, indicate which of the following (if any) steps your firm has taken as a result of concerns about hacking and data security.

Role of CFO Over the next five years, which of the following issues will have the most impact on the role played by the Finance Function in your company, as well as on the role of the CFO? Top 10 shown for role of CFO

Funding Environment In general, how would you describe the current funding environment for your company? Latam US

M&A Activities – Country Level During the next 12 months how do you expect M&A activity to change in your country?

M&A Activities – Industry Level During the next 12 months how do you expect M&A activity to change in your industry?

Peru’s Political Crisis How have the economic prospects of your company changed since the beginning of the year? How has the political and economic stability of Peru changed since the change in government? Did not exclude DK

Return on Assets (ROA) Profit growth in Latin America is strong March 2017: Argentina too high: 21.1 & 23.3 Profit margins are expected to increase in all regions CFOs in Latin America expect profits to grow as measured by ROA

Duke/FGV Latin American Business Outlook in Press The Latin American Business Outlook is frequently reported in the press

Duke/FGV Latin American Business Outlook in Press The Latin American Business Outlook is frequently reported in the press

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