LATIN AMERICA GLOBAL TRADE OUTLOOK 6th Annual Global Supply Chain Excellence Summit

Director of Operations MEXFLEX GROUP Introduction Ricardo is a senior executive with broad international experience in Supply Chain Planning, Supply Chain Execution, IT Strategy design and International Distribution with Fortune 500 companies. He has gained significant experience developing Operational Models (Process, Infrastructure, Technology, People) for CPG and Retail companies in Latin America with recognized capacity to asses Supply Chain needs and improvement plans. His achievements include setting up programs to better integrate Supply Chains to Demand and Commercial needs while addressing hard savings for the P&L. Ricardo has established and managed “third party” operations and large scale “Business Change Programs” like the implementation of SAP R/3 in Latin America. Ricardo Vera Director of Operations MEXFLEX GROUP

Br & Mx are the World`s 8th & 15th Largest Economies Projected to become #7 and #8 by 2050 Countries with largest GDP in 2017 (Trillions of dollars) Rank Country $USD 1 United States 19.4 2 China 12.2 3 Japan 4.9 4 Germany 3.7 5 UK 2.64 6 India 2.59 7 France 2.58 8 Brazil 2.0 9 Italy 1.9 10 Canada 1.6 11 Russia 1.54 12 S. Korea 1.53 13 Australia 1.32 14 Spain 1.31 15 Mexico 1.26 #7

Mexico has an enviable Geopolitical & Economic Position to improve Regional & Global Trade Natural Resources - Strategic Location – Solid Economic & Business Climate

Brazil can seize greater benefits from greater global and regional integration Integration into global trade is much lower than in other emerging markets as trade barriers shield enterprises from global opportunities and foreign competition. Exports and growth could be stronger if firms could source the best inputs and capital goods from international markets. More exposure to trade will also lead to rising productivity among domestic producers as they improve efficiency and seize new export opportunities. This would create new jobs across the economy, but especially for those with lower skills and incomes, making growth more inclusive. Source: ProMèxcio; Secretarìa de Hacienda y Crèdito Pùblico 2016 OECD Economic survey “Connecting the world through Network, Education, and Advanced Research (NEAR).”

Brazil has recovered from recession Investment has supported the recovery, helped by lower interest rates and reforms that improved confidence Economic Overview After a decade of strong growth (2002-2013), Brazil entered into the worst recession in its history in 2015 (-3.8% of GDP) and 2016 (-3.6%) Economic crisis due to the fall of commodities price and a drop in consumption and in investment In 2017, the economy recovered and GDP recorded a 0.7% progression Budgetary adjustment and favorable economic conditions have fostered the recovery In 2018 the Brazilian economy should confirm its rebound with an expected growth of 1.5% (IMF) Structural reforms will be crucial to sustain the recovery. Low inflation is supporting household real incomes and has opened space for significant interest rate reductions, both of which are likely to support stronger private consumption. “Connecting the world through Network, Education, and Advanced Research (NEAR).”

Working age population Mx & Br: Young Countries with Expanding Working Population Generating Production Sustainability, Abundance of Competitive Labor Working age population % of population 72% 70% BR 68.85% 68% G 20 66% MX 65.32% 64% Source: (1) UN Population Research Division; (2) ProMèxico, The Economist

Labour productivity in Thousands of USD at PPP / person employed For Mx & Br, productivity will have to become the principal engine of growth Need of significant higher investment and microeconomics reforms Labour productivity in Thousands of USD at PPP / person employed MX 38% Productivity will contribute to create more and better remunerated jobs. Improvements in productivity require investment in physical capital and people skills. BR 29% Source: (1) UN Population Research Division; (2) ProMèxico, The Economist

Mexico has Achieved Important Legislative Reforms Positive Impact on Business Climate, Foreign Investment and Overall GDP Source: ProMèxcio; Secretarìa de Hacienda y Crèdito Pùblico 2016

A Leader in Leveraging Mexico`s Benefits Since 1994 automotive production has increased from 1.0M to 3.5M. 5.0M in 2020

Logistics has a new role creating value What are the “Supply Chain Management decision makers” in LATINAMERICA expectations on Logistics? ACTIVITY FOCUS BEFORE: Logistics a competitiveness enabler: Operate eficiently Reduce cost and working capital Reduce time – Just in time Value: Increase margins for the company. NOW: Competitive companies use Logistics for: Develop and support new businesses Increase sales and market share Improve service and consumer loyalty Value: Increase value for shareholders. Logistics has a new role creating value FROM: COST MANAGEMENT TO: INCREASE SHAREHOLDERS RETURN ON INVESTMENT

LATINAMERICA: A Changing Supply Chain Landscape ACTIVITY FOCUS Operations & Infrastructure Logistics vendors Integration Logistics management and planning COORDINATION Global 4PL w/IT solutions. Integrates Regional 3PL´s Regional 3PL w/ IT solutions, and Operational Models design & implementation 3PL services por transportation & whsing services w/o Technology EXECUTION Simple Transportation, Warehousing, Customs services

Room for Improvement Mx & Br Strengths….. Are among the world`s most extensive Many are betting on the countries - to great success But the Opportunities are Real…. Political Corruption Drug Trade Rule of Law Security Infrastructure Mx & Br future depends on citizen participation to strengthen the rule of law, eliminate corruption, improve education and drive entrepreneurship

6th Annual Global Supply Chain Excellence Summit Thank You!