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SÃO PAULO, BRASIL SUMMARY: APRIL 10, 2013
The LT CFO Forums are invitation-only events that offer CFOs, finance directors, treasurers and controllers from various industries in Latin America the opportunity to participate in high-level peer group discussions and to interact in a private setting. What We Learned
2013 Economic and Market Outlook » Leading cost effectiveness efforts throughout the corporation Speakers: David Beker, Chief Brazil Economist & Fixed Income » Leveraging information tools and systems Strategist, Bank of America Merrill Lynch Key Points: CFO Workshop » Country and regional economic growth estimates » Stewardship: Compliance, controls and risk » Key political events and considerations management » Internal and external forces impacting market Speakers: activity Werner Stettler, Corporate Head, Zurich Brazil Keynote address: Gustavo Reis, Senior International Economist, Bank CFO of the Year Award of America Merrill Lynch and Keynote Address Marcelo Martins, Chief Financial and Investor Relations Officer, Cosan Lunch and Special Keynote Address Strengthening the CFO Role: Supporting the organizations to Operational Finance consolidate its strategy, with focus Speakers: in value creation Alexandre Dinkelmann, Executive VP of Strategy and Finance & Investor Relations Officer, TOTVS Marcela Drehmer, Planning, Finance and Investor Relations Vice President Daniel Levy, VP of Finance and Management, TAM Executive Officer, Braskem Vincent Eavis, Practice Lead and Management Director, PayTech Commercial Key Points: Event Moderator: Mark Ludwig, » Developing efficient processes for financial LT CFO Contributing Editor, Latin Trade, reports production and Principal, Variant Advisors
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SÃO PAULO, BRASIL SUMMARY: APRIL 10, 2013
2013 Economic and Market Outlook hiked interest rates already he said adding that he was not convinced that the Central Latin Trade hosted a meeting of some 70 bank was going to increase interest rates. CFOs at the Hotel Tivoli in São Paulo on April Dilma had pledged to cut interest rates and 10th, 2013 to exchange views on the current even under pressure, “she is not ready to give economic situation in the country and discuss it back right away. The government will resist challenges faced by finance executives. doing it. But a portion of it, she will have to The session started with an overview of the give it back.” Brazilian economic situation (“Searching for “The balance between growth and inflation Investment”) delivered by David Beker, Chief has deteriorated a lot,” he said although he Brazil economist and fixed income strategist ruled out a Turkey-like or Argentina-like at Bank of America Merill Lynch. He started scenario. by saying that it became more difficult to The fiscal situation has also deteriorated predict what the performance of the economy due to a series of creative accounting will be because president Dilma Rousseff practices. “Brazil may not lose its investment has been concentrating a lot of decisions grade but credit rating agencies may change instead of sharing them with her team. During the outlook due to the fiscal deterioration. that morning, the March inflation figure was As far as the currency is concerned, released by the Brazilian statistics institute, he said the real should be weaker than and the benchmark IPCA inflation index it currently is (it should be R2.2 to the reached 6.6% per year, which was higher than dollar, instead of around R2 at present) the upper range of Brazil’s inflation target but the government “cannot afford it” as a (6.5%). Beker mentioned the government depreciated currency puts additional pressure was becoming more tolerant with inflation, on inflation. The real will nevertheless tend to and that without government intervention lose some ground in the coming years (due to (cutting electricity rates and cutting taxes on a widening current account gap towards 4% of basic foodstuff, for instance), inflation would GDP). already be at 8%. “Brazil has an inflation Investment is the key issue. The issue. The policy mix will keep inflation high! government has become more investment He recalled that Rousseff had recently said friendly as it launched a series of concessions that she was not ready to sacrifice economic in roads, railways, airports, and tentatively, growth in order to curb inflation after a recent ports. “Even though it was not a sea change, BRICS meeting. “Dilma indeed says what she the situation is improving and there is now a thinks.” He argued that Brazil should have good chance that investment will increase by
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SÃO PAULO, BRASIL SUMMARY: APRIL 10, 2013
5% this year,” said Beker, who forecast GDP done in a very disciplined manner acquisitions growth to post 3% to 3.5% this year. “I hope that have created tremendous value for our LT CFO Events that investment will react. If not, the economy shareholders.” Martins described his focus will underperform. on value creation. “We are now 100% on For further information Beker said he did not see any trouble for delivering value creation more than growth... about this event series, companies that want to issue bonds on the everybody in the company thinks about capital or to participate on capital markets, although costs will probably employed.” “We do have challenges in Brazil, a panel or in the audience, be higher. but we have to concentrate on being more please contact: In terms of politics, only three scenarios efficient, reducing costs and creating more Mark Ludwig, could prevent Rouseff from being reelected value for our shareholders.” Contributing Editor next year: a major deterioration in inflation, [email protected] a sudden jump in unemployment, and energy Operational finance: “Connecting rationing. While he ruled out the first two, he finance to the real world” and said the last one remained an incognito. But behaving as if you were the owner he believed Rousseff will turn more pragmatic of the business than interventionist in 2015, once re-elected. “A whole set of policies can be implemented Alexandre Dinkelman, executive vice to put Brazil on a strong path again,” he said. president strategy and finance, reflected On the international front, Beker mentioned on his current experience at Totvs, the a slow recovery in the US (with the economy leading Brazilian software company. He growing less than 2.5% per year), remaining said his mandate is designed to be close to tail risks in Europe (Cyprus), and the recent the operation of the company, including in QE policy in Japan (“The message for emerg- merger and acquisitions. “This is fantastic ing markets is that the carry trade in back”) for me,” said Dinkelman who feels he has a while changes in the Chinese economy will role to help the company rowing and does become “less of an event”, he said. not deal with “only with the finance people”. Instead, he is also in charge of international CFO of the Year Award and Keynote operations, and the capital venture arm of Address the company Totvs Ventures. He said he is background as an investment banker and Marcelo Martins, from Cosan, was named real estate executive helped a lot. “The CFO of the year and received the Latin [Banco] Pactual culture means that you have Trade award. He reflected on the series to behave as [if you were] the owner of the of acquisitions that transformed a former business,” he said. “It really speeded up my sugar and ethanol company in a diversified learning process. I like to have the operational energy and logistics group. “We increased guys with me.” He argued clear business our Ebitda by more than 500% in five years targets have to be indentified over a five-year and our revenues in more than 700%, which period.“I believe the way to go into the detail ended up giving us more access to the capital of the business is to start with the long term market and reduce our cost of capital,” he planning... My work is to help the company to said. “We are getting full support from our work as a portfolio management company.” minority shareholders and bond holders to He insisted that companies now demand continue to grow our business... We have different CFOs than they used to 10 or 15 years
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SÃO PAULO, BRASIL SUMMARY: APRIL 10, 2013
ago, and that they now have a more strategic international, while TAM was very centralized role. “It is not just about cost cutting – it but now operates on a matrician mode with may be easy to cut 10% - but it may be about business units. LAN was very efficiency helping the company allocating capital in a oriented, while TAM emphasized the level better way. The CFO can really occupy that of customer service. He said only 3% of the role and connect finance to the real world.” routes of the two airlines overlapped. Daniel Levy, the vice president of finance and management at TAM, the Brazilian Stewardship – Werner Stettler, corporate airline that is currently merging with LAN, head at Zurich Seguros, argued that large said the consequence of the current full Brazilian companies expanding abroad should employment situation in Brazil is that there be aware of the risks related to foreign is a shortage of talented people in finance. legislation and insurance policies. “There “We are overpaying people to do a job that is are different definitions of non-admitted above their capabilities and do not have the business. We’d better make sure that we are necessary experience.” He mentioned some in compliance”. CFOs, he said, are in the line differences between TAM and LAN before of fire, as they are the ones that can end up in the merger: The Chile-based LAN was more prison if things turn sour.
LT CFO Event attendees in São Paulo
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SÃO PAULO, BRASIL SUMMARY: APRIL 10, 2013
Alexandre Dinkelmann, Executive VP of Daniel Levy, VP of Finance and Strategy and Finance & Investor Relations Management, TAM Officer, TOTVS
Marcela Drehmer, CFO, Braskem
David Beker, Chief Brazil Economist Vincent Eavis, Practice Lead and & Fixed Income Strategist, Bank of Management Director, PayTech America Merrill Lynch Commercial
Marcelo Martins, CFO & Investor Relations Officer, Cosan; Mark Ludwig, Contributing Editor, LT CFO Events, Latin Trade Group Rogério Menezes, Finance Director, Akzo Nobel Ltda.; Marina Negrisoli, Treasury Manager, Fibria; Sergio Malacrida, Treasury General Manager, Fibria
Luis Emilio Fortou, Global Emmanuel Baltis, Vice President, Customer Distribution & Marketing, Zurich Latin America; Wagner Birochi, Treasury Manager, Syngenta; Commercial Expansion Michael Raney, CEO, Zurich; Rodrigo Purchio, Corporate Strategy Manager, Wilson Ferreira, Exportation Director, Team, Latin America and Volkswagen Brazil; Federico Bove, Executive Vice President, Datarisk Global MITSUI Alimentos Caribbean Region, Visa Inc.