GDP Ranking on the 1st quarter 2016

How did Brazil reach such a situation?

• It is politics, s...– The elected President had a bellow 10% approval rate for more than one year

– The country went out the election divided and the legislative support for the Government was weak

– Lava Jato (Car Wash) Operation was and still is derupting the credibility of the Political Parties in power

• But the Economics, too– The economical model was showing already strong signals of deruption– Lava Jato Operation has frozen the investment sector, already facing a suffering stage before it

– Level of confidence of all economical players is at the botton level.– The international prices of the commodities impacted strongly, specialy on the pre-salt oil project of Petrobras

3.2

-0.8 -1.1 -0.7-2.0

-3.0-4.5

-5.9 -5.4

2014.I 2014.II 2014.III 2014.IV 2015.I 2015.II 2015.III 2015.IV 2016.IGDPPer quater

in comp. Of lastyear

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

AGROPECUÁRIA INDÚSTRIA SERVIÇOS CONSUMO DAS FAMÍLIAS GASTOS DO GOVERNO INVESTIMENTOSFamily Consup.FamilyConsup. Gov.Consup. InvestmentAgrobus.Agrobus. Indust. Serv.

It is the end of an economic cycle supported by a model that no longer works.

128.71104.90 91.31

-32.54

-111.20

-170.50

2011 2012 2013 2014 2015 2016*

PUBLIC ACCOUNTS RESULTIn BRL billion

Source : Banco Central

A strong deterioration in the Public Accounts : The Government was not able to balance its account given a new economical scenario;and more than that the society was not able to influence the political agenda for the reforms of the Fiscal, Political, Social Security and Labour areas.

6.50% 5.84% 5.91% 6.41%

10.67%9.28%

2011 2012 2013 2014 2015 2016

ANUAL INFLATION RATEIPCA

Source : IBGE

After a sequence of acceptable level of inflation, Brazil reached a 2 digits stage in 2015, specialy because the increse of the Public managed prices.

5.35.9 6.2 6.4 6.7 6.9

7.5 7.6 7.6 7.97.5

6.87.6

8.2

9.5

10.9

3

4

5

6

7

8

9

10

11

12

13

Jan'15 Fev'15 Mar'15 Abr'15 Mai'15 Jun'15 Jul'15 Ago'15 Set'15 Out'15 Nov'15 Dez'15 Jan'15 Fev'15 Mar'15 Abr'15

UNEMPLOYMENT RATE Per month in %

Source:IBGE

Strong growth in the Unemployment rate

5.16%5.21% 5.23% 5.25%

5.30% 5.32% 5.35%

5.45%5.50%

5.60%

5.70%

5.80% 5.82%

ABR MAI JUN JUL AGO SET OUT NOV DEZ JAN 16 FEV MAR ABR

Fonte: Anafec

EVOLUTION OF THE MONTHLY INTEREST RATE FOR COSTUMERS IN RETAIL Apr/15 a Apr/16

Strong growth in Interest Rate for the Mediun Class and all the other economic players : the basic interest rate of th Government is 14% per year

GDP – FAMILY CONSUPTION

The outcome is obivous : strong decrease in consuption

3.564

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

JAN11

MARMAI JUL SET NOV JAN12

MARMAI JUL SET NOV JAN13

MARMAI JUL SET NOV JAN14

MARMAI JUL SET NOV JAN15

MARMAI JUL SET NOV JAN16

MARMAI

EXCHANGE RATE – US$ X BRLIn R$

Fonte: Banco Central do Brasil, Boletim, Seção Balanço de Pagamentos (Bacen / Boletim / BP)

A strong devaluation of the BRL against US$ impacted strongly the economy as well, companies that had loans in US$ suffered, the Brazilian industry is very integrated to other countries and had to increase prices, the export sector did not leveraged the opportunity because of the commodities price drop

Brazilian External Trade Balance

Surplus in the trade balance, a good news for a negative reason : Strong decrease in imports to Brazil

• On the short run, we see some relief in the Economical situation– First quarter 2016 decreased just 0,3% against last quarter 2015– US$ X BRL exchange rate is stable and market future option looks stable too– Interest rate market future option with a decrease forecast– Some economists believe that the level of economic activity is already too low to

keep on diminuishing• The Political scenario is still unpredictable, but

– The Economical team is experienced and is looking for a new model– There is an intention of accelerating the infrastructure area, specially partnering

with the private sector avoiding mistakes from the past– The Governement Budget was approved by the legislative, eventough with a

important deficit – The new president of Petrobras is on a more technical and less political treck

• We will have a long road to surpass these obstacles but at least we have a new agenda

What about the travel Retail Industry in Brazil?

• Huge change in the Airport infrastructure due to the concession to the private sector– Most important change of the Retailing Infrastructure in the last history :

• More than 30.000 square meters of new stores• All major Brazilian airports renewed• World class business practices in place

– Change from a Landlord to Concessionare relationship to a truly Business partnership• Colaborative and win-win relation in all phasis of the business lifecycle• Longterm view• Transparency in operation and financial aspects• Speding up the Learning curve

– The 2016 Olympic Games is and has to work as a anti-cycle • 1 million + forecasted to visit the region• Infrastructure legacy to generate more tourism in the future• For the Industry, failure is not na option

– Suppliers partenering with the new efforts• Stores more attractive in all senses : product portifolio, purchasing experience, interaction, promotions, travel exclusives, value added services and so on

• In difficult times, the Travel Retail can be more resilient than local market

3.564

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

JAN11

MARMAI JUL SET NOV JAN12

MARMAI JUL SET NOV JAN13

MARMAI JUL SET NOV JAN14

MARMAI JUL SET NOV JAN15

MARMAI JUL SET NOV JAN16

MARMAI

EXCHANGE RATE – US$ X BRLIn R$

Fonte: Banco Central do Brasil, Boletim, Seção Balanço de Pagamentos (Bacen / Boletim / BP)

A strong devaluation of the BRL against US$ impacted strongly the Travel Retail Industry, volatility plays a negative role in the result of the business

EXPENDITURE OF BRAZILIANS ABROADUS$ bilhões

-

0.500

1.000

1.500

2.000

2.500

3.000

JAN 14

FEV MAR ABR MAI JUN JUL AGO SET OUT NOV DEZ JAN 15

FEV MAR ABR MAI JUN JUL AGO SET OUT NOV DEZ JAN 16

FEV MAR ABR

Fonte: Banco Central

Brazilians felt strongly the impact on the fx impact and the Economic Recession, the Industry is learning how to depend more on foreigners

Expenditure of foreigners in Brazil(10% increase against last year)

18 1819

21 21 21

0

5

10

15

20

25

2011 2012 2013 2014 2015 2016

Millions

INTERNATIONAL PASSENGER FLOW Most Important Airports in Brazil

Proj.

After a sequence of positive growth, International passengers held stable in the last years.We believe that the profile changed strongly : Foregners are travelling more to Brazil

112

128137

148 153145

0

20

40

60

80

100

120

140

160

180

2011 2012 2013 2014 2015 2016

Millions

DOMESTIC PASSENGERS FLOWMost Important Airports in Brazil

Proj.

After a sequence of positive growth, Domestic passengers are forecasting to decrease in 2016.Neverthless, the base is huge and the Industry has to be capable to foster this opportunity

What the Industry is doing to face the reality and be proactive to grow once more?

• Being more costumer centric.– Investing in understanding better the traveler and designing better value offers

to them – Digital is key for fostering this effort– Relationship programs to offer a customized package for key clients– Breaking down barriers to buy

• Partnership with Airport Partners is key– Looking for not just the short run, but the middle and long run as well– Retail offer design has to be unique, the profile of the business is completely

different by Airport (or flight). The one size fits all concept is gone– The data exchange has to happen faster and more detailed. The only way to

operate propely is to use and act through information

What the Industry is doing to face the reality and be proactive to grow once more?

• Suppliers are the main driver of the Industry–We see ourselves as an important channell to bring together suppliers and

costumers, generating a unique and very pleasent experience of interaction among both.

– Our success depends on the ability of the value chain to bring innovation and expiration to it.

• Being more cost efficient– Our Business model has very little space for mistakes. The industry has to

operate in a worldclass level in order to deliver the returns required by investors

MUCHAS GRACIAS