TOP 100 COMPANIES.

PUBLICLY TRADED IN LATIN AMERICA

EXICO'S CEMEX HAS THRIVED ON THE SORT OF TUMULT facing companies in Latin America this year. CEO Lorenzo Zambrano considers market downturns more than a fact of life in an increasingly global economy--he sees them as buying opportunities. In less than 15 years, he built a mid-sized company into the world's third-largest cement maker by moving fast when speed counted most. "There is no magic solution [to volatility]," he says. "Once you go in and things go sour, then you have to turn it around very, very, quickly."

The numbers emerging out of this year's LATIN TRADE 100 of top publicly traded companies show that not everyone has Zambrano's Midas touch.

The United Nations Economic Commission for Latin America and the Caribbean predicts that regional economic growth will be a paltry 1% in 1999. That doesn't bode well for companies in the region: last year the regional economic output expanded by 2.3%, but sales for the top 100 firms dropped 6% to US$233 billion and profits plunged by a third to $18.3 billion.

While companies in Mexico are now emerging from the Tequila economic maelstrom that started five years ago, firms across South America are entering what promises to be a challenging year of Samba-nomics. The Brazilian currency may have stabilized, but the largest market in Latin America is expected to enter a deep recession, taking many of its neighbors with it. Faced with the deadly duo of a sudden spike in financing costs and a severe recession, many wannabe global players from the region and inbound multinationals have had no option but to restructure and retreat.

Whatever happens in Brazil, the wild swings in sales and profits will continue. Last year, almost half of the largest publicly traded companies in Latin America reported double-digit changes in revenues and a remarkable eight out of ten firms posted similar movement in profits. "You get used to volatility,' says Zambrano. "For Cemex (1999 Rank: 8), volatility is just another part of doing business and we have learned how to profit from it." As the LATIN TRADE 100 shows, companies are getting used to volatility. Time will tell whether they learn from it.

Some highlights from this year's ranking:

TELECOMMUNICATIONS

Carlos Slim, the principal behind Mexican holding Grupo Carso (17) and Telefonos de Mexico (2), is thoroughly enjoying deregulation. Not only has he managed to fend off invaders AT&T and MCI, but the phone mogul is aggressively promoting convergence with stakes in Internet access provider Prodigy Communications Corp., media conglomerate Grupo Televisa and online music seller CDNow Inc.

Telmex advanced from fourth place to second in the ranking, with sales increasing a modest 5.3% and profits rising 4.3% over the previous year. Luiz Carvalho, a Latin American telecommunications analyst with Morgan Stanley Dean Witter, predicts Telmex revenues will grow at least 22% this year. "The company should benefit from good telephone line growth and a strong cellular business:' he says in projecting that the number of cellular subscribers will increase 50% this year; nearly 28% in 2000.

"Telmex is a cash machine with a strong balance sheet," says JP Morgan Latin American telecommunications analyst Simon Flannery Most analysts, however, do believe that Telmex will receive pressure from the Mexican government to spend more money installing more telephone lines to raise the country's phone density. Today, Mexico has only 10.7 lines per 100 people, a ratio less than that of Argentina, Chile and Venezuela.

The privatization and breakup of Telebras, the massive Brazilian telephone company, caused that company to disappear from the ranking. The firm had held second place for years behind another perennial, Petrobras (1). But the 12 new companies that emerged from the $19 billion privatization in July 1998 are not exactly tiny; five made the LATIN TRADE 100 list.

Take, for example, Tele Norte Leste Participacoes (9), the largest of the lot, controlled by a consortium led by Andrade Gutierrez, a major Brazilian construction company. Tele Norte Leste's market is massive, made up of 86 million people, more than half the Brazilian population. JP Morgan's Elannery says he expects earnings to grow and calls the company "a dark horse" among the 12 new companies born following the breakup of Telebras But he cautions that competition and the company's inexperience-the consortium does not include a telecom operator-could be a problem.

RETAIL

All eyes are on Telefonica de Espanas hottest new property Telesp Participacoes (13). The Sao Paulo phone company's 6.4 million telephone lines represent 36% of all existing lines in Brazil. Flannery calls it the "blue chip" of the Brazilian telecom sector. "It has the virtue of being the largest company operating in the most attractive market with the most experienced management team;" he says.

Mammoth U.S. retailer Wal-Mart is now taking lessons at the school of hard knocks. A couple of years ago, it took a majority stake in former joint venture partner Cifra (6), Mexico's largest chain of stores. Cifra's sales are rising nicely, but now profits--down by a third last year--are under serious pressure. Further south in Brazil, Wal-Mart ditched its joint venture with Lojas Americanas (72), as the Brazilian retailer went into a tailspin, generating profits only after selling a fifth of its 110 stores to France's Carrefour.

Dutch supermarket chain Royal Ahold continues to grow in the region, with first quarter sales doubling to $715 million compared to the same period a year ago. The company is co-owner of Brazil's Bom-Preco (48), which dominates northeastern Brazil with 91 stores, and is an equal partner with an Argentine investment company that owns Disco (53) and Chilean retailer Santa Isabel. in Argentina, revenues are expected to grow even higher this year because Disco-Ahold acquired Supamer and Gonzalez, two Argentine food retailers with 75 stores.

ELECTRICITY

Chilean businessman Jose Yuraszeck's bid to build Enersis (21) into a multinational power company was cut short not by flagging results but rather lack of financial firepower. Spain's Endesa took over with a $1.4 billion bid and then proceeded to lock up the grid with a highly controversial takeover--worth $2.1 billion-of Empresa Nacional de Electricidad, a power generation company with assets in Argentina, Brazil, Chile, Colombia, and Peru. Competitors cried foul because the deal would give the Spaniards near monopoly control over the power sector in Chile.

Like the Telebras privatization, the breakup of federally run electricity holding Centrais Eletricas Brasileiras (3), more commonly known as Eletrobras, promises to spawn a host of new large publicly listed companies. This year, Eletrobras was expected to sell three electricity generators, but may delay the sale of at least two until next year, according to published reports. That may give time to improve the company's performance, which included a strong 24% surge in sales and a dismal 45% drop in profits largely due to losses at a power generating subsidiary and increased tax payments.

Among the other Brazilian electricity companies falling from grace were staterun Companhia Energetica de Sao Paulo (34) (Cesp), whose sales and profits dropped by more than a third. The results reflect the July 1998 sale of its distribution unit, Elektro Electricidade Servicios, to U.S.-based Enron. The unit generated nearly half Cesp's annual revenues. The company was scheduled to sell three of its generating units in the second quarter.

STEEL

Benjamin Steinbruch, the dynamic Brazilian businessman who took over steel maker Companhia Siderurgica Nacional (36) (CSN) and later mining giant Compania Vale do Rio Doce (10) (CVRD), is clearly looking to cash out on his investments. Rumors continue to circulate about the sale of all or some of his holdings in CVRD. CSN has launched a major restructuring that will involve the sale of non-steel related assets. The company is said to be looking at an international expansion into the United States, not unlike compatriot Gerdau's foray into steel production outside of Brazil.

Steelmakers, like Brazil's Usiminas (28) and Altos Hornos de Mexico (66), continue to struggle with depressed demand, high interest rates and lackluster prices. Altos Hornos was probably the hardest hit, posting a $177 million loss last year that has prompted the hiring of investment bank JP Morgan to find a strategic partner.

OIL/GAS

Roberto Monti, another high-flying Latin American entrepreneur and head of Argentine oil concern YPF (5), pushed growth as fast as he could but not fast enough. YPF has been investing $1.5 billion a year and yet, last April, Spain's Repsol launched a $13 billion takeover bid, effectively ending Monti's hope of building an independent multinational oil conglomerate.

For the oil companies that dominate the upper echelons of Latin America's largest publicly traded companies, depressed oil prices are making a difficult year worse. Petrobras, the Brazilian state-run oil giant with $15 billion in sales, is facing tough times. Last year, sales and profit fell about 15%. This year, says JP Morgan energy analyst Mary Bourque, does not look promising. She forecasts a net loss of $1.3 billion, due mainly to the devaluation of the Brazilian real.

NEWCOMERS

Brazilian power companies Light (12) and Electropaulo Metropolitana (26) jumped high into the rankings once privatization made them eligible for the list, as did the former units of Telebras. Other entrants new to or back on the

LATIN TRADE 100 include Brazilian electricity distributor EBE (61); Mexican cement maker Tolmex (67); Argentine steel firm Siderar (85), as well as bus manufacturer Grupo Dina (88) and retailer El Puerto de Liverpool (97), both from Mexico.

                         LATIN TRADE 100 SCORECARD

                          RK 99    RK 98
Sales (US$ billions)      233.5    247.9 Reduced sales (# of firms)
Profits (US$ billions)     18.3     29.2 Reduced profits (# of firms)
                            US$ % Change
                       millions    97/98
SALES
WINNERS                                  LOSERS
Light                     3,949      139 Itausa
Embraer                   1,299       76 Santista Alimentos
Disco                     1,601       61 Cesp
ICA                       1,675       56 Sadia
Tolmex                    1,337       56 Lojas Americanas
NET INCOME
WINNERS                                  LOSERS
Lojas Americanas            145      534 Suzano
Embraer                     109      469 Grupo Dina
CPFL                        295      337 Klabin
Renault Argentina            26      283 Molinos
CMPC                        337      213 Altos Hornos
ASSETS
WINNERS                                  LOSERS
Light                     9,765      204 Ceval
D&S                       1,245       51 Varig
Lan Chile                   877       50 Copene
Ericsson                  1,899       37 Telemig
Pao de Acucar             2,502       34 Eletrobras

                          RK 99    RK 98
Sales (US$ billions)         45       32
Profits (US$ billions)       58       41
                            US$ % Change
                       millions    97/98
SALES
WINNERS
Light                     2,933      -60
Embraer                   1,106      -36
Disco                     2,263      -34
ICA                       1,928      -25
Tolmex                    1,270      -24
NET INCOME
WINNERS
Lojas Americanas            -38    -1016
Embraer                     -65     -933
CPFL                        -28     -669
Renault Argentina           -40     -612
CMPC                       -177     -219
ASSETS
WINNERS
Light                     1,827      -42
D&S                       1,905      -35
Lan Chile                 2,601      -27
Ericsson                  2,371      -19
Pao de Acucar            72,939      -16