In This Article:
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Revenue Increase: 18.5% increase in constant currency; 11% increase excluding Argentina.
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Profitability Expansion: Profitability expanded by 340 basis points.
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Net Income: Positive net income of BRL 302 million from continuing operations.
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Non-Recurring Loss: BRL 7 billion recorded in discontinued operations.
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EBITDA Margin: Expanded from 13% to 15.3% in the last quarter.
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Gross Margin Expansion: 240 basis points increase.
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Corporate Expenses Reduction: Fell by 43% year-on-year.
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Net Debt/EBITDA Ratio: 1.5 times.
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Cash Position: Ended the quarter with BRL 3.3 billion in cash.
Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Natura &Co Holding SA reported an 18.5% increase in sales in constant currency, showcasing strong revenue growth.
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Profitability expanded by 340 basis points, with EBITDA showing more than a 50% improvement.
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The company successfully implemented Wave Two in several regions, leading to six consecutive quarters of margin expansion.
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Natura's brand in Brazil grew by 19%, maintaining strong seasonal dynamics and benefiting from productivity and volume gains.
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The company has a strong cash position with 3.3 billion in cash, sufficient to cover obligations through 2027.
Negative Points
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A non-cash, non-recurring loss of 7 billion BRL was recorded due to the deconsolidation of API subsidiaries, impacting net income.
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Avon in the Hispanic region showed a 2.7% decline in revenue, excluding Argentina, due to ongoing channel reductions.
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Higher financial expenses were incurred due to a shift from a net cash position to a projected net debt position.
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The company is not planning to pay dividends until the end of the Chapter 11 cycle, impacting shareholder returns.
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There are concerns about the company's net debt being higher than previously expected, linked to the Chapter 11 process.
Q & A Highlights
Q: What remains to be delivered for the new operational models in Argentina and Mexico, and how does the company's net debt situation look? A: The financial aspect of the quarter was impacted by the deconsolidation of Avon International (AP I) and its subsidiaries, causing accounting noise and net income impact. The leverage impact can be reversed depending on the Chapter 11 process outcomes. Strong cash flow in Latin America and good operational performance, especially with the Natura brand, offset the discontinued operations' impact. The company is working on integrating operations in Mexico and Argentina, using lessons learned from other regions to minimize disruptions.