Another quarter of improved margins driving turnaround on profitability at Natura &Co
- Positive net cash of BRL 1.7 billion and net income of BRL 3.0 billion with BRL 979 million to be distributed as dividends.
- Consolidated net revenue of BRL 26.7 billion, driven by the integration of Natura and Avon brands in Latin America.
- Improved gross margin, adjusted EBITDA, and net income, showcasing successful financial and operational execution.
- Strong net cash position and debt reduction, indicating progress in the company's corporate strategy.
- None.
Insights
The robust financial performance of Natura &Co, as indicated by a net income of BRL 3.0 billion, represents a significant turnaround from the previous year's net loss. The strategic sale of Aesop, generating USD 2.6 billion, played a critical role in this transformation, enhancing the company's liquidity and enabling substantial debt reduction. The debt-to-EBITDA ratio improvement from 3.5x to -0.79x is particularly noteworthy, as it underscores the company's transition to a more financially stable position. This is further evidenced by the positive net cash of BRL 1.7 billion, which indicates a healthy cash reserve that could support future investments or cushion against economic downturns.
The declaration of BRL 979 million in dividends is a strong signal to shareholders of the company's profitability and confidence in its financial health. However, investors should consider the sustainability of such dividend payments in the context of the company's long-term investment plans, particularly in technology and brand growth as highlighted by the CEO. The focus on margin expansion and cash generation, rather than top-line growth, suggests a disciplined approach to financial management that may appeal to conservative investors, especially in the volatile Latin American market.
Natura &Co's strategic integration of the Natura and Avon brands in Latin America, along with its portfolio optimization, has yielded an increase in gross margin by 410 basis points. This indicates a successful repositioning of the company's product mix and pricing strategies. The growth in the Natura brand's revenue within Brazil, a key market, is a positive sign of brand strength and consumer loyalty. However, the reduction in Avon's Latin American revenues due to consultant decreases and strategic changes signals a potential area for concern. The company's ability to navigate these challenges will be critical in maintaining its competitive edge in the cosmetics and personal care industry.
Investors should monitor the progress of the 'Wave 2' integration strategy, as its success will be crucial for achieving synergies and cost savings. The mention of a softer integration in Chile suggests a learning curve and adaptability in the company's approach, which may mitigate risks associated with such large-scale transformations. The potential separation of Natura &Co Latam and Avon could also have significant implications for the company's market positioning and investor sentiment, depending on the strategic benefits realized from such a move.
The impact of Argentinean hyperinflation on Natura &Co's financials is a reminder of the broader macroeconomic challenges faced by companies operating in volatile regions. While the company's overall performance has been strong, such external factors can pose risks to profitability and should be factored into any analysis of the company's prospects. The company's decision to delist its ADR from the NYSE may also reflect a strategic shift towards focusing on its core markets and could have implications for international investor accessibility and perception.
The company's commitment to providing a living wage and addressing the gender pay gap aligns with a growing global focus on corporate social responsibility (CSR). These efforts can enhance the company's reputation and brand value, potentially leading to increased consumer support and a more dedicated workforce. The long-term benefits of these social initiatives may contribute to the company's competitive advantage and align with investor interests in sustainable and ethical business practices.
Fiscal Year registered positive net cash of
Net income reached
SÃO PAULO, March 12, 2024 /PRNewswire/ -- Natura &Co's (B3:NTCO3) 2023 financial results, released today, reflect the benefits of a strategy defined and implemented 18 months ago, to prioritize profitability and cash conversion versus revenue growth, integrate the Natura and Avon brands in
Natura &Co's 2023 consolidated net revenue reached
Improved profitability is principally attributed to the expansion of gross margin that reached
Net income totaled
Fabio Barbosa, Group CEO of Natura &Co, commented: "2023 marked a pivotal chapter in the Company's history, setting the stage for the ambitious horizons we aim to reach in 2024. Notwithstanding a volatile macro environment in
On our corporate strategy, we delivered a leaner holding structure as the Business units operate with more autonomy. Our simplification agenda has progressed markedly, thanks to the divestments of Aesop and The Body Shop, which allowed us to pay our debt and end the year with a strong net cash position. The positive free cash flow to firm, alongside our much stronger balance sheet, allowed us to start moving to a more optimal capital structure, and as a result we are announcing
Recognizing Natura &Co's social achievements, the Company is proud to have reached its goal of providing a living wage for all employees across Natura &Co. This commitment extends beyond the notion of a minimum wage, embracing a comprehensive understanding of a dignified life. Our approach reflects a deep commitment to improving the quality of life for our employees and their families, thereby contributing to the construction of a more equitable society. Natura &Co also maintained its commitment to closing its pay gap between men and women for the whole Group.
We are encouraged with the positive results from the strategy set in 2022, but we must continue evolving that strategy. Margins and cash remain as priorities in the short term, paving the way for further investments in brands and technology. In 2024, capital allocation will continue to be a critical driver for future value creation, with a focus on investments in key growth markets and projects. We continue to expect volatility in top-line, but with margin improvements in the full-year, particularly ex-
Subsequent Events
In another step towards simplifying the corporate structure, Natura &Co announced in January 2024 the ADR NYSE delisting, and in February 2024, the Company released a material fact announcing the study of a possible separation of Natura &Co Latam and Avon, unlocking the full potential of both companies. The Company will keep the market informed as these studies evolve.
The full earning report and financial statements can be accessed at https://ri.naturaeco.com/en/.
About Natura &Co
Natura &Co is a global purpose-driven group uniting Natura and Avon brands. We connect more than 200 million clients worldwide, engaging them through 7 million dedicated Consultants and Representatives, 900 stores and franchises, and 22,000 employees.
We believe in promoting real positive economic, social, and environmental impact. We believe that the world does not need another big company. The world needs symbols of change capable of blazing new trails and inspiring others to follow. We believe in the power of cooperation, co-creation, and collaboration for a better way of living and doing business.
We are Natura &Co.
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities. Any offers, solicitations or offers to buy, or any sales of securities will be made in accordance with the registration requirements of the Securities Act of 1933, as amended, or an exemption therefrom. This communication may contain forward-looking statements which reflect Natura &Co's current view on future events and financial and operational development. Words such as "intend", "expect", "anticipate", "may", "believe", "plan", "estimate" and other expressions which imply indications or predictions of future development or trends, and which are not based on historical facts, are intended to identify forward-looking statements. Forward-looking statements inherently involve both known and unknown risks and uncertainties as they depend on future events and circumstances. Forward-looking statements do not guarantee future results or development and the actual outcome could differ materially from the forward-looking statements. Any forward-looking statements contained in this communication speak only as at the date hereof, and Natura &Co does not assume or undertake any obligation or responsibility to update any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
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SOURCE Natura &Co
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