Hispanic countries that have implemented Wave 2 continue to boost Natura &Co's profitability in Latin America
SÃO PAULO, Aug. 13, 2024 /PRNewswire/ -- Natura &Co (B3: NTCO3) today reported financial results for the second quarter of 2024 (2Q-24), showing improved revenue trends while margins continued to expand, especially in Hispanic countries where the second wave of the integration of Natura and Avon in the region was implemented. This positive performance, however, continued to be impacted by the ongoing sales deleverage at Avon International, which encompasses all global markets except Latin America.
In addition, Natura &Co announced its support for the voluntary financial restructuring procedure of its non-operating subsidiary Avon Products, Inc. (API) initiated today in the U.S. through a Chapter 11 process to address pre-existing debts and liabilities. The proceedings are restricted to API and no impacts are expected on Avon brand operations outside the U.S., which are not part of the proceedings.
Consolidated net revenue reached BRL 7.4 billion, up 5.7% vs. 2Q-23 (YoY) in constant currency (CC) and up 5.4% in reais (BRL), driven by Natura &Co's operation in Latin America, whose revenues grew 10.0% YoY in CC (+4.3% ex-Argentina), offset by Avon International, whose revenues fell 8.4% YoY in CC. This improvement was mainly driven by the performance of both brands in Brazil. While Natura recorded another quarter of strong growth (+14.8% YoY), Avon posted a significant recovery compared to the previous quarter's figures (from -11.3% in
Q1-24 to -0.8% in Q2-24). In Hispanic markets, Natura's growth gained pace but was partially offset by the Home & Style category and Avon's adjustments across the region.
Adjusted EBITDA was BRL 804 million in 2Q-24 with a margin of 10.9%, up by 80 basis points YoY, marking another quarter of solid profitability expansion. Natura &Co's gross margin growth in Latin America more than offset Avon International's margin reduction which, combined with SG&A efficiencies coming from the integration of the Natura and Avon brands, enables reinvestments in marketing and strategic growth projects, including innovation and digital investments.
The net loss in 2Q-24 was BRL 859 million, compared to a net loss of BRL 732 million in the same period in 2023. This was mainly caused by a one-off non-cash write-off of BRL 725 million that impacted the Company's tax line this quarter. Excluding non-operational effects, recurring net income was BRL +162 million (vs. a loss of BRL -219 million in Q2-23) as higher adjusted EBITDA and lower net financial expenses more than offset higher tax expenses, even excluding the BRL 725 million impact of deferred tax assets.
Fábio Barbosa, CEO of Natura &Co Group, declared: "Natura &Co's revenue was back in positive territory, driven by strong results in Q2-24 at Natura &Co Latam, partially offset by still challenging figures at Avon International, while margin continued to expand. This is an important sign that our strategy is effective.
We also started to see a better trend in top-line dynamics, reflecting not only a strong performance by the Natura brand with Brazil and Mexico accelerating vs. Q1-24, but also the significant recovery by Avon CFT in Brazil. The integration of the brands in Latin America continues to advance and has proven to be the main driver of our profitability, both in this and in recent quarters. We believe in the potential of the Avon brand and fully support the measure adopted by API, announced today in the U.S., which we consider an important step in our ongoing efforts to streamline our structure and provide more autonomy to our business units, as well as being in line with the goal of promoting sustainable growth for Avon," the CEO added.
Natura also completed another issuance of debentures linked to sustainability goals during the quarter, the first Brazilian bond linked to bioactives from the Amazon. By issuing the BRL 1.3 billion green bonds, the Company committed to achieving the target of incorporating 49 Amazon bioactives in its catalog by 2027-it currently has 44 ingredients. The funding included an important allocation from the International Finance Corporation (IFC) and IDB Invest, and helped extend the Company's debt maturities by prepaying debt of the same amount that would have matured in 2025 and 2027, while this new issuance matures in 2029.
The full earnings release and financial statements can be accessed at https://ri.naturaeco.com/.
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 19,000 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.
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