Natura Cosméticos (NATU3) Investor Day 2025 summary

Strategic direction and business model

• Refocused on core strengths in Latin America, prioritizing the Natura brand and leveraging Avon as a gateway to new households and consultants, especially in underpenetrated markets like Mexico and Argentina.

• Simplified, more agile, and digitally enabled business model, integrating direct sales with contemporary retail and digital channels, and emphasizing omnichannel strategy.

• Integration of Natura and Avon brands in Latin America, with unified management and regional innovation centers.

• Human capital revitalized, focusing on accountability, curiosity, and integrated results, with clear performance incentives and a strong engagement culture.

• Social and environmental impact integrated into the business model, aiming to be the first regenerative company, monetizing environmental and social capital alongside financial returns.

Financial performance and guidance

• Achieved significant gross margin improvements post-integration, with 570 basis points gained from 2022 to 2024, especially for Avon, and further synergies expected from Mexico and Argentina.

• SG&A efficiencies realized through sales force optimization, logistics consolidation, and system harmonization, with a 160 bps reduction and further cost reductions anticipated.

• Cash flow conversion improved to 57% of EBITDA in 2024, driven by working capital efficiencies and inventory optimization, with operating working capital at 11% of revenue.

• Healthy leverage maintained (net debt/EBITDA at 1.27x), with a strong amortization timeline and 60% of debt linked to green indicators, targeting 100% alignment with sustainability goals.

• Commitment to return to pre-acquisition CapEx and OpEx levels, sustaining margin expansion and resuming high dividend and yield distributions as transformation costs subside.

Growth levers and market opportunities

• Market share gains in Brazil and Latin America, with Natura holding 14.1% in Brazil and 8.9% in Latin America, and strong room for growth in Mexico and Hispanic markets.

• Direct sales remain a core channel, now more digital and productive, complemented by rapid retail and e-commerce expansion, with omnichannel customers doubling their lifetime value.

• Major growth opportunity in Hispana through increased household penetration of Natura, aiming to replicate Brazil’s 54% penetration (currently 16% in Hispana), leveraging standardized processes and digital tools.

• Avon repositioning underway, focusing on emotional heritage, portfolio simplification, and targeted investments to restore relevance and profitability, with a new operational model rolling out through 2027.

• Emana Pay, the embedded FinTech, drives consultant productivity, financial inclusion, and new revenue streams, with over BRL 60 billion in TPV, 45% consultant adoption in Brazil, and breakeven in 2.5 years.