Natura Cosméticos (NATU3) Q1 2026 earnings summary

Executive summary

• Q1 2026 was challenging, with net revenue at BRL 4.7 billion, down 7.7% year-over-year, and net loss of BRL 445 million, mainly due to margin pressure, restructuring costs, and macro headwinds in Brazil and Argentina.

• Performance was impacted by slower Natura-brand recovery in Brazil, continued Avon decline, and one-off restructuring costs, but early signs of improvement appeared in consultant activity and market share.

• The new operating model was fully implemented, with 75% of administrative headcount reduction executed, aiming for a leaner, more agile organization and expected G&A savings.

• Early results from Avon's relaunch and Natura's channel recovery are promising, with omni/digital channels growing 23.6%.

Financial highlights

• Net revenues were BRL 4,745 million, down 7.7% year-over-year; Brazil declined 5.5%, Natura -3.0%, Avon -13.8%, and Hispanic Latam down 10.5%.

• EBITDA margin was 7.3%, down 790 bps year-over-year, impacted by 470 bps of one-off expenses and 320 bps of operational pressure.

• Net loss reached BRL 445 million, up from a BRL 50 million loss in Q1 2025, driven by lower EBIT, higher financial expenses, and reorganization costs.

• Free cash flow to firm was negative BRL 315 million, mainly reflecting BRL 330 million in non-core cash outflows.

• Net debt increased to BRL 4.0 billion, up BRL 565 million sequentially, with leverage ratio at 2.12x.

Outlook and guidance

• Q2 is expected to remain a transition period, with gradual revenue recovery and significant cost savings from the new operating model starting to materialize.

• Restructuring expenses are expected to decline substantially from Q2, with efficiency benefits becoming more visible in H2 2026.

• SAP system replacement in June may cause operational disruption despite high technical readiness.

• Management remains confident in delivering FY-26 commitments, including EBITDA margin expansion and robust cash generation.