Natura Cosméticos (NATU3) Q2 2025 earnings summary

Executive summary

• Completed merger of Natura &Co into Natura Cosméticos, streamlining the holding structure and consolidating operations in Latam and corporate functions.

• Avon International and CARD reclassified as assets held for sale, impacting reported figures and with high likelihood of sale within 12 months.

• Integration of Avon and Natura in Latam (Wave Two) nearing completion, with Mexico integration done and Argentina live as of July.

• Strong Natura brand performance in Brazil, growing double digits and offsetting Avon's decline, with digital and retail channels outperforming consolidated growth.

• ESG progress recognized with an A score from the Carbon Disclosure Project and the launch of Vision 2050.

Financial highlights

• Q2 2025 net revenue was BRL 5.7 billion, up 5.5% year-on-year in constant currency, with consolidated recurring EBITDA at BRL 796 million and margin at 14.0%.

• Natura brand in Brazil grew 10.3% year-on-year, driven by consultant productivity, better mix, and price gains.

• Avon revenue declined 12.9% in Brazil and 13.6% in Hispanic region due to less innovation and integration impacts.

• Net income for continuing operations at BRL 445 million; underlying net income (excluding non-operating impacts) at BRL 564 million.

• Net debt increased to BRL 4.0 billion, with net debt/EBITDA ratio at 2.18x.

Outlook and guidance

• Wave Two integration expected to complete by year-end, with system simplifications and production transition ongoing.

• Management anticipates a more challenging macro environment in 2H-25, with a slowdown in Brazil, pressure in Mexico, and potential FX depreciation in Argentina.

• Expectation of more stable gross margins and benefits from Wave Two starting in Q3.

• New product launches for Avon expected to impact results in 2026; Natura pipeline remains robust.

• Commitment to annual expansion of recurring EBITDA margin remains.