Natura Cosméticos (NATU3) Q4 2024 earnings summary

Executive summary

• Completed Wave 2 integration of Natura and Avon in Brazil, with ongoing implementation in Mexico and Argentina, driving revenue, profitability, and cash generation gains.

• Sold Aesop and The Body Shop, advancing group simplification and de-leveraging since July 2022.

• Consolidated net revenue reached BRL 24.1 billion in 2024, up 12.4% year-over-year in constant currency.

• Avon International remains under strategic review, with alternatives including sale or joint venture being considered.

• Voluntary Chapter 11 process for Avon Products Inc. in the U.S. completed, with ongoing streamlining of the holding structure.

Financial highlights

• Q4-24 consolidated net revenue was BRL 7.7 billion, up 16.1% year-over-year in constant currency, led by Natura Brazil (+21.1%) and Hispanic Latam (+33.5%).

• Recurring EBITDA for Q4-24 was BRL 703 million (9.1% margin), down 70 bps year-on-year, mainly due to IT investments and higher marketing spend.

• FY24 recurring EBITDA was BRL 2.9 billion (12.2% margin), with adjusted net income improving by BRL 236 million year-over-year.

• Net debt at year-end was BRL 2.4 billion, with net debt to EBITDA at 1.27x; adjusted for non-operational effects, 0.86x.

• Free cash flow from continuing operations at BRL -126 million in FY24, but underlying cash flow improved to BRL 931 million.

Outlook and guidance

• Wave 2 integration to be completed in Mexico and Argentina by end of 2025, with further efficiency and margin gains expected.

• Ongoing focus on expense control, margin expansion, and cash generation, especially in Latin America.

• Transformation and integration costs to remain high in 2025 as programs ramp up in new countries.

• Strategic review of Avon International continues, with focus on accelerated restructuring and cash outflow minimization.

• Macroeconomic uncertainty in Brazil and potential beauty market slowdown pose risks to top-line growth.