Natura &Co posts strong net income and margin improvement in Q4; sales grow in the full year, with net income reaching R$1 billion

Rhea-AI Summary

Natura & Co reported a significant turnaround in financial performance for Q4 2021, with a net income of R$695.4 million, up 292% from R$177.4 million the previous year. The full year net income reached R$1 billion, reversing a loss of R$650.2 million. Consolidated net revenue for Q4 was R$11.6 billion, a slight decline of 3% year-over-year. Digital sales now comprise 52% of total revenue, demonstrating a strong shift towards e-commerce. The company ended the year with a robust cash position of R$6 billion.

Positive

• Net income for Q4 increased to R$695.4 million, up 292% from the previous year.
• Full year net income reached R$1 billion, reversing a previous loss of R$650.2 million.
• Digital sales accounted for 52% of total revenue, marking a significant shift towards online sales.
• EBITDA margin improved by 90 basis points to 13.3% in Q4.
• The company ended the year with a strong cash position of R$6 billion.

Negative

• Consolidated net revenue for Q4 decreased by 3% compared to last year.
• Adjusted EBITDA margin for the full year decreased by 110 basis points to 10.3%.
• Sales in Brazil decreased by 6.4% in Q4, indicating challenges in the CFT market.

Digitally-enabled sales reach 52% of total; Avon synergies ahead of plan

Natura & Co and brands make donations of R$3 million to help victims of war in Ukraine

SÃO PAULO, March 9, 2022 /PRNewswire/ -- Natura &Co's (NYSE – NTCO; B3 – NTCO3) net income in the fourth quarter more than tripled and it reached R$1 billion in the full year despite short-term cost pressure, reversing a loss in the previous year. The Group's strong focus on cost discipline allowed it to post an EBITDA margin gain of 90 basis points in the fourth quarter of 2021 despite a slight sales decline in the period.

In this challenging operating environment, Natura &Co continued in the quarter to make major advances on key strategic initiatives that will fuel future growth. A key highlight is the progress made on Avon's turnaround, with the implementation of the new commercial model in several key markets, both in Latin America and at Avon International, with positive initial signs, and an acceleration in digital tools. Planned synergies are ahead of plan, with close to 50% of the overall target already achieved at year-end, helping Natura &Co offset raw material inflation and foreign currency headwinds.

In the face of the Ukraine and Russia conflict, Natura &Co has already made significant donations to relief organizations acting on the ground in Ukraine, mainly the Red Cross, and is also donating products to refugees. Both markets are important for Avon, but represent less than 5% of total revenue for the Group. While we are suspending operations in Russia for The Body Shop and Aesop via our Head Franchises, Avon is also suspending exports while continuing to support the social selling operations of its representatives via its local plant to provide them with financial support. The Group will continue to assess the very fluid and dramatic situation in the region.

Roberto Marques, Executive Chairman and Group CEO, declared: "At a time when conflict is again impacting millions of people, our thoughts are with our teams in Ukraine and Russia, and with all those who find themselves in harm's way.

The geopolitical situation adds new challenges to our businesses, beyond headwinds in supply chain, rising inflation, new pandemic restrictions and weak consumption in Brazil that has a strong effect on the CFT market. However, our focus on costs and continued transformational changes allowed us to significantly expand our EBITDA margin and net income in the fourth quarter of 2021. In the full year, we posted net sales growth and net income above R$ 1 billion, and ended the year with a strong cash position of R$6 billion.

This performance reflects the remarkable mobilization of our teams to focus on profitability, but also the strength of our omnichannel model and the depth of the reinvention of the social-selling model through digitally-enabled sales. At Natura &Co Latam, the Natura brand outperformed the CFT market, with strong growth in Hispanic markets in the fourth quarter that helped offset a tough environment in Brazil. Avon International delivered strong gains in EBITDA margin in Q4 as it accelerates the streamlining of its operating model and benefitted from year-end seasonality. The Body Shop demonstrated its ability to adapt through an enhanced multi-channel offer and the brand's growing appeal. And Aesop continues to post double-digit growth year-after-year, outperforming global luxury brands.

As we expect to face continuing challenges especially in the first half of 2022, we are focused on delivering our priorities, implementing even stronger financial discipline to drive sustainable profitable growth this year and beyond."

In the fourth quarter, Natura &Co's consolidated net revenue was R$11.6 billion, down 3.0% vs the same period last year in Brazilian Reais (-5.3% at constant currency). Adjusted EBITDA margin stood at 13.3%, a gain of 90 basis points, reflecting financial discipline, structural changes primarily at Avon International and the faster-than-expected achievement of synergies, despite strong cost pressure. Net income reached R$695.4 million, an increase of 292.0% over the previous year's R$177.4 million.  

In the full year, consolidated net revenue reached R$40.1 billion, up 8.8% in BRL and 3.8% at constant currency, driven by growth in Hispanic markets and at Avon. Digitally-enabled sales, which include online sales (e-commerce + social selling) and relationship selling using our main digital apps, reached 52% of total revenue. Adjusted EBITDA margin was down 110 basis points year-on-year to 10.3%. Net income was R$1 billion, reversing a net loss in the previous year of 650.2 million. The group ended the year with a strong cash position of R$6 billion, and the group has executed about 27% of its share repurchase plan through the end of February 2022.

Performance by business unit:

Natura &Co Latam's net revenue decreased by 2.8% in BRL in Q4 but was up 9.1% in the full year. In the quarter, Hispanic markets accounted for more than half of net revenue for the first time, at 52%. The Natura brand posted 3.5% growth in the quarter and 10.5% in the year. In Q4, sales in Hispanic markets were up 22.4%, offsetting a 6.4% decrease in Brazil, which still outperformed a difficult CFT market in the country.  The Avon brand's revenue was down 12.3% in BRL in Q4 but grew by 6.6% in the year, with solid growth in Hispanic markets in the full year. Natura online sales reached 7.9% in Q4, up from 4.3% pre-pandemic, and our own payment solution, &Co Pay, already counted 340,000 accounts, with Total Payment Volume of R$6.5 billion in the full year, far ahead of the annualized estimate of R$4 billion. Adjusted EBITDA margin for Natura &Co Latam was 12.1% (-10 basis points) in Q4 and 11.2% (-70 basis points) in the full year.

Avon International's net revenue decreased 5.6% in BRL in Q4 but was up 2.5% in the full year.  Overall representative satisfaction showed positive momentum compared to the previous year on the back of record service level rates and the implementation of the new commercial model across Avon International's top 9 markets. Social selling adoption reached 15%, three times above pre-pandemic levels. The share of online sales, at 4.2% of the total, is also triple that prior to the pandemic. Adjusted EBITDA margin was 10.7% (+660 bps) in Q4 and 6.0% (+80 bps) in the full year.

The Body Shop's net revenue was down 8.8% in BRL in Q4 but was up 9.2% in the full year. The Q4 performance was impacted by the Omicron wave in the holiday season, notably in the UK. The Body Shop had a strong Christmas campaign, with 12% growth over the previous year.  Online and At-Home channels are still 1.5 times above pre-pandemic levels despite channel rebalancing with the reopening of stores. EBITDA margin was 22.2% (-150 bps) in Q4 and 17.6% (-260 bps) in the full year.

Aesop posted another excellent quarter, with net revenue increasing 22.8% in BRL in Q4 and 33.4% in the full year. Aesop continues to show strong momentum, posting revenue growth, notably in Asia and North America. The share of online remains 1.5 times above pre pandemic levels at 24%. EBITDA margin was 26.7% (-1,040 bps) in Q4 and 24.0% (-710bps) in the full year, reflecting planned higher investments in digital, categories and geographic expansion to accelerate growth.

About Natura &Co

Natura &Co is global purpose-driven group made up of four iconic beauty companies, Avon, Natura, The Body Shop and Aesop. Operating in more than 100 countries, with over 2,900 stores, 35,000 employees and over 7.6 million representatives and consultants, we believe in challenging the status quo in order to promote positive economic, social and environmental impact. Natura &Co posted net revenues of R$40.2 billion in 2021. We believe in the power of cooperation, co-creation and collaboration. We are proud to be the world's largest B Corp. For 135 years Avon has stood for women: providing innovative, quality beauty products which are primarily sold to women, through women. Founded in 1969, Natura is a Brazilian multinational in the cosmetics and personal care segment, leader in direct sales. Founded in 1976 in Brighton, England, by Anita Roddick, The Body Shop is a global beauty brand that seeks to make a positive difference in the world. The Australian beauty brand Aesop was established in 1987 with a quest to create a range of superlative products for skin, hair and the body.

Press Contact
Brunswick Group
+ 55 11 3076-7620
natura&co@brunswickgroup.com

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SOURCE Natura &Co

FAQ

What were Natura & Co's net income results for Q4 2021 and the full year?

Natura & Co reported a net income of R$695.4 million for Q4 2021, a 292% increase compared to the previous year, and R$1 billion for the full year.

How much of Natura & Co's revenue came from digital sales?

Digital sales accounted for 52% of Natura & Co's total revenue.

What was the EBITDA margin for Natura & Co in Q4 2021?

The EBITDA margin for Natura & Co in Q4 2021 improved by 90 basis points to 13.3%.

What was the consolidated net revenue for Natura & Co in Q4 2021?

Natura & Co's consolidated net revenue for Q4 2021 was R$11.6 billion.

What cash position did Natura & Co have at the end of the year?

Natura & Co ended the year with a strong cash position of R$6 billion.