Natura &Co Reports R$ 6 Billion in Q3 Revenue, Up 18.5%; EBITDA Grows Over 50%

Rhea-AI Summary

Natura &Co reported strong Q3 2024 financial results with total revenue reaching R$ 6.0 billion, an 18.5% increase in constant currency. The growth was primarily driven by Natura Brazil (+19.4%) and Avon CFT (+14.4%). The company's Recurring EBITDA reached R$ 870 million, up 52% with a 14.6% margin.

Following Avon Products Inc.'s Chapter 11 filing, Natura &Co recorded a non-recurring, non-operating loss of R$ 7.0 billion due to deconsolidation, though this had no cash impact. The company ended Q3 with a net debt/recurring EBITDA ratio of 1.5x and R$ 3.5 billion in cash.

Positive

• Revenue increased 18.5% to R$ 6.0 billion in Q3 2024
• Recurring EBITDA grew 52% to R$ 870 million with 14.6% margin
• Gross margin improved by 340 basis points in Latin America
• Corporate expenses reduced by 43%
• Strong cash position of R$ 3.5 billion with healthy debt ratio of 1.5x

Negative

• R$ 7.0 billion non-recurring loss from Avon Products Inc. deconsolidation
• Weak performance of Avon in Hispanic markets offsetting regional growth

Strong performance driven primarily by Natura in Brazil. Avon Products Inc.'s (API) deconsolidation due to Chapter 11 process resulted in a non-recurring, non-operating loss of approximately R$ 7.0 billion, with no cash impact

SAO PAULO, Nov. 7, 2024 /PRNewswire/ -- Natura &Co (B3:NTCO3) today announced its financial results for Q3 2024, reporting solid revenue growth and robust profitability expansion. The company's total revenue reached R$ 6.0 billion, a 18.5% increase over Q3 2023 in constant currency (CC) (+11.3% excluding Argentina) and a 17.4% increase in Brazilian reais.

This strong performance was driven mainly by Natura Brazil (+19.4%) and the recovery of Avon CFT (+14.4%), which rebounded from weak performance in the same period last year. In the Hispanic markets, Natura also showed accelerated growth (almost double-digit increase year-over-year, excluding Argentina), although this was partly offset by Avon's performance in the region.

As a result, Natura &Co reported a solid 340 basis point (bps) improvement in gross margin in Latin America compared to Q3 2023, driven by operational leverage, a better country mix, and higher exposure to the Natura brand. These gains, along with efficiencies in general and administrative expenses, logistics, and credit and collections, were reinvested into marketing and other strategic initiatives, further boosting sales. This performance, added to a 43% reduction in corporate expenses, positively impacted Recurring EBITDA, which reached R$ 870 million, up 52% with a 14.6% margin, representing a 340 bps year-over-year expansion and marking another quarter of profitability growth.

"These third-quarter results demonstrate that the integration of Natura and Avon in Latin America, the Wave 2, is progressing well, and confirm that the reinvestments in marketing and technology since the beginning of the project are already improving sales performance," said Fábio Barbosa, CEO of Natura &Co. "The integration of the brands in Mexico and Argentina in 2025 will also be crucial for advancing our margin recovery agenda. Wave 2 has already been implemented in much of the region, and we expect it to be completed by the end of next year."

This quarter, following Avon Products Inc.'s Chapter 11 filing, Natura &Co deconsolidated the financial results of API and its subsidiaries. As a result of this deconsolidation, Natura &Co recognized a non-recurring, non-operating loss of approximately R$ 7.0 billion, consistent with the accounting write-off of its investments in API and impairment of receivables from the company and its subsidiaries. This loss had no cash impact.

In July, Natura Cosméticos issued its 13th debenture of R$ 1.3 billion, maturing in July 2029. This was the company's first Sustainability-Linked Bond in Brazil, which includes performance indicators related to the development of Amazonian bioingredients. It also replaced previous emissions that were repurchased, extending the company's debt maturity profile. Natura &Co ended the quarter with a net debt/recurring EBITDA ratio of 1.5x and R$ 3.5 billion in cash.

"Our triple bottom line fundamentals have also evolved, and as we celebrate a decade as a B Corp, we stood out in the Community pillar in our most recent recertification, thanks to the R$ 43 million invested in 2023 to support agro-extractive communities in the Amazon," added the CEO. "We also made progress on our Climate Transition Plan, with the addition of 20 new biogas-powered trucks, which now account for 35% of our heavy freight, resulting in an 82% reduction in emissions. These actions demonstrate our continued commitment to developing a regenerative economy.".

The full earnings report and financial statements can be accessed at Natura &Co Investor Relations.

About Natura &Co

Natura &Co is a global, purpose-driven group that unites the brands Natura and Avon. We connect with over 200 million customers worldwide, engaging them through 7 million dedicated Consultants and Representatives, 900 stores and franchises, and over 19,000 employees.

We believe in creating a truly positive economic, social, and environmental impact. We believe the world doesn't need another large corporation.

The world needs symbols of change that can open new paths and inspire others to follow. We believe in the power of cooperation, co-creation, and collaboration for a better way to live and do business.

We are Natura &Co.

FAQ

What was Natura &Co's revenue growth in Q3 2024?

Natura &Co reported revenue of R$ 6.0 billion in Q3 2024, representing an 18.5% increase in constant currency compared to Q3 2023.

How much was the loss from Avon Products Inc.'s deconsolidation?

Natura &Co recognized a non-recurring, non-operating loss of approximately R$ 7.0 billion due to Avon Products Inc.'s Chapter 11 filing and subsequent deconsolidation.

What was Natura &Co's EBITDA performance in Q3 2024?

Recurring EBITDA reached R$ 870 million, up 52% with a 14.6% margin, representing a 340 basis points year-over-year expansion.

What is Natura &Co's current debt ratio?

Natura &Co ended the quarter with a net debt/recurring EBITDA ratio of 1.5x and R$ 3.5 billion in cash.