Natura & Co Latam Achieves Impressive 15% Profitability in Q1-2025
In the first quarter of 2025, Natura & Co Latam reported a notable resurgence, with a recurring EBITDA margin reaching 15%. This marks an impressive increase from 9.6% reported last quarter and reflects a growth of 50 basis points year-on-year. The company's robust financial performance stemmed largely from a 12.2% increase in net revenue, amounting to R$5.3 billion in constant currency compared to Q1-2024. This growth was underscored by significant contributions from the Natura brand, particularly in Brazil and other Latin American countries where the Avon and Natura brands have been integrated.
Gross margin has also witnessed an upswing, reaching 67.1% over the quarter. This was aided by operational efficiencies stemming from the integration of the Natura and Avon businesses, termed Wave 2, which has shown promising results in countries that underwent this integration. Enhanced management of general and administrative costs has further supported this profitability increase.
The momentum from the Natura brand has been particularly robust, with a recorded increase in revenue of 8.2% within Brazil and an impressive 38.4% across Hispanic regions (recording mid-teens growth when excluding Argentina). Brazil's strong retail growth can be attributed to significant increases in same-store sales and a continuous rise in new store openings—149 owned stores and 869 franchises—marking a rise of 34 and 88 respectively since the previous year. Digital channels have also surged, with online sales seeing a year-on-year increase of 34.7%. The growing share of voice on social media platforms has buoyed the brand's market position in the beauty sector.
Natura's CEO, João Paulo Ferreira, stated, "This quarter's performance underlines our aim to achieve sustained year-on-year growth in the recurring EBITDA margin by the close of 2025. Our strategy includes reinvesting efficiencies from Wave 2 back into our marketing initiatives while managing volatility to ensure a more consistent performance across quarters. The concluding phases of Wave 2 in countries like Mexico and Argentina are anticipated to complete in 2025, helping us stabilize our transformation cost cycles."
On the sustainability front, an important highlight was the recent achievement of Natura's Celaya plant in Mexico, marking it as the first facility powered entirely by certified solar energy in Latin America. This advancement is part of Natura's broader decarbonization strategy, which successfully reduced carbon emissions by approximately 1,000 tons. Annual emission reductions are projected to be around 83%, emphasizing the alignment between operational efficiency and environmental objectives.
The commitment to ESG (Environmental, Social, and Governance) initiatives remains paramount for Natura, a belief reiterated by the CEO who remarked on its role in bolstering the firm's competitive edge as well as aligning with their corporate social responsibility goals. In recognition of these ongoing efforts, Natura was recently named one of the World's Most Ethical Companies by the Ethisphere Institute for the 14th time, along with securing the title of 'Corporate Sustainability Bond of the Year' from Environmental Finance, showcasing its leadership in sustainable finance practices.
Moreover, the company's net loss in Q1-2025 dwindled by a remarkable 84% compared to Q1-2024, coming in at R$151 million, a stark contrast to R$935 million from the previous year. This improvement reflects the substantial strides taken through their ongoing simplification journey initiated three years ago. Following a recent shareholder approval, Natura Co Holding's incorporation by Natura Cosméticos signifies an important step in cementing the company’s strategic focus on Latin American operations.
For detailed financial insights, the complete report and financial statements can be accessed via the Natura website. Looking ahead, the upcoming Q1-2025 Earnings Conference Call is scheduled for May 12, 2025, at 8:00 AM New York time, where further discussions surrounding the company's performance will be held.
Gross margin has also witnessed an upswing, reaching 67.1% over the quarter. This was aided by operational efficiencies stemming from the integration of the Natura and Avon businesses, termed Wave 2, which has shown promising results in countries that underwent this integration. Enhanced management of general and administrative costs has further supported this profitability increase.
The momentum from the Natura brand has been particularly robust, with a recorded increase in revenue of 8.2% within Brazil and an impressive 38.4% across Hispanic regions (recording mid-teens growth when excluding Argentina). Brazil's strong retail growth can be attributed to significant increases in same-store sales and a continuous rise in new store openings—149 owned stores and 869 franchises—marking a rise of 34 and 88 respectively since the previous year. Digital channels have also surged, with online sales seeing a year-on-year increase of 34.7%. The growing share of voice on social media platforms has buoyed the brand's market position in the beauty sector.
Natura's CEO, João Paulo Ferreira, stated, "This quarter's performance underlines our aim to achieve sustained year-on-year growth in the recurring EBITDA margin by the close of 2025. Our strategy includes reinvesting efficiencies from Wave 2 back into our marketing initiatives while managing volatility to ensure a more consistent performance across quarters. The concluding phases of Wave 2 in countries like Mexico and Argentina are anticipated to complete in 2025, helping us stabilize our transformation cost cycles."
On the sustainability front, an important highlight was the recent achievement of Natura's Celaya plant in Mexico, marking it as the first facility powered entirely by certified solar energy in Latin America. This advancement is part of Natura's broader decarbonization strategy, which successfully reduced carbon emissions by approximately 1,000 tons. Annual emission reductions are projected to be around 83%, emphasizing the alignment between operational efficiency and environmental objectives.
The commitment to ESG (Environmental, Social, and Governance) initiatives remains paramount for Natura, a belief reiterated by the CEO who remarked on its role in bolstering the firm's competitive edge as well as aligning with their corporate social responsibility goals. In recognition of these ongoing efforts, Natura was recently named one of the World's Most Ethical Companies by the Ethisphere Institute for the 14th time, along with securing the title of 'Corporate Sustainability Bond of the Year' from Environmental Finance, showcasing its leadership in sustainable finance practices.
Moreover, the company's net loss in Q1-2025 dwindled by a remarkable 84% compared to Q1-2024, coming in at R$151 million, a stark contrast to R$935 million from the previous year. This improvement reflects the substantial strides taken through their ongoing simplification journey initiated three years ago. Following a recent shareholder approval, Natura Co Holding's incorporation by Natura Cosméticos signifies an important step in cementing the company’s strategic focus on Latin American operations.
For detailed financial insights, the complete report and financial statements can be accessed via the Natura website. Looking ahead, the upcoming Q1-2025 Earnings Conference Call is scheduled for May 12, 2025, at 8:00 AM New York time, where further discussions surrounding the company's performance will be held.
Topics Consumer Products & Retail）
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