#Brazil #São Paulo #Avon #Natura

Natura's Robust Financial Performance in Q2-2025

In a significant announcement, Natura Co (B3: NATU3) revealed its net income for the second quarter of 2025, amounting to an impressive BRL 445 million in Latin America. This figure marked a clear indication of the brand's resilience within the market, especially in light of the complex economic environment. When accounting for Avon’s operations outside Latin America, which have been categorized as assets held for sale, the total net income fell to BRL 195 million.

The positive financial performance can be attributed to several key factors, primarily stemming from corporate restructuring and the ongoing integration of the Natura and Avon brands within the region, referred to as Wave 2. This integration is on track to be completed by the year's end, promising further improvements in profitability and market presence.

João Paulo Ferreira, Natura’s CEO, emphasized the company’s strong fundamentals during a press briefing, stating, "We advanced our simplification and restructuring strategy, further strengthening our business fundamentals and leadership in Latin America. Following a solid Q1-25, we delivered another quarter of healthy results."

The company reported a net revenue of BRL 5.7 billion for Q2-25, showing a growth of 5.5% in constant currency. Notably, the Brazilian market delivered a remarkable 10.3% increase in sales, while the Hispanic markets saw a notable 17.8% growth, albeit this growth was slightly muted when excluding Argentina.

However, it wasn’t all positive news, as Avon's performance in Brazil showed a decline of 12.9%. The ongoing integration process in Mexico, recently completed in May, and preparations for Wave 2 in Argentina, which occurred in July, contributed to these challenges.

Natura’s recurring EBITDA margin in Latin America reached 14.7%, an increase of 10 basis points compared to Q2-24, bolstered by improved gross margins, which saw an 80 basis points upturn. This enhancement was primarily a result of operational efficiencies in markets where the integration with Avon has matured. However, the EBITDA margin experienced a temporary dip of 100 basis points since Q1-25, mainly due to the implementation of Wave 2 in Mexico and Argentina.

One of the noteworthy aspects of Natura's Q2 results was the cash generation from Latin American operations, totaling BRL 408 million during the first half of the year, demonstrating impressive fiscal management even amid the typical seasonal cash demand.

In further strategic moves, Natura announced that both Avon International and Avon operations in Central America are now classified as "assets held for sale." This classification is due to the high probability of negotiations concluding within the next 12 months as the company explores various strategic alternatives, including a possible spin-off or sale of assets outside Latin America.

On the social responsibility front, Natura made strides in enhancing its sustainability efforts, achieving an “A” rating for both Climate and Supplier Engagement from the CDP—a platform recognizing organizations for their commitment to transparency and actions against climate change. This recognition places Natura among the elite global companies addressing environmental challenges effectively.

With the introduction of Vision 2050, Natura has set ambitious goals aimed at becoming a fully regenerative business over the next 25 years, emphasizing its commitment to socio-environmental challenges.

Natura, established in 1969, has emerged as the leader in beauty and personal care across Latin America. Renowned for its ethical sourcing practices, the company partners with extractive communities in the Amazon, ensuring mutual benefits that extend beyond consumer products to contribute towards forest conservation.

As the company continues to leverage its strong market presence, robust financial performance, and commitment to sustainability, all eyes will be on Natura’s journey towards achieving long-term profitability and operational excellence in 2025 and beyond.