Natura &Co's sales stabilized in Q2 and profitability is impacted by cost pressure - Seite 2

Though we expect our businesses' revenues to trend better in the second half of the year, we believe the challenges in the macro environment will persist and our margins will remain pressured in the short term. In this context, our clear and immediate priority is to focus on margins and operational cash-flow, and the teams at all our brands and businesses are mobilized and incentivized on those clear goals."

Performance by business unit:

Natura &Co Latam's net revenue was up 5.6% at CC (+0.4% in BRL) in Q2.  The Natura brand posted strong 14.8% growth in Latin America at constant currency (+12.2% in BRL) in the quarter. In Brazil net revenue grew by +14.3% in Q2-22, supported by an acceleration in consultant productivity, up by +17.5% in Q2. In Hispanic Latam, net revenue was up +15.5% (+8.8% in BRL.) Growth was mainly driven by Argentina and Colombia, offsetting a decrease in Chile. The Natura brand was again ranked the strongest cosmetics brand in the world in Brand Finance's brand strength index. The Avon brand's revenue was down -5.0% in CC (-12.8% in BRL). In Brazil, net revenue improved sequentially since Q3-21 but still decreased by -10.7% in Q2-22. This was mainly due to a drop of -31% in Fashion and Home sales, while Beauty sales increased nearly +5% in the quarter. In Hispanic markets, net revenue was down -2.8% at CC (-13.9% in BRL), also due to lower Fashion and Home sales and reflecting a very strong comparable base in Q2-21 (+68.0% vs Q2-20 at CC). The new commercial model is showing significant progress in Ecuador and Colombia, with sales growth and a sequential improvement in the number of representatives, activity and productivity. Adjusted EBITDA margin for Natura &Co Latam was 10.8%, stable vs last year, supported by synergies, revenue management and strict financial discipline.

Avon International's net revenue decreased 11.4% at CC (-25.4% in BRL) in Q2. Performance was mainly impacted by the war in Ukraine (excluding Russia and Ukraine, sales were down -5.8% at CC), low consumer confidence and eroding household purchasing power in Europe as well as fewer representatives in Europe. Avon's business fundamentals continued to improve as the new commercial model, now implemented in 16 markets, resulted in higher productivity and activity as well as a stabilizing number of representatives outside Europe. Adjusted EBITDA margin stood at 3.3%, -100 bps vs Q2-21, due to substantially higher cost pressure, the impact of the war in Ukraine and lower volumes, mainly in European markets These were partially offset by an effective revenue management strategy across markets and cost reduction resulting from strict financial discipline and a leaner operating model.