Natura & Co profits drop with declines at Avon International

Brazilian beauty company Natura & Co has reported a 17.4% decrease in net revenue to £1 billion (BRL 6.6 billion) for the fourth quarter, impacted by declines at Avon International.

Avon International, which covers all markets excluding Latin America, saw revenues decrease 17% to £267 million (BRL 1.7 billion), with declines across its beauty, home and style categories.

Overall, Natura & Co revealed a net loss of £2.1 billion (BRL 2.7 billion), compared to a net loss of £696 million (BRL 890 million) in 2022, as it continued to "deleverage and simplify its corporate structure".

The group has been shedding global assets over the past year, including the sale of Aesop and The Body Shop, as it turns its focus to Latin America, with its Avon and Natura brands.

Last month, the group said it was assessing the possible separation of Avon International into an independent publicly traded company as it attempts to unlock further shareholder value.

The announcement was "consistent" with the group's strategy of simplifying its corporate structure, following its divestments of both Aesop and The Body Shop last year.

Fábio Barbosa, CEO of Natura & Co, said: "2023 was a landmark year for Natura &Co, with important and significant advances on the (i) strategy, (ii) operational and financial, and (iii) balance sheet fronts accomplished.

"On our corporate strategy, we continued to pursue a leaner holding structure enabling the business units to operate with more autonomy. We also had important advances on the company’s simplification side, as a result of the Aesop and The Body Shop divestments.

"On the operational and financial side, we prioritised profitability and cash conversion in lieu of revenue growth.

"Lastly, our balance sheet was strengthened as we used the proceeds from the sale of Aesop to retire more than BRL 7.6 billion in debt, ending the year with a strong net cash position of BRL 1.7 billion.

"We also announced in February of 20244 the study of a potential separation of Natura & Co and Avon. We continue to assess the merits of such a potential transaction, and will provide updates when the studies are finalised.

"2023 marked a pivotal chapter in the company's history, setting the stage for the ambitious horizons we aim to reach in 2024 onwards.

"We are encouraged with the positive results from the strategy set approximately 18 months ago, but we must continue evolving in our strategy, as margins and cash remain as priorities in the short term, paving the way for additional investments in brands and technology. During 2024, resource allocation will continue to be a critical driver for future value creation, with a focus on investments in key growth markets and projects."