Strong growth by Natura Latam and improving fundamentals at Avon International; solid improvement of 430 bps in gross margin in the quarter
SÃO PAULO, Aug. 14, 2023 /PRNewswire/ — Natura &Co (NYSE – NTCO; B3 – NTCO3) posted another quarter of sales growth in constant currency in the second quarter of 2023, while also continuing to improve its profit margins.
Natura &Co posted Q2 consolidated net revenue of R$ 7.8 billion, up 1.9% at constant currency (-4.1% in BRL), driven by solid constant currency (CC) growth at Natura &Co Latam. Gross margin was 65.4%, up 430 bps vs Q2-22, and adjusted EBITDA margin was 9.7%, up 230 bps vs the same period last year, reflecting improving margins at all three business units, Natura &Co Latam, Avon International and The Body Shop, as well as a 5.7% drop in corporate expenses. Net income was R$ (732) million, slightly improving over last year’s R$ (767) million in the period, while Underlying Net Income was R$ (219) million, also improving from R$ (262) million in Q2-22. The Group ended the quarter with a solid cash position of R$ 3.7 billion.
Fabio Barbosa, Group CEO of Natura &Co, declared: “Natura & Co’s second-quarter performance continued to show the improvement already observed in Q1, with low-single digit top line growth at constant currency and a significant improvement in adjusted EBITDA margin. This was mainly driven by gross margin, benefiting from mix effects, partially offset by investments and inflation. Net income was still impacted by high financial expenses, which will be addressed upon closing of the sale of Aesop, expected to occur in Q3-23.
Cash conversion remains our main focus, and this quarter we saw further improvement in operating working capital dynamics, partially offsetting seasonal cash consumption in the quarter. We continue to drive our cash conversion improvement, mainly through working capital and net Capex optimization, among others, and we still see more opportunities to be captured on these…
