Cosmetics group Natura’s shares rise at higher margin
SAO PAULO: Shares in Brazilian cosmetics maker Natura and Co rose more than 6% as positive margin trends and the announcement of dividends offset the fact that its quarterly loss more than tripled from a year earlier.

Natura posted a net loss for the fourth quarter of 2.7 billion reais (US$542.27mil), logging a hit of one billion reais from a discontinued business that it sold recently, and a 664 million-real impairment related to Avon.

The firm, however, said its stronger capital structure meant it would dole out 979 million reais in dividends.

Sao Paulo-listed shares in Natura closed up 6.6% to 18.48 reais each, their highest closing price since April 2022.

“Results continued to show a good and consistent trajectory to deliver the expected turnaround results, bringing the solid free cash flow and cash back to shareholders,” analysts at JPMorgan wrote in a note.

Natura has been shedding global assets, including the sale of the Aesop and The Body Shop brands, as it turned its focus to Latin America, where it has been integrating Avon and its namesake brand.

The firm’s core earnings, or adjusted earnings before interest, taxes, depreciation and amortisation stood at 671 million reais, up 31% from the same quarter in the previous year but below analysts’ estimate of 722.9 million reais.

The cosmetic group’s net revenue fell 17.4% to 6.61 billion reais in the quarter, and management said it was prioritising profitability rather than revenue growth.

Goldman Sachs analysts wrote the results “brought some encouraging trends with robust high-single-digit growth of the Natura brand in Brazil, as well as overall margin gains from portfolio optimisation, positive mix effects, price increases, and general and admin expenses control.”

Natura director for Latin America Joao Paulo Ferreira said in an earnings call he saw room for a further expansion of gross margin in the region, which rose 3.8 percentage points in the quarter year-on-year.

Chief executive officer Fabio Barbosa also told journalists that Natura was not considering selling the Avon brand outside of Latin America, known as Avon International, after media reports last year that a divestment was on the table. — Reuters
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Shares in Brazilian cosmetics maker Natura and Co rose more than 6% as positive margin trends and the announcement of dividends offset the fact that its quarterly loss more than tripled from a year earlier.