Natura & CO (NTCO3), whose action accumulates falling over 20% in the year, held a meeting with analysts to clarify investors’ main concerns after the dissemination of 4T24 results and present a general business update, amid a period of volatility and corporate restructuring. The meeting was led by Natura’s CEO and CFO in Latin America, who will soon assume the same positions in the group. At 2:30 pm, the company’s role was 2.33%, quoted at R $ 10.12.
According to XP reportthe administration emphasized that the gross margin of the fourth quarter was impacted by the product mix, promotional initiatives and challenges in Argentina. Specifically, they noted that the introduction of an import tax of 17% by 2024 (compared to 7% in 2023) further affected Argentina’s profitability in the quarter, as NTCO also had to account for the third trimester tax deferral (the last, part of the non-recurring impact of 50-base points).
Looking forward, this import tax will cease to exist in 2025, helping in the evolution of the quarter margin to the quarter.
On the other hand, the administration reinforced its confidence to expand both the gross margin and the EBITDA margin (EBITDA = profit before interest, taxes, depreciation and amortization/net revenue) adjusted this year, mainly supported by wave 2 gains, and highlighting that general and administrative sales expenses should be more evenly distributed over the quarters.
When asked about the level of transformation costs, management stressed that Natura’s transformation costs in Latin America in 2025 will be lower than 2024, even considering Capex/Opex reevaluation, while strongly noticing that 2026 should be a free year of this line.
For reference, the transformation costs in Latin America were R $ 487 million in 2024, and the forecast for 2025 is R $ 400 million. In addition, the company intends to stop adjusting the results for these costs by 2026, managing the operation in full.
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With the Natura brand consistently gaining market share in Latin America, management is working to recover Avon’s revenue growth in the region.
The complete internalization of the R&D (Research & Development) and Marketing team in Latin America should help reposition the brand, although they have recognized that there is still a long way ahead. XP predicts that Avon revenue will fall from 3 to 10% in Brazil and Hispanic Latin America in 2025, respectively.
Regarding the International Avon (API), executives noted that it is too early to evaluate the level of recurring holding and taxing holding expenses, while the company remains focused on Avon Internacional resolution.
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Goldman Sachs, in turn, points out that the transformation costs in Latin America will be lower in 2025 and will no longer be accounted for by 2026.
The management stated that WAVE 2 cash disbursements are aligned with the business plan, although the allocation between Capex and Opex has suffered some adjustments. By 2025, transformation costs should be lower than in 2024, without adjustments by Capex migration to Opex.
Administration mentioned that investments on the Omnichannel platform, especially those aimed at modernizing channels and brands, were concentrated on 4T24. Although expenses are more distributed throughout 2025, they were not punctual, as the company will continue to invest in innovation and differentiation.
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The management stressed that, after the proposed reorganization, the only expenses that will remain in the holding company will be related to the Board of Directors, Investor Relations and Strategic Elements of Turnaround.
For context, the 3T24 holding expenses were R $ 44 million, compared to R $ 241 million in 2024 (an average of R $ 60 million per quarter).
Despite the positive tone regarding operational improvements and trends, JPMorgan points out that the company has provided limited quantitative data, making it difficult to immediately realign the short -term expectations of investors.
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JPMorgan also points out that Natura is improving its communication strategy to increase the visibility of financial results. Administration has reinforced the importance of clearer disclosures to align investor expectations with the company’s strategic objectives, ensuring a better understanding of their financial health and future perspectives.
Goldman Sachs and JPMorgan reiterated a neutral recommendation, with a target price of, respectively, R $ 12 and R $ 11. XP Investimentos, in turn, maintained purchase recommendation for Natura.
