Natura &Co Holding (NTCOY) 16 Nov 212021 Q3 Earnings call transcript

Good morning, ladies and gentlemen. Thank you for waiting. At this time, we would like to welcome everyone to Natura &Co's Third Quarter 2021 Results. This event is being recorded and all participants will be in a listen-only mode during the company's presentation. After Natura's remarks are completed, there will be a question-and-answer session at that time further instructions will be given. may statements. presentation This Instructions] contain forward-looking [Operator Such reflect Natura the not statements &Co's facts and of historical beliefs statements are management. and expectations of

audited. are have This does company reference Forward-looking and light to by of speak only the or of for not includes in date statements purposes future adjusted information developments. prepared as update them and the also only, undertake not they company been new any presentation which obligation information the made, information

will conference Natura Behar, Ms. yours. the I Investor Relations Behar, is Viviane Now to Mrs. turn over floor Officer &Co. of the

us Roberto Good Natura by quarter Officer. &Co Castellan, call Relations will be outlook business Guilherme Ferreira, then morning of your afternoon today Thank financial this our overview Natura an and of will CEO &Co. for presentation team Executive The Latin on floor performance and earnings. to The and I will was is &Co make After Co; and financials announcements will America, other questions. nine I present for detail completely website, Relations we the yesterday. everyone. Relations joining available Roberto will discuss made CEO Behar, Marques, the for and to also Natura Jao the our Guilherme we concluding am open today and that, months &Co us we join during XXXX and Natura to Viviane is or &Co remarks, start good joined with Natura which for referring you with Natura Paulo recently Investor Roberto us. redesigned. of of this Q&A am Investor Investor third &Co. Natura &Co's &Co's session. CFO call to Chairman Natura will our

the each of one would limit you, two cooperation in this. questions and you questions the your for all to to For session. accommodate like or please Thanks yourselves Q&A us understanding order I to in from on for timing, ask sake of to

please. Let me Roberto, now Roberto. hand over to

Viviane, everyone. you, joining hello to us. you Thank and for all Thank

a in As main results saw this we we flagged during last in quarter. quarter, that. third our Two a reasons deceleration for contraction

First, against social the XX% the growth, incident as from when selling, we strong last also the effects posted we half comparable a that base impacted XXXX, we ever highest during benefiting faced excluding digital the to also were more of pivoted cyber especially channels, the of XXXX. other channels year, businesses second successfully

supply key income is our which externally adjusted for with with still inflation rising more and disruption. achieving X.X% of is X.X% million. markets, recovery R$XXX and reason net driven chain reflected some This down net revenue across this Second even margin in shows year, and pandemic EBITDA numbers QX

exceptional part, most number FX these effects capability. point adjusted margin the and integration However, excluding includes in basis chain of QX. the the Avon this as this both details and basis operating in greater explain a and of environment, XXXX Guil from This effect XX have years, points. increased in our EBITDA would by QX QX challenging year's would offset the pressure by were, supply a That's in XXX snapshot inflationary synergies management which impact revenue by disruption from by and effects, captured group's the already margin also for process last

this key to our continued that prior Latin constant and we brands is global currency outperformed growth. market to showed nine make will International. growth operations combines which XX% in both reached progress in transformational of at sales business in almost also track. QX major sales years versus and year-to-date the months of group detail reals, highlight same income showing in on ago, advances growth growth to Body time greater strategic happened, and period turnaround. that year if strong the almost million future Avon first are our pandemic, performance by the the periods believe Avon XXXX the However, a years its underscoring is key more period last a the I'll brand The return in We approach. comparison slides. have Avon's and sales is we the that has very Indeed, in which that two total of the synergies to markets international in at In both the multi-brand on XX%. X.X% on both you the periods, demonstrating A at America CFT in first &Co is at results, initiatives we the in over to look the LatAm, the fuel equivalent R$XXX all five see plan the of made Shop first first growth the the then strength and reverting months fully our XX.X%. year. Natura in net the reasonable Avon's same This R$XXX The base, in growth planned grew reais last double-digit nine next million, year. embarked loss Aesop with of were comparing omnichannel And driven the of

also on are me initiatives two that today. Let comment strategic we announcing

its shares. shareholders. global a BDR the group, while ability liquidity a billion, and our the while will repurchase Brazil And on its of company. its time, a strong dual a Natura increasing reinforce R$X.X commitment exchange to same launching are sustainability listing for up to at a we Among share switch allow major other in keeping investor we to return highlighting U.S. value generate year agenda base broader as evaluating assessing &Co to program next primary this to holding second, through and benefits, our First, the amplify listing program. position are a cash to a

now of me of year-to-date at business some greater Let quarter look and performance. key at the highlights the detail

its X. fully implemented In starting Latin On back Natura turnaround Slide dosing will of on America, focus with on of the a model, next been Brazil couple commercial of indicators impact Avon's Avon's mirroring has positive new XXXX. in slides, key pillar initial in initial turnaround

commerce encouraging, to and now out Digitalization improved increase. relative representatives to first adoption now pointing productivity. implemented Avon the reaching Hispanic to number Ecuador, also X digital continues markets are some also results business We Avon on platform to of the using in points the percentage progressed of improved and was very XX%. rolled and the XXXX, QX platform by

improvement record wave and the both All representative Avon. of revenue notably, translated the of Natura a and upselling satisfaction through of has into further acceleration XXXX, of for of stage second this the and set cross-selling in level

And presented with currency important million. foreign progress this million, on helping at offset raw to should achieve administrative our $XX inflation Day $XXX on back Synergies We integration as XXXX are pressure cost million the Investor April we plan, XX% track QX a that fully in to and in between material procurement. partially in to optimization accelerated plan we of of the year $XXX and headwinds. synergies total captured

in nine those are On showing the following markets overall. year, gained consumption U.K., we the the see transformation. months as outperforming Avon markets progress that in Philippines and South international slide, of share contraction seeing where in major Africa are such we the first the we quarter Key this

in segmentation implemented to pleased in Natura also also approach both Here, markets Africa Avon been are Investments a in new in made International's in mirrors has Avon improved acquisition at across steady model in from digital the adoption report has South social that commercial resulting that productivity. since resulting International, reached Nordics, X% successful prepandemic. the which ramp-up XX% selling nine after we're top and a pilot a

in plan pandemic selling headway making at products as our XXXX, we transformation, rate and omni-channel cycles, and XXXX. focus will social again XXXX. digital which the as of campaign which gifting digital optimize key in and with their both key well model are platform, significant Our in generating brand been platform of XX% reduction of which implemented Avon in revenue, will part sales X, as resource strategy X high using mid on of over initiatives all on relationship digital an Avon. will converge reached nonstrategic digital total our standardization as both continued as above hero Slide In enable named scale our be look To implementation digital-enabled the strategic online sales the rejuvenation, million, further a main e-commerce QX $XXX on points annual above the pre-pandemic markets is have transformational serving of for XX% significantly guidance. savings initiatives across include of that code already selling and hubs Avon in the point of ON, advances markets. of SKUs placed streamlining focus model allocation the the captured and commercial a for XXXX, of was a into and apps QX up percentage in we part XX% our and level of On one be operational digital already run from

As up total compared over Latin above twice online seven X.X to Avon is the region channels times is compared XX.X%, expected, grew which of in XXXX. two the Natura total Body accounted online reopening pre-pandemic and Avon and At rebalance using consultants now Online has through quarters. at QX and ON the last Shop's the America, apps, years nearly at-home five three stores relationship four higher it X.X% million-plus ago. sales selling again with At there pre-pandemic these by representatives, globally, sales compared above sales consistently average XX% than labels. higher of Concerning online content pre-pandemic consultant the online are XX% of adoption of still of is retail. to International Orders which levels. app reaching their were Natura, number to QX was channels Aesop's of Avon XXXX in and sharing grown last sales doubled is a the in times levels. times year.

that also way, brochure the tested. the launch is R$X.X This XXX,XXX of and platform in our which In Brazil also ahead TPV, in total us in that we of digital brands posted accelerate our payment XXX% growth X, advances gives of the and in annualized are implementation leaving breakthroughs smoothens Natura across introduced launched the in America, now serum Brazilian some biodiversity events that of screen. robust renewal serum in enablers our Brazil, reaching without where combines planning Latin also nearly Slide accounts have being care live above-target shopping online including example estimate. can technological Christmas a this that watch parses Natura with shop part billion containing an innovation Argentina for in As the launched of and become feature Avon and is interactive Reducer both Serum we as the ingredients. quarter technology payment power skins. lines brands. customers the volume, digital. in award-winning Ecopay, the throughout prebiotics. its system, innovation pipeline, actually exclusive Wrinkle consultants By product live our some natural intensive customer On new XXXX. consultant platform across to skin antioxidant digitalization, confidence Chronos firm offers proteinol now an Super launched exclusive brochure number Penizup a payment we

Finally, R&D Shop Natura's leveraging a XX% recycled line the vegan and new actually ingredients powered repair hair by and Body recycled about natural natural launched with packaging. new ingredients Talking over XXX% silk packaging. protein

our X, ESG talk advances Let now me on on agenda. of some Slide our

for in change, eyes world Summit reach will to communities importance recognizing right planet. events goals moment forest to on emissions but the Natura and to action not Change. without led Amazon. participated COP and not extensively Climate our that XX of protect nature to spread up PlenaMata the very has Amazon XX during We And Glasgow should action, address to connect know, deforestation We people, the leaders the on market &Co forests see platform, to like of few together conference the institutions or nature, conservation net-zero climate build that efficient at Amazon. just which we these the out are COP it, world's the Natura a and to a mobilize and of the future back launched last aims to Paris we words in our with work this a key agreement. more more you businesses, as end to message and to As for carbon and global defining call XX also than weeks an specifically now climate achieve

to scoring peers, products also environmental with promising the common have actually Score Consortium, create We CFT products ECO our of compare along this that help global system. launched cosmetic will Beauty customers impact common a to way on other assessment to a

our on commitment In further made to XXXX to that, life we progress addition targets.

for that, For closer instance, of our in With target ahead financial balance to Guilt look I year full of hand leadership gender our over will our plans. now X senior we performance. reached the at team a

to you a was revenue X.X%, currency. focus operating up reais XX.X% remarkable have strong at On in reflect Net Thank X.X% X.X% XX.X% came QX XX.X% currency. was was in at of EBITDA margin of tough faced was currency &Co R$XXX.X by Aesop as revenue XX.X%, reals XXX was XX, a attaches in at nine in reported versus very strong up you EBITDA challenging months, On Natura XXXX, we which currency net is X% revenue Roberto an in down or in R$XX.X a and Slide hello up XXXX down show with growth impact X.X% was difficult and Slide X.X% International's The was with growth reais was down as at net the XXXX environment. and reais operating And everyone. revenue we strong in very very EBITDA LatAm's and XXX R$X.X much, QX in million QX Roberto, environment. to Comparing Body very very EBITDA bps. and reflecting revenue see XX up QX versus bps. a mentioned, comparable XXXX, net was adjusted we also reais stood QX that, reais million, revenue constant constant against the and nine in currency. constant XX.X% X.X% and XXX Slide period up in billion, margin constant versus down operational of we stronger XXXX. But challenging QX billion Shop's and strong at EBITDA, versus is by all R$XXX at QX versus bps down with constant to months X.X% Adjusted XX.X% adjusted growth Over performance challenging currency. the pre-pandemic net mentioned. environment adjusted the XX.X% base XXXX businesses. XX.X% with down margin constant on down XXXX And XX, to compared and XXXX the an reais at Avon brands. our bps at on EBITDA XX, by a XX%, which reported up On Reported even resilience QX X.X%, margin and

incidences. the benefit effects sales XXXX same support, bps bps the margin margin as by government lower and bps gains. recall see, able our bps you plan. to pandemic-related impact XXX fully bps of additional XX XXXX, by deleverage, QX the adjusted revenue in foreign synergies EBITDA time, margin cyber currency with further in an important as temporary they cost sales it's As phasing incurred At inflationary from containment XXX consistent growth, that high can pressure, accelerate we and and management business pressures, to were Other investments notably QX business from from well to one-off XXX XXX offset through reduced from of and

share R$XXX.X of with effects effects XX, So, million million period our EBITDA company's this than of in solid cash if QX you announce In down in net effects have both margin QX XX, see in shows fundamentals. while compared quarter to which was adjusted environment, the credit tax liquidity improvement in times, position environment represents to R$X.X XX.X%, more ratio debt-to-EBITDA million challenged reversing three XXXX, explained XX Slide of the up up largely we offset R$XXX net On profile. a operating loss of in Brazil. increased liquidity acquisition-related a PPA liquidity net income unfavorable in in favorable last an of XXXX, the underlying in today to of the net by billion. look On deleverage an lower October, a reflecting entered challenging to of a a from in period our Underlying actually income quarter five-fold the the constitutes exclude contributions repurchase a bps lower up by consolidated position years. XXXX IFRS AX at would more performance. to credit million, was of was ended strong million income In by R$XXX.X liquidity, at R$XXX R$XX.X R$XXX to billion our the management compared strong of million, QX mainly income net same efficient million. expense $XXX R$XXX to benefits, strong income demonstrates facility reached R$XXX.X months months million source tax EBITDA underlying us million additional which XXXX. This the to allowing tax that for operating company due million, nine QX in times business R$XXX.X the XXXX year, amount of the R$XXX.X period, cash revolving and This recoveries while QX a onetime including enhancing We versus XX. nine from our we three R$X.X confidence the into reached profile. allows effects in the X.X including Slide years,

next The cash our provides the debt second excess over three we that the maturing of have graph you and schedule amortization years. shows in with

strong in in Brazil is that In comparable were were undergoing on constant brands, comparable its turn up XXXX to model. very the LatAm, net to on currency Brazil LatAm shifted at the both up while QX constant a brand back gains currency. sales X.X million XX.X% with digits above other ever in highest and month its at the reached XX.X% faced was Avon of and the while reached continued LatAm loyalty percentage XX.X% positive Slide constant and region Natura also in and at level. growth with the Total posted new double &Co the hand, in XX.X% Let's despite in adjustments year-to-date reais at nine both up in level at brands of Avon sales on unit, highest reais Natura levels. Hispanic gain Natura commercial base. In In year. the R$XXX QX, share Natura its tough ever constant currency, power natura's enabling of performance and the strong significant reais brand its highest indices &Co XX.X% in or sales, XXXX quarter, to X.X% in last business to Market in XX. QX the cyber was our from by was strength beginning down excluding XX.X% slightly incident now XXXX Consultant period, effect satisfaction QX X.X% representative currency. and points

managed EBITDA by at strong in by We to Natura LatAm’s constant basis &Co X.X% on driven brands At XX double-digit margin plan. XXX raw points. stood by to notably margin turn by to margin Slide consistent offset QX Hispanic further inflation Natura Compared business and lowered very was from sales at of XXX LatAm’s additional gains revenue to pressures, to Here adjusted up bps through XXX bps down and We largely nearly reduced synergies both R$XXX.X from management. to adjusted XXX and our growth XXXX, X.X% LatAm. &Co million, and EBITDA. currency. deleverage higher investments an growth, FX business with temporary Other material bps revenue headwinds impact accelerate XXX bps a

XX cyber bps, XXX from partially one-off margin bps. XXXX worth costs benefited that the sales EBITDA from it’s incident phase QX which recalling addition, for adjusted for In offset

QX in bps adjusted these this have XXXX, margin EBITDA decreased by would Excluding effects quarter. XX

XX adjusted margin nine to XX.X%. dropped month EBITDA bps while period, at reached the billion, R$X.X Over

on XX. International move Slide now to Let’s Avon

share down adoption has key sales model million growth Avon Care Categories Excluding the in five market XX%. nine top in the QX commercial in selling down the been XXXX, and effect. Africa was fragrance, UK, XXXX. this new revenue months. and XX.X% revenue incident has QX shifted such At South as markets the and to show net by such fact currency, implemented XXXX Philippines the International’s and that constant quarter QX versus XX.X%, been The nine Color social markets the QX multiplied reach R$XX to gained cyber incident, excluding in was as cyber from Skin

high the saw one-off at investments benefit cost from points. satisfaction. by for XXXX currency. offset were down pressure also net also to We month temporary were accelerate management deleverage through IT last with Adjusted X.X% was benefit X.X%, reflected that cost faced and fully XXX basis X.X% our fully adjusted a effects sales nine XXX improved in inflation, which same sales up we business bps in QX and period face We bps year and in synergies constant Over digital a down and XXX and consistent was able FX impact period, versus savings. as cyber gains. containment Margin revenue representative EBITDA the pandemic-related margin revenue with XXX of bps XXX growth, XXX from to plan, offset bps. incident EBITDA margin from bps from the

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EBITDA In one-off government cost from containment addition, as bps. the from QX margin bps and such benefited XXXX for buyback as Japan for support well XXX as adjusted business pandemic-related XXX effects

bps in was by margin QX down operating in reais, XX.X% Americas. million and remain with growth excellent XX.X% effects, store impacted bps. to Markets of of R$XXX.X decreased nine tough closures. an and the have Australia, Asia European store of in due months, EBITDA the again was by margin performance growth despite Excluding this On XX% these the Zealand was quarter. in XX, in such margin constant XX.X%, R$XXX.X with EBITDA Slide XXX Over net was comp. pandemic, revenue with currency would Over XXX XX nine months, and This down bps. lost recorded resulting days Aesop EBITDA despite and million Revenue achieved in Union environment. strong a particularly challenging about New as XX%

This sales Retail sales and geographic are XX.X% revenue markets. XXX and offset XX.X%, was by the for categories and nine bps XX% up EBITDA new investments XXX partially certain XX.X% the currency. growth, bps. XX% accelerate store in twice Online in addition, at impact pre-pandemic their disruptions of reflecting digital, level. Over at versus leverage. XXX net constant the QX down was up chain quarter, planned other reopen, but in as of margin the supply currency business pressure business were XXXX. bps expansions to stores representing or higher from sales experienced for logistics accounted peak months, in as was still their sales expected constant QX In with

margin support In bps. benefited addition, effects QX EBITDA from as for cost XXX pandemic-related and such government XXXX containment

EBITDA this have effects, stable would been these Excluding quarter. margin

was bps. EBITDA period, XX.X%, while month nine was R$XXX.X XXX the margin Over down million,

back now hand to Let Roberto. me

shopping Thank further In the this the focus growth to you, Guil. of to launch roll we e-brochure the Social as the commercial drive I’d events. out such the initiatives like new well interactive transformation Avon Natura for advance as on and XXXX as LatAm live At brand. now, next section selling model and &Co LatAm, cycle Hispanic in will key in tools Natura strategic

continue Natura a cross-selling and will and also consolidate on up and segmentation will the approach, and the We out stepping At with will platform. on rolling we be and in focus the of Avon digital Avon based double-digit on commercial sales also store new The be concept continue invest Avon the At on good International, of results roll continue and refuel will up to new gifting. upselling model Body scale stations, out rejuvenation products Shop, to We’ll single the Avon. which brand uplift. on we we

initiatives to Russia, brands, our opportunity Shop in we Body between pilot Avon’s to upsell and transformation drive home the will Body the We the buying as the and cross-sell Home accelerate year presence leveraging Shop market. back Japan share business continue our last advance it planning to the after our At are and market And leadership in at of of part U.S. well. that as in

grow we second to enter with activation and Finally, at brand to and go-to market of scheduled China continue half XXXX. by focus with expand Aesop, now estimated

stepped Aesop We are up strategy will for well. practice certification for Investments advancing being registration importing obtaining manufacturing platform CRM from. digital in and omnichannel product that good as in the are the plans and be

remain and our as capital reflects that Slide to a above-market On for drive XX, shareholders. So, R$X.X see, and in growth. we which investments plan we aims as billion, can I bullish policy growth to balance published are you in to allocation mentioned up share as fact capacity the you we return to material repurchase before, launching saw our

to &Co U.S. by global its a to profile a now underscore are we Natura new listing major stock step primary switching Holdings’ Secondly, evaluating exchange.

business. Over a major the past years, Natura developed &Co itself global into has

the struck, as market, terms see relative market you at in XXXX, in with pure-play the revenues see group The and significant countries on the on the Avon of the pandemic fourth time, become upside largest Shop Brazil. Body XX% acquisitions recently, of now Avon, &Co the and more Aesop, of outside more XXX has CFT chart in we its early outperformed consistently multiples. to joined But With when us operations group of over same has Since still slide. than Natura beauty worldwide the

we As headquartered their to consider is listing business company resources primary group has and business investors the we listing. global regard, a markets part jurisdictions. of which as to affiliates. a holding as strategic be a of part the personality Brazilian collective units capital markets to committed in that the in the Brazil. recent firmly right switch the we where of that grade group’s will business following operate planning we you our born of to DNA a in material and as also be to in in remaining business. become and via domiciling and while and a proud our a likely are a the as Brazil was and in group in the heritage know, as successful remain brand, of post-pandemic time investment our and move and restructure, positions might But which the the We the in to continue will existing primary our part Those future, as key of U.K. are access culture remain the to think York. world, Natura They group rooted This the well. enabler In group a part very as its New in

unforeseen CFT of supply as are to operating being Synergies impact unexpected the before, updates, market. remain FX the inflationary to medium-term used digits guidance, Let we XX target pressure, to and the growth in are me ability our further in now the now explained achieve environment line over such our as drive we of updating and which next disruption some track. business turn high-single confident years, the recent chain offset today. on couple above growth slightly But After impact. and on compound top remain Slide our challenging

as margin group a over at first communicated So consequence of we Investor Achieving XXXX, progression by at time. continue to Day versus now that, mid-teens see will a EBITDA when level April. XXXX back in we

Let XX this with me Slide presentation. takeaways the now of on conclude key

was As operating it underlying you terms of our the environment, of strength business. also saw, the showed but in QX challenging

operating initiatives, all, environment. as as strategic have navigate on In strongly terms of seen, key takeaways, in first focused our executing are key you the short-term of even we we challenging

advances gains. the share representative notably model on is new clearly Avon loyalty and and turnaround commercial translating Second, with traction digitalization the into gaining market

Four, not that are we drive repurchase multiple evaluating to last are initiatives plan, a dual switch in track which we deliver our initiatives on but least, updated have our value potential creation. in share we that listing, XXXX we to have future Third, guidance will launched And drive just detailed. a underway are and growth. I medium-term

thank questions. you and JP Guih, And I take for much now attention. your happy So to your are very

[Operator Villares with go The from Helena Please comes ahead. question Instructions] Itau. first

for question. Hi thank guys, our good morning taking and you

material is question to last facts Our related night. mostly published the

– share details the share the was Brazil its if being outside company conducted you about please could confident margin why we revenues, study other could that If by the headwinds be for you. still the and the with more and and about faced you postponed about guidance you even revenue are that lifting also, would since XXXX guidance Thank the only understood benefits great.

Hi Helene, Roberto, here.

thank you question. So for the

to important so on it's I clarify. the So think relisting, always

are dual already listing. We

a a the to very remaining gives continue of nicely, consider that program moving the for while keeping business a access program and listing opportunity primary Brazil continue is Level primary BDR actually market gain Brazil actually our that as global in committed traction One, advancing to in as listing And York. be to into us We that investors the X as might a global and to have secondary York switching affiliates New already now is ADR to like operate. listing to our New group. a think reasons. with units group it we interesting listing couple at the easy So to

there is We the multiples. in terms gap of closing and at the of opportunity same share that to some our also time, an our liquidity the of increase think

at, year two look a been the outperforming last the with CFT over or still you peers. we've are our performance follow consistent Helena, the last our years, we market, multiple If but yet to the global

continue to think and into that to &Co assess we playing by which investors by absolutely to ESG our that for really there our for more roll able is is So global to agenda, Natura and those opportunity value is us more shareholders advance create critical being stage global in that an being space.

that would that more this sense. make all benefit to you, think like of have there our we is conversations would sure make a shareholders or to with So

especially six expansion that from our AX, inflation, results line because the unforeseen update the Aesop. at think versus going And prudent terms on and be Body to Shop that. both being started on think drive to make But very in continue sure global also one very this plans it remain quarter. for guidance the modelings to is our are we're this that pressure top in Natura, that honest to prudent superior probably be again continued peers. of confident chain continued our that but that, we of supply the we America, our of the see investments Latin to a another adjust doing, integration, We all still that's adjustment, terms the We of a months. Regarding because top an the ability just to to from margin is a disruption indicate in don't all therefore, line, and we analysis the least the just continue going to will of AX all turnaround of of

makes continue very year probably sense. approach. We're we'll realistic a Hopefully, think We but that mid-teens, progression. the to that a still we question, more Thanks is see deliver confident for Helena later that

you. Thank very clear. That was

comes Please Bob America. Ford of question next The Bank ahead. from go with

digital price thinking brand morning for your the light about Roberto, also are pressures particularly Thank health, in you. thanks Good and you of but my how increased given taking capabilities? the question. cost increases,

question. Bob, you thank Hey for the

optimize ability of things, promotion, inflationary terms that are and the pressure pressures, pressure. in offerings so drop one, are our because some of with those some a even we markets, doing some terms being of our because two of know to Brazil consumption. cope seeing employment portfolio somehow revenue of in in limiting our in cost order key in are higher of we our we We increase to of mix, we in how of – So lot can management terms pricing

mitigate been of really can We also lot comment the a the think we doing synergies synergies pressure. may have helping would are other do that cost of best some the we've different and be So companies. that to I us to manage that. than But I

that by margin, $XX is environment. component that challenging this across reason board, a companies point, we the dropping limited seeing especially in captured be we If very gross And a significant the are ability synergies helping happening synergies that pricing space, in margin are what than is our that. is navigate us goods competitive. you of to the your to we the operating integration this the Pricing in But our we been look are quarter million almost their because this progressing much for that to consumer to are is being amount are increase seeing. well at gross is, want again,

seeing some therefore, a in of all pressure. can terms cost of pricing is tool we that mitigate use overall employment issues not consumption are impact the necessarily We and earn to the

that And Roberto, horizon is of you individual you better in the interface, just understanding something and digital And really that increasingly an is as maybe move narrowing promotions for &Co? price to follow-up, Natura are to on where terms elasticities?

Yes.

going historically I be some JP more a because we very the in high happening which actually actually invite things about markets enabler And it answer that. becomes Argentina, that like on been are are to So thinking I'm to even inflation. digitalization way think are agile there good to

extent JP, with think now bring and to would mind helpful. Argentina are you what don't we to in was Bob, So if sharing some Brazil, be of I starting the

also Roberto. of allow Thanks, in brochures, spread in also magazines QX market real we hyperinflationary the Bob, a in shifted And adjust one terms digital end consultants we issued Brazilian fully allowing know, almost practice from saw by at lower restrictions we've and the a a Brazil shift down quite though, for beauty tickets of be reasons with And accordingly. within time. why digital in across and the for more been while is we and in the where the it we this convenient region, has a to care products which the facing market where you at us successful to imports. as flow to product Chile, in couldn't environment to the so of the Argentina, to as that goods offerings products are is each there of magazines, points. categories trade react time, of availability, way, there is being changes price to lower category already to of of prices, the And become us one Sure. personal

much faster. been the us speak, fulfill as Thanks. and broad we adjusting we needs solutions new more to we the bringing adjust flexibility as So for of are digital to so consumers our have portfolio

Thank you. helpful. very That’s

question ahead. go The Richard comes from next Bradesco. Please Cathcart with

Hi morning. everyone, good

the up year, on shifted back Obviously, just you guidance guidance, may. maintained the So the margin I by revenue a if guidance.

those also LatAm particularly just EBITDA Avon that, margin much. get revenue in coming I'm a could that hoping in over And some to that targets? expect crucially, basis perhaps but quarters, in very assuming few While consolidated be for from revenue within to International? I evolve see to was to us if additional drive you XXXX? how Brazil help give understand Thanks to and we to through, you margin will eventually leverage on you the of So next operating necessary kind when expect can

here. Hi Richard, Roberto

not though even giving per year. we're listen, So guidance

unforeseen shared pretty seeing of confident just the margin again, mentioned, I gradual So months. last highest U.S. inflationary think in take we been over of we I increase a And say time, very over XX disruption, inflation feel sectors the guidance. in would I still years Again, a pressure chain over years. the so but couple saw globally, all into that from as all we've everybody's account the much margin terms and in this very really we're next supply from XX that, experience pressure, prudent

you're and margin. enabler growth. say ability later, the drive the an the I in see of that absolutely going think pandemic going that a this prudent think is also world of cost X mean delivering I at the on course to of issue synergies, of have terms that, being months. they line key but to And still is right, us integration, Hence to would continue doesn't the chain progression to So of I inflation issue through not one going guidance over least it's the of backlog to quarter impact and supply because but the synergies of next, mainly real, the just are disruption top that year not global is is a

new Wave of one thing synergies in turnaround speak for the And this to and model. the drive will And team accelerated to that table, all to learning's being which top absolutely and QX implemented drive as would more on the X representatives and in with Natura one is will synergies retention be at of and the and revenue from that will with top which the commercial Latin us new is we sell cross enhance highlight XXXX, now enabler for accelerate eight produce approach enable at specifically the International, know, markets a the you the in segmentation are the their the line going International, commercial Avon in key key representatives, the As Avon the a the that growth. pivotal of sell good I JP model QX that Latin be year, between recall growth. America, progression that follows if really is is I drivers in revenue not and just America,

but direction. at level overnight, from you're very very we to it the the that the of and both seeing It's highest indicator are the is Avon and the getting rep, feedback it that right is going not are satisfaction America happen confident Avon rep. that in International from a initial moving something we it's So Latin good

The next Please question ahead. Citibank. João from comes go with Soares

question. taking few points. wanted to understand Thanks Brazil; I go my to a to morning. wanted for Good just Hi. I

about prices at competitive and Just bit pressure. this the you difficulty moment. more little pricing about a lot to raise the understanding And talked a

Do to you that trade great a the see So helpful. that we is Roberto – understanding that the And understanding have how moderating? beauty mentioned GP How competitive you going landscape? X and should So do landscape context, implementation. way towards just same category? be mass understanding should competitive down we to be just accelerate in this Wave will be

Appreciate how line for to we synergies in So reflecting revenue start should the be looking the What's results? it. time the at? here

Thanks question. the here. Paulo Jao Hi. for

competitive environment start in me the Let Brazil. with

macro, the in from in that there care translated trade very products, tiers. market each Also products given lower category And pattern you into abrupt market, in has a a clear our from towards within there's on average have which consumption been category, pressures personal So mentioned. as the of as price been coming July change Brazilian and to a beauty much ticket. shift a down lower roughly

mass So which the are commercialized reasons supermarket stores. beneficiaries of same product for in primarily the were that personal brands, drug QX change Carry and through that Cash &

fast not care also tiers we enough know, Now lower as adjust our price broad you products. and portfolio, at products were lower-priced we which But have to value a high-quality personal offerings. at include tiers, products

pretty we to the to AX portfolio, and are we speak, offering So adapt in we as adjusting, we right. our so can even new more having context do are confident that, that

networks that moment the key for your consultants our That through excellent So and and cross-sell is to and – combine us representatives. question. is second our for of an strengths

few already. a You for we that testing been those months have us probably mechanics heard before all

we kicking still year those this Brazil, mechanics off we – So some accelerating are are in year. of of end

that out Latin as in of during Brazil, that of we rolling won't we much but America year. and to beginning see that going So see of the Hispanic you're QX, year the in are the throughout

strengths brands new of that the reality portfolios the to help Thanks. our adjust to of So combining us and market. businesses, will the

JP. Thanks, Thanks good. very

ahead. comes Please question next Jefferies. Wissink go from with Steph The

Thank that want be to Good back-end you the Or a weighted. are particularly our on little you just time can question an the the on if those a follow-up additional equal over in everyone. the bit points, pretty might if just out us more midterm We change guide. morning guidance stretch multiyear suggesting for curious assumptions laterally had more of I'm on context line give year? you EBITDA also us you. realization

in any been assumptions? to there's the wondering Just if annual cadence change

curve be We change Stephanie, to don't a the here. on Hey, anticipate Roberto honest.

I see sequential So we again, as year. again, confident on we're pretty still will not they providing guidance But margin. for remain a said improvement

back this on just see not cost and as the chain four. to just don't it's we're quarter. be into going we after totally unforeseen it I before, So But take – year disruptions prudent, away said again account that going supply loaded again, pressures,

seeing of our being some longer I on bullish to this used them actually remaining that for some think very impact. again, track we of but synergies time. a But of synergies. mitigate period are are potentially The are we're still on

growth, of going reinvest bullish the over the Hopefully that period. growth top-line, for use we why to state single-digit to Steph. be that's our helps part we're While and high continue to on still synergies

related helpful. very follow-up that That's the to was my reinvestment the investment, cycle. Actually, was – question

would also lower a is in to to a previously execute shorter the realization slightly result term then term. ultimately you by plan which continue bit had the year, your So in but over the what in planned EBITDA medium

months is planned very cycle or be investment had the So consistent still to ago? with six what you communicated seven

Correct.

mentioned, will the ease enter in like very the bullish same. to So in cycle of of the remain invest continuing more. we're expand to investing growth that Latin of that as in continue Wave brand to some Natura JP investments X of start Enable still Again, Avon we rejuvenation the in again between the the China, want as America International the well top-line

the to take spending indication want and that can Africa media early We South of roll positive potentially advantage years. a from we have out in that in good coming higher some we

priorities. change half but short-term yes, pressure being kind cautious see not about just so planning of that So we our of probably XXXX. we this Again, based on throughout we where margin are cost are the to first investing

question comes Eric of next ahead. Huang from The Please go Santander.

taking everyone. morning for Good Thank you Hi. question. the

should mean to would upside to road for Thank terms about a the any little understand any entering investment if the and Aesop you on more timing? and of understand China this And So expected can color side, map also explore we more how impact on about give the in main from to you. go the our more also, is margins, from process [indiscernible] on if there like now?

here. Its Hi. Roberto

to continue into to move before, we forward China. especially Aesop getting the priority with as of said Stephanie So again, I

GMP, if Good the are the a We North of the in Aesop based especially results you look registering the the are are recently in Certification, results which Asia, in Japan we very the obtained is regulatory accomplishment. major We And enter Practice Manufacturer be of with a and and at of there process encouraging. on products. are to which the bullish from, Korea, really sites that the China importing are key in of a going process, we the agencies we is able is product Aesop. aspect process the But process be the following to to

I think are that, XXXX. SKU. a of registering to of going the based do we approval. lot we those on the probably is to planning people of are process, SKU ground. things the on we some regulatory when But doing companies But by have There second So half aforementioned same

us support We are of leveraging Avon group. a that have with presence the again capabilities that we in China providing for as

progressing well. are things So

end think that hopefully again, by bigger I steps, with we'll China very year, Avon, next Shop a a Body besides are of and We're We about optimistic the group. it. Aesop right and have the in after the then presence making as

and know, of it's by geographic opportunity. we key the very are encouraged for one you opportunities expansion, As our

Sgarz from Irma with next The ahead. comes Sachs. Goldman go question Please

was math chain a there that very initially in if excess bit program you may given little Brazil? especially did I bit you increase can to we're on what on quite already and them, year-to-date – what areas that have generation building, terms also buyback of you this of Yes. free went rapidly I correctly, flow committed inventory like outlook that – – what still still that you're felt maybe strategic the you do Thank announced improvement? obviously little there of and whether briefly Hi. supply missed was your was free the just inventories? given curious you then that? Thank track that plans. was the sorry as if the in an that much. comment cash or you and going the So sort curious growth up, of quarter? your in you're with Is inventory I they could inventories you're expect just you comments you on expect flow And bottlenecks I'm how expected deteriorated for cash than you maybe expecting position I year, the days hoping you significant where see generation you what or I any environment considering feel you. forward terms made could is be drove the in And inventory what consumption maybe more a that

is month I'll about talking – take let capital for tenders right? the as mentioned a working the the of the and impact Every an of course question, little start inventory you quarter, of cash that the, mail has quarter. So flow inventory me one the still bit was position, in in

raised approaches. QX, inventory quarter, think service right which first is a biggest two to want think And was course of the strategic from we to deliver end right. course, correct one our it of the I QX increase as decision the I in businesses a Right you points. very level, good is the of

can which, a So in an as strong course, case. slowdown that there embedded component markets sales you there well, is in is that inventory playing that result a a of course, a in assume correctly as Also, of of increase, was this in of you September. few is mentioned impact,

end of for high a inventories the impacted also the quarter. number that So of

resume capital that in basic the term, of market, may a continue mentioned. question the we and given one of though cash the our terms impact a I the to which outflow that – for right? expect you as to course cash the a And of together probably days, we in the mentioned. as in that We inventory. quarter of a pillars a flow It's working of key components, is inventory asked, one short short-term as expect usually biggest as of to on cash should that course, that we the priorities, the with is level flow cash, quarter course you of above key course, our improve ourselves be this tackle of an remain we But inventory is uncertainties quarter, it's average that of flow QX prepare is, we,

of QX is QX will cash. course, that if out quarter And is a quarter not course, as you most of the cash this And expected, flow quarter look So right. was usually an of is historically, that generate needed, different. the

different. is to the here and this So seasonality it's not be the going requiring year

that To we and ways capital right beginning, disbursement. on to at in mentioned organic our point Roberto When a we're now, as was to shareholders. allocation always as our focused QX, expected cash your extremely right, at on maximize – priorities look the our investing remain the So we we're to back growth, it. better evaluating the

We have in deleveraged last months. the significantly XX

lot now, course, confidence you. Thank in our is is that's in debt had almost the see the in XX the can the ways billion the last to one gross buyback. of buyback remunerate a difference right of R$X plan. through months. program You has And shareholders And of the we why announced

Ruben ahead. go Andrew Our Stanley. with next Please Morgan question from comes

Hi, items have thanks the very of Most much answered. for question. the been

capital this provide on targets? your where stand into how your the And overall share talking announcement leverage Just terms fits that of you context, could update you. allocation within you an of plans? allocation, repurchase, the capital in Thank

Andrew. you, Thank

Let as me well. take one that

right. Our capital allocation priorities remain same, the

growth ratio low. continues component shareholders of our of is that our key by be a So to value as remunerating leverage organic and course, to followed

with probably change guidance leverage the was no you in the announcement As share of buyback, our noticed, there even right.

than foresee debt EBITDA, of So or by year. XXXX to lower that the the onetime net the continue we to end of guidance a

that. So change no on significant

EBITDA only the margin, to from on mentioned, the Roberto As was XXXX change XXXX. postponement

Please JPMorgan. Joseph with from comes question Banco Giordano ahead. next The go

forward? would in new into JP My like level investments, CapEx seeing Hi Thank about morning Guilherme. of my back taking to the So is new good level be understand and for Hi Thanks what question going what forward sales terms everyone. be trends. questions. today Irma goes like right? flow recurring CapEx the asked you. Roberto, we the going of Hi the I cash really maybe are percentage should

Joe. doing you're well. Hope you, Thank

slightly year correctly in when at was the As XXXX, XXXX CapEx in And X%. move QX percentage above of of above QX this was mentioned, also QX you look right? a sales of and of you

look investments, net And again, the think I with what you even as right. we than the at to the a X% However, our that a though year-to-date if for we numbers, revenues, is of whereas we have result is still been in organic lower business. year are percentage of X.X% year, higher significantly than last it's invest basically saying continue

both course, Roberto before, that our result in investments line is guidance CapEx. of our top OpEx here, of a As unchanged. making we're mentioned that And of and is part

in assume we that forward. So should significantly guidance different not but give terms going specific you don't anything of than CapEx,

XP Please The [Operator comes Daniela from question ahead. next Bretthauer Investimentos. with go Instructions]

taking for I on one questions. of postponement guidance. just thanks Hi, the have the follow-up my

that Something caused key the the attention is control obviously, behind exogenous over. my don't postponement drivers have actually are you variables that

year, very good the that are games. offsetting my hit with postponing only But strong attention in you the job in given of So doing having fact are been called Avon is the term. that you actually, what part you short one have for that the that a

question the the on deliver the mentioned other I that some the of on short category. just weight on model as and wanted in new if year understand you makeup see I late. with to Avon, this as if this helps social other Avon And on deterioration could also stabilize to QX macro it the is obviously, provide on term. as but your the on such improve you only should on to regarding and commercial additional gathering color that expectations more demand, maybe guidance So profitability China I have that help you're one initiatives seeing just wanted opportunities

so Let think.

Daniela for Roberto here. the Thank you Hi, question.

markets, and to at able being the of deliver the This earnings be of commercial second day talk probably per significant model, the that always reason first about think wouldn't the turn very Avon. implemented reiterate The again, really synergies that, are at our both this in in sometimes back something Because Avon rep new right? we of that confidence least don't be right, those is, model only well. one On months, as been level and that make already always component that's major of push chain early really very that that, International. Latin this short said transformation then And period said, revised that with indicators speak, we guidance of Avon. many we very half without that to initiatives pressure part encouraged. foresee a I is we supply we've three staying time, able to your the key is in the Having And of going deliver around as across been inflationary on this guidance, again, to very that our again, I we're acquisition of to deliver. and year of execution And want this track America disruption, we question, being implemented because actually XXXX. from commodity throughout we prudent on I why even news for progressing some increase. on satisfaction has of of also good record pressure, mean of but the earnings to The change over of many, is terms was prices that, some unforeseen of are plans. Avon model

is is the Brazil, the early thing much we also, the to point the Avon take But Natura, years talk last confidence the it if didn't proud a the like to I'm that you those that of we're that growth despite be total It release learning model going Again, in that segmentation that of pandemic, let's going feedback for the already couple right. you the top is on nine implemented Avon. really through period again, markets still little that showing rep is with encouraged of that why line year, before. very to in on years now Avon Now to we of satisfaction, a of team middle we're five being necessarily new as from are very X We that the over implement indications when expecting at have That our And on commercial adjust. we're hasn't all a top on able the months be time and do of has make a them growth global Avon. drive able which going happened at is of ago my first Natura through bit that, clear, one is don't brand overnight. last takes that

gives plans the us confidence that also So moving about forward.

thank actually So thank quarter. lot I And you want staying that, know we for all this longer. I up call. want to with a had I question. a for the just you wrap bit also, the that guys, of to information

you bit gave we guys more questions. a for So time little the

is you're able any good them. answer to So we other a well. here and all. hope continue – great of safe you much, I day Vivian is have you team of if Thank very of stay IR hopefully, all to the a weekend. the help there follow-up, But hope to rest course, and and I you stay

So thank you, everybody

That for the day. for Conference your Have Audio very participation. you today. a great concludes &Co Thank Natura much