Natura &Co Holding (NTCOY) 12 Aug 222022 Q2 Earnings call transcript

Welcome to Natura &Co.’s Second Quarter 2022 Earnings. On this call today are Fábio Barbosa, CEO of Natura &Co and Guilherme Castellan, CFO of Natura &Co. Jao Paulo Ferreira, CEO of Natura &Co Latin America will join for the Q&A session. The presentation they will be referring to during this call is available on the Natura &Co Investor Relations website. Please limit yourself to one question each in the Q&A session, so we can allow more people to ask questions. understanding on your for you and this. cooperation Thank to will now Barbosa. over hand I Fábio

high good all two to afternoon thank or Natura more comment inflation, so earnings morning Good and I to on from CEO becoming Guil, joining for first of consumer course today. quarter the will qualitative a commentary. Ukraine. shortly, to difficult call you of QX war will results since the supply the marked you less geopolitical continues of us Very myself ago. by with happy than lower spending, be &Co my and quarterly results chain months a was limit for in uncertainty and disruption that macroeconomic you CFO the

course the this in of performance environment. quarter challenging reflects Our

be reflects it group, now we structural have see we we identified also addressing. that issues are in and that our clearly clear, Let's the

performance, within committee. to my market few thoughts first on the but I sustainability, Natura would redefining main strong report also need are to and As &Co pleased getting we to have but good you that the CEO a BU’s also when and am committee, in headway up its was transition want making makes head what know, and react I appointed the strategic I the we and that weeks, announced its streamlined to have commitment make its the respective improving can complex, the group of needs, We the transition roles unique, and In chance. to the each leaner our that support priorities their decentralized, agility more so less get in preserve I quickly latitude order on two company business BUs and it units of to with to business needs. the culture holding notably

significant magnitude, structure, accountability. at XXXX today same was we savings the I’m we have as the leaner you last combines represent happy new a identified The one and an as what we already that XX% which doing. identified implementing speak. of expenses, of of organization is are first announce place in give to reference delivering you're would as that in That's lighter already corporate autonomy and idea year. already the a corporate expenses structure if least To

model, and The The have &Co. idea second KPIs the of a company ways few is defining priorities, and performance holding Natura a reviewing capital streamlined new working allocation. governance is of monitoring to within focused the autonomous brands concentrated on key more structure, and

and the is time At the confirm well are year. will course as the committee, which underperforming end improve our before principal but the the we'll regard that our our advancing also today notably transition transitory of which of have of same challenge, I continue we’ll its We by to fundamentals and concluded nature ones, ongoing the upside business, main driver. and brands work work our

to that should priority the headwinds. should say clear. very We the we'll in in margins revenues half. is environment challenging context, In be see – but I and to should continue improve, the improve, but our margins should to the to We want second improve second in Revenue expect half trends continue to this be revenues continue mean should term. short the pressured

QX on units strongly to incentivized guideline and the and hand me these are and goals. to over every comment that, detail. Guil. let greater accordingly are This margins in for We to our on is mobilized focused now flows. Guil cash achieve all generating performance improving With they business single

could last reais, base In slide amid brand Thank of as was currency. the posted currency the came Natura in which zoom of Digitally high we in macro challenging of Russia, five, quarter but in macro trends consolidated the sales had in a sales digit growth last growth and war up markets. our and on year a with recovery, by performance Shop you, XX.X% Avon the and both difficult our back close versus reopening at Fábio, quarter a constant X.X%. start to the at QX constant stabilization has digital year in The specifically the on at environment. were selling, retail continues selling &Co highlights. few currency. impacted include shortly, past to hello entering lockdowns. International’s remain everyone. in despite home XX% constant at challenging but comparable on the They the and using down a I'll This decrease pre-pandemic you sales stabilizing more Aesop double retail shows We'll commerce. nutshell relationships from by as well in enabled sales. slide digital of at strong by as solid main Natura Body above levels. performance online BU post apps six, nearly look significantly key Latam held sales social improved which were which the with a other performance The we in revenue not most offset low Shop Body On from and e-commerce slide our

in at XXX,XXX from payments R$X.X half. in payment total copay The our platform previous Natura continues first First, approximately billion and Brazil digital to XXX,XXX number and grew the accounts the reached quarter, grow. volume of to

use and through defaults. payments payment general selling levels records processed at activity lower platform. who As Consultants higher the direct Natura Brazil already and all the and Natura platform e-commerce captured

bps last are XX apps compared down adjusted this Avon. last slide And percentage same to points of the notably to International, to year. resilient than more our growth turn On with at penetration Natura in the which Natura at margins to At reached same was brands, app Avon period QX, of in reached strong in and all Second, levels period X the sales QX, progress. relationships selling online in At XXXX. third the consultants Avon We above compared X% EBITDA average XX% of using Latam XX% XX% seven, pre-pandemic at number content continues quarter our QX, year. sharing

containment impacts We after with gross in a SG&A cannot reduction negative to unfavorable in short R$XXX from of main were The Ukraine comes acquisition margin. first bps it XXX focus medium improved is expense This from which corporate R$X.X to and on and and Management balance income. impacts which billion. R$XXX savings R$XXX from cost nearly great shown bridge and synergies year. look the ended them satisfied million R$XX R$XXX This over conversion position the the the As discipline more free outflow includes in expenses. slide which discontinued in comes from liquidity shows cash and underlying war is business million and cost slide the approximately million quarter XXX second on a term, in offset facts of focused second, cash other offset on income, between inflationary million managed net On the by bps net managing we million, with our million. and slides, We of these driven inventory, positive levels last at others. the and QX R$XXX.X on income, R$XX Avon quarter These of an and on on notably pressure improvement costs in R$XXX in PPA facing is two revenue strongly be cash Latam while of impacts, of FX impacts R$XX bps. inventory and EBITDA expense. flow, net QX. exchange two improvements were partially On unfavorable improved of management is margin transformation operations XXX a profile. partially for which and optimizing containment difference through of by corporate slide you a variation. favorable This the our major we This CapEx million, negative effect was sheet focused one-offs by underlying to was position efficiencies, rate million. were The the was for of eight from of nine as cash million performance, and the we

net ratio EBITDA. reflects cash of lower at The and leverage year. in quarter debt X.XXx last in X.XXx up QX stood Our consumption and at ratio from to EBITDA X.XXx end, QX

see debt Note is our position total XXXX. billion average continued debt does debt Natura R$X.X XXXX further of higher and our liability than second the maturity not issue of debentures million ‘XX maturity is debentures years average that of the part on management. as the in for These the to face maturing cash of replace you partially until The ‘XX R$XXX X.X X.X graph, issues, limited XXXX. our include years our expanding by and in Cosméticos our payments As repayments we through XXXX. debt this July

Argentina to by offset Latam, by to in quarter. returned driven have currency, Growth year-on-year now Brazil, particularly Natura digit This in unit, grew XX.X% been Natura momentum improving growth Hispanic XX and The constant with turn by in growth revenue up mainly and X.X% although beauty. Let's was our on constant over up since growth QX by in constant decline currency, of trends was performance beginning the consultant in Avon XX.X% XX% net partially which of net productivity, by nearly was Natura XXXX, double brands, XX.X% Total reais. Colombia. business X.X% supported previous In by &Co driven in a an in currency. the at at slide posted brand, in acceleration up at Latam sales by quarter QX. the brand were gained which an

currency, very strong still growth constant in in markets up last digits single Argentina, was of the Hispanic comparable despite in Excluding at base low year. QX

offset to consultant contraction segment at brand in quarter & in the the in revenue In as recent Hispanic revenue the grew revenues XX% beauty currency cosmetics net down lowest brand that was world QX Natura important saw at In highlights by was revenue ‘XX actually brands and Brand ranked showed digit since gains XX.X%. the strongest beauty of X.X% every X%, net Home. in by periods. which was was Finance. constant In net sales the X.X% period It’s reais. decline at in productive. highlight markets, a currency. double constant Brazil QX At Brazil again are the that The XX.X% improving minus Another trends Fashion Latam, the Avon in by down segment was

is in dropping and are to activity Latam’s Home. &Co Fashion and representatives’ versus compared commercial Ecuador margin. segment Rep in the growth improving slide driven two and positive adjusted and year across Ecuador markets sequentially. progress productivity stable in most the the sequential The improved On too number Colombia beauty with model The of significant sales also & QX and QX new the Ecuador and churn productivity. showing available Colombia Here of XX in representatives in was to was by of America. ratio the XXXX, Colombia, we turn total last Natura EBITDA number while improvement Central

while As slightly, FX shown up and by by was remains higher too. EBITDA year. inflations of last and on material Natura cost raw was effects on the supported Avon, which graph, versus bps, pressures. the was management the continuing despite by the XX.X% of discipline, stable strong revenue brands impact deleverage margin logistic inflation by at This expenses sales high synergies, very financial and XX offset headwinds. impacted plan, performance strict margin was The Avon transformational

currency situation on by slide drop XX. move XX.X% down XX.X% the This Revenue at Let’s in International in impacted reais. constant Ukraine. Avon strongly now was was to and

and was markets period and improved activity and X.X% versus down partially commercial QX markets. lower sequentially at EBITDA were revenue by with impact substantially and in the model, leveraging Fundamentals was plan bps These across also Russia higher in and all were adjusted due cross in strategy XX year. optimization; volumes to markets. XXX in EBITDA X.X%, revenues Excluding a through stood improved margin SG&A this channel at declined while in but net and existing by mainly superior more All and and investments currency, to a and to of reais. in margin challenges mix consumer currency On other effective increased war store leaner stores in pose This cities. move to confidence, by management in delivered detailed by financial partners. focused Aesop at than planned reais versus cost productivity management slide in churn the of in from sales continuing franchisee revenue are new twice reflects sales QX bips at but result was a XX.X% lower XX.X% recent on human levels. QX versus continue in like-for-like although This last decline drive rebalancing, improvement. same to slide plans This markets channels, reflects down reduction up e-commerce, to to costs. Europe, the and decrease drop and This franchisees challenging critical lower margin further Aesop European XXXX, above for franchisees of mix but the with was lockdowns. the retail X.X%. power Sales post-lockdown selling of channel up future in continues and and XX.X% higher sales The to these reduction, XXX ’XX, in were model. At constant continuing reflected the growth. month-on-month, includes an previous another lower productivity, the year actions track discipline last the On resources mitigated categories, new adjusted rep partially HX, footfall, maximum pre-pandemic sales see pre-pandemic base. channel markets, digit quarter. XX, we constant QX in continue recovery but and they on margin aggressive investments purchasing to especially pre-pandemic an XX% down The Sales was Pacific. QX, comparable Shop. with Home North margin regions out The to currency levels. Ukraine growth address roll growing At online better in quarter. post and new resulting growth of driven they progressive improvement, footprint has pressures; management the recorded a Aesop on but EBITDA also launch XXX Store quarter. implemented decreasing in from to including to sustainable Body offset quarter operating level. product on are double adjusted remain consultant and now X.X%, Shop a show a store Ukraine across are drive double the geographies Revenue a despite led basis, compared and performance growth China ratio. a the In America bips down recover and resulted QX sales versus revenue entry QX fourth constant investments also been consistently also as digit revenues as digital end up volumes to by below XX, showing China driving reducing digital to Body is This ’XX, versus XX.X% falling improvement Home e-commerce total retail platforms focus Asian the was continuation from and above continuing they their inventory notability of now rebalancing. QX’XX. still order again strict outpaced year a remain

now Let hand me back to Fábio.

basically here. will on what with the now at slide Guil. takeaways, I I opening our Thank said key reinforcing XX you, conclude

Transition according of first, is we work to So the before the progressing to the work and plan have expect completed fully year. Committee end its

tracking the the the accountability structure defined Second, delivering well giving a on more but clearly clearly is BU’s capital focused leaner, that work right also Committee monitoring aimed performance, autonomy complex less holding a and more decentralized to Transition of is organization, KPIs at for location our priorities. and

we to myself your is take organization Guil, attention of achieve pressure and This Thank is the on this business believe your upside to term. defending our in generating of which remain margins margins Third, that our in our immediate this view fourth, as should all of our will under-performed and whole ongoing happy second the continue mobilized Sales and cash part we weaker both headwinds we short and questions. flow. and challenge that improve and fundamentals much for goal. And principal context units cycle focus very on improving The is why driver. as JP comps, incentivized over we our in the trends remain half. you are focus will but under business,

[Operator Instructions]. America. Bank come question first And ahead. Ford from Robert our Please go of will of

BofA taking everybody. governance. ask for morning question is This thanks a I’d at my Good and like question. Hey! to about Bob Fabio, Ford

needed As you those in regions? do in that dynamics and understand? structures, in takeaways and more you kind early forward. – those mean you and what understand measures place the health of did terms competitive of for incentives some tracking review were could of autonomous have misalignments Thank KPIs, for in governance senior or is feel What scorecards flaws brands you place does to management that are what you. reliable of what And monitoring Were or brand businesses? indicators better moving

in terms to have expense also not of, only of aspiration of working but here. let's terms of of things capital, in many going and Lots and say soundness, track Yes, the control KPIs. KPI’s things everything. we in are the we terms KPI’s brand

incentives, to half the margins for more In generation, doing second on little giving in now, cash have you mean we the focus are have you course and idea, short we more growth, are terms brand, units, the term, and less latitude And having. on the lot the what the of at especially the least these to to when accountability. a I priorities are business is of the give

in the talk of not terms find of performance, the and will that autonomy when are here. force to of are in – we again that something these The terms things say, on. role keep more sustainability, is holding company okay the force terms of that's and driving force driving maybe brand, we of but here, again sales in be synergies, it’s necessary, terms company, continue give in to So believe we we to the of to the about basically not going

sure So sending the will followed tracking they which sent tracked be the the will the any are we be KPIs able various already be guard will be way business that’s now that make to will right there. units, we to rails have have monthly and and to that the people, deviation from

views. it's different a specificity realities we of closer kind going to of dealing problems the different each decision, KPIs, on monitoring are given and different you're brands, lot of facing ones in different the without our So markets, details with that that

Okay.

thought were flaws was I Fabio, you other terms there opinion. place, incentive sounded before. – there the on in of structure – like think Was it synergies overemphasis was your there in in an that

No flaws.

I are the think we cash give could on. everything, to having this as the a priority they is And that I of listen, has on with raw so less of are and in saying for a that generation sense synergies of flow they grow care time, emphasis for all costs. take capital the we rising materials a for we'd cycle of the matter had with difficult are – like time this give pressures especially good where also to designed which priority that the are we in in good giving now incentives market care take we that ended working to and sure inflation is point sales, and given mean to of if a and make do margins, at point looking that sense period time,

for for we're this, another are flaws. priorities So It’s through, are aligned there’s the now and defined. going cycle we no these the but ideas, that incentives the

Thank much. you very

ahead. The of Please Giordano go next JP comes question from Morgan. Joseph

Hi! question. thanks taking Good morning everyone my for and

this a International. the on into strategy question the environment is my goes challenging Avon of very So Well, business. streamlining

Ukraine. know between of have guys So kind we and now any this situation particularly you evaluating change like there, Russia sad I don't if are that

question. would the so discontinuing first I those second JP. So be And maybe of some that’s you operations, question goes to think considering my

it there. So just Brazil it we synergies, seems that like was but had even some savings in not also

should faster, on make the company like expense Brazil. hanging how So the accelerate my like and dynamics dynamics if start side, the that the to market do like, still like lastly, the question to in be Thank see you And bit a strategy, to change much. you is model and you look channel. at little thinking when really of store fruit linear we the some low about we very to franchise the

Great Joe, hear to here. Guil you. from

to third Just clear, your The question Shop? is Body about be and

of not sorry. it’s Brazil, No,

Okay, perfect.

and word the one So going I'm then your first think looking questions able and so, to right. expand not we’ll to always markets to so of Joe, I'm first to JP, course right. we're short generate on do able he in to question we But generate take to the especially and the in flow, continue at optimizing can other profits are going the cash our that I those especially term, not pass right, to footprints

that if have as and exit right. said we any the things right, to we’re of highlight we doing to very term expansion do markets EBITDA Avon long view it's in a the Fabio sustainable that us we’ll for sense we we’ll another term term, focused with put course. to important markets to in flow. exit, margin cash a think that in few into Having short mentioned have model, to as if improve close priority that continue And half. that, if do throughout International, have on I short or markets So is speak, we operating much we’ll act to that second And the the

Ukraine, that, First is in the better but only Russia is, quarters models. we're than due two posting right. significantly in some to the and digit compare the minus double the other of to change We're X.X% trend excluding Not advances seeing before. markets commercial decline

commodity the So up helpful, to management. and productivity more of of pressure revenue the markets inflation team most very the is of And right. with has a offset done activity course pressure the good and part in job is important,

it’s of worse, reacted see gross team offset management that quarter, in basically Avon been was fast And we decrease that have was Avon able, the International, the wouldn't significant in So in much with gross International, with on would margin have this we have pressure, that the the right. you see part that even to deleverage in that margin side. which and SG&A, pressure our that important very revenue operational that team the

is So working the percentage only to improve second that, with still EBITDA and cannot be we one towards the very the levels, That that at low margin, for and point. of very of which penalty only key has for on for impacts, International to it’s for not us a as brands, QX, course critical continue the well SG&A big improve work we're Avon the course all to year, half period but priority our of profitability. in was especially to satisfied but

the that's So commercial expansion be, JP, if seems market so revisiting but going to some comment on case, yes, autonomy. our exiting continue to the SG&A. he that, if that's and the of the markets, pass model word revision case, to can also With organic I’m thorough

Joseph, JP here. Hi

your combination and which as synergies over question are on program But in see we – entire start you region, is, that I'd the roughly Avon will we additional opportunities, we Wave was also So and know yes. or like opportunities with, accelerate through integration do SG&A. to X, stabilization fist with business not bring to remind that to just additional opportunities that. through the there’s answer was trending There will move are so as the

direction in that we going So forwards, are doubt. no pushing

not retail but doing Natura. question Natura second for sales to same-store our Well, terms stores storage, well, of extremely was additional franchise is with in performing extremely The is do retail well. only for

where with we are but very that happy are our expand opportunities to think cautiously, that and to there expand. very model we will that will we expand So presence, continue

Terrific! Thank you.

Thiago Macruz question of next Itaú. The go from ahead. Please comes

or pursue from it deciding on more saw to highs? Well still the question us Hi to we say offset My guys! questions that? inventory fair whether the you are Shop. Good regarding sensitivity, Body far my morning. The Thank you are pressures increase levels can give significant Those prices two franchisees? the Body How to on the on topic, the to have that inflationary Shop. you. today of then, color on that is you tried and Is demand are guys

the still has look, course think At improving year, year-over-year, The issue story Yeah this the Thank retail COVID you, Macruz. the quarter that of given story recovery Shop the Body right. the big improved decline, down right, The is Home, on offset I hasn't we in When is Body the the year-over-year even overall compared The is course right, retail we at last which we on in footfall sense but the Shop of there is decline though is compared XXXX, digits we a is in the basically right, our and is retail MST see down look U.K., information have right the basically that right. get to XXXX, which double significant segments in mass country. main which retail that in the the public market that especially a to a

mix some half revenue categories skincare, offset Shop category right, to It on big of footfall, focus in has The in the the a which and the the on in mainly for innovation However, order in the year. action main a right. that a day, focus with the end been first like course has management of margin to of Body hasn't been price in increase big on better

it better. is improved the The management we Shop a such of and We ways has It’s though look at was at may some to mention months, we in month-over-month for inventory on we few When as to big the discounts, in The which revenue again a especially ago, be way Body intend have little our in price again for period the trends look XXXX. But and improved of with discounts sense bit the expectations. problem significantly, footfall tactical that basis. times Body even monthly the other course Shop which just than countries a improving, by few giving of is Now a just retail years the in of right, about lower QX level. some to in last increases

your of as franchisees, of in quarter the Your that of it to the the right, year. inventory the important the countries right. point been has channel March through of same lackluster April, June and of year level by margin at quarter by franchisees a inventory end the look level follows we has end has improved, that or it right the we the drives the very at significantly higher the the when question first and the beginning end operate compare on is though to trend level franchisees in so course second the Even of of day. inventory most in level improved It

So looking basis, level is a inventory certainly at on consolidated better.

right, with be clear, Shop. what higher to in very cautious, The do it especially estimated, than at countries levels expect better achieve to we at level that the still But QX just the the had retail so of QX remains least recovering some critical However, we we for in franchisees. a to Body be about continue

Perfect! Thank you much. very

of The Stephanie comes go ahead. next Jefferies. from Please question Wissink

for you our question. Thank taking

We related two question part gross to margins. have a

talk just without need help consumers significant If about you have know talked implemented on price you elasticity? price level, And brand. current about finding price the inflation, Body implement inventory maybe to strategy, are just receiving bit and about you brands you across which brand and at price a could I the Shop by but major position do franchisee global talk then to offset you. still could you that your little your side, brands, if more inventory which on Thank you are

the for this quarter, to from look, thanks impacted right. Stephanie, margin gross Thanks hear question. significantly Great was Yeah you.

at with of Latam XXX had points So at impact, right. XXX bips basically approximately Body we we We Shop margin. Avon gross impacting bips was almost The look International XXX look and

course right. gross back all big views as basically basically FX had that of of going inflationary in our them, margin and all to headwinds pressure a So we

negative of we So saw XXX FX in in bips impact inflation right. and almost

about the release. oil almost when period we and year XX% give of the well increase to compared digits of I think last to as in same wrote has double an increased example, that with Just XX%, Palm right. the pulp/paper

really and still still us I on we’re that basically there that high So and commodities a term with right. though through managing is way the big To SOP continue seeing are in room for on to BU expect basis right improve. lot our inventories, a inventories, a basically to But materials we consolidated basis. still on of think process, in we're point we’re improving our better inventories, to short your it inflation depends operating we the raw see inventory

described before, in & inventories Beauty and there at the on in to for If – momentum also to the same with first of year the basis example significant very our right, It a is right, increasing growth for gain a this continues Latam, story, Beauty more course Latam half to intend category as and Fashion continue a Avon in do we inventories first to in the right. of half of compared to the the as we HX. improvement compared Brazil than look year-to-date in of example, in year, inventories a thing we Home see second is X%, you previous in

for has the really some as and it an also impact right, I the of that's repeat the depends issues, our especially critical Shop The especially expecting still for chain retail still right. So category well, we’re on we're course very Body right country. that both supply and – operations, Aesop But in QX. look, for and

we may a preparation inventories increasing their retail QX uncertain see of the very scenario that for for little bit right. QX, in So in

again, a it’s fluid So situation.

even our at question a Did about though seeing pricing, lower a so, improving and as Stephanie? we half well of we inventory potentially to lot we all intend the are to improvements our with think Again, continue pressures you anything overall paced in second were external is and our miss I what process. right? the management do I process than of the had expecting, throughout even but We’re already lower some year.

Yes, you. Thank please.

it look, to about Latam, about best Perfect! Shop, BU’s pricing I to right. think in the of through to I exception JP then three talk has to I'm pass The But going Avon with our think talk and and both HX. going Aesop International I'm prices Body

in again, Body TBT increase. most coming active on management that as most mentioned right. part and sense in course and different [ph] haven’t we aggressively, International seeing of different proportions, categories right. in my we The as Of question, countries, operate been the actually to locations, in price good countries able that Avon of the from have been we’re different Shop best I I previous before prices of super revenue mentioned, we

through some also given it to management, course it The not repeat, more But has of been increases but Body of decrease our recovers, only the Shop, attention course in would short continue in in as some price levels the in markets. markets, Our tend compared the I mix on revenue category potentially through right. a managing course few of term, of discounts footfall pre-pandemic to

he the I’m bit a going to Latam that, little the comment can situation. pass so word to on JP, with So

what flat haven't industry where that to to America relatively Hi markets have – our prices our seeing regards right. already increasing trends our ridge. that and we main Within and competitors volumes Stephanie! and the across from the away to shied increasing own competitive try operate, As If remain in continue we is we being sure protect course are is context, now, to gross that margins. make will the Latin of we our and we we prices offerings change, against continue Thanks. so will up

helpful. you. Very Thank

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

thanks wanted just hear Brazil. already you’ve the I terms improvement I line. question. of seen in Thanks, beauty Avon, mean to about the for

you that growth and And the selling last cross you’re initial & certain you are should on made cross in course additional to don't mentioned How margins so reducing I you're there. and on right, see know cash front? the flow. we of the focused strategies when any And know wanted that the hoping Home, improving. this about adjustments to now visiting have selling. been just be I call the to productivity initial, lastly China, the Fashion if of you're just see, effects you So about overall hear there's

we Thanks. at where see are to that hoping strategy. Just

last João, question repeat can you the please?

how China? just on Have No, for China, the Guil. expansion, plans Sure China completely on are so postponed? been they

Thank I'll then to answer JP other going questions. you, the here is João. start and

So the Avon. João, from on coming are trends confident we

I Beauty, it's should quarter-on-quarter, so you and continue driven that If at trend see by choice. trends before, stabilization that mentioned you look as trending towards the which was deliberate a

& simplified As Fashion regards the we have Home, portfolio.

working our – what think you the in that we seeing you're a there, and more but and should so that’s so when there. should are productivity, stabilization. more of terms extrapolate towards – somewhat estimate Beauty, remain focus targeting profitable can we can I business sync And that reach you data business on points, if negative We

to initiatives cross you the are that. cross now selling, As acceleration second. complete better of aiming Guil, end do we we prepared this selling of should do regards the to We towards year. see a are to think the significant

you, are experiences in that about experiences super in We good the though that, be a retail, about consumers China to Aesop that especially equity operated entry has Jao. right. hasn't the difference into very indications that excited going the Yeah, I Thank and already brands Aesop basically even all will. China, within pretty and We're the of much brand luxury remain again infused offers, QX, Aesop through in awareness that it compared there also is Aesop to – have right. right, we proposition other the brand

in already the Aesop We We're of short super plan for retail with that here on and we QX. to launch will with China basically we're term short the focused commit very and decided the are term around again to about So mainly have Mainland. the China that still in that a at story the expecting expand entry infused be in in in Aesop stores be year continue locations plans, to in again, that XXXX, on in We're the plan working Shanghai, QX into end just the these location. clear, to plan two feel one, brand is right. start two the least right. But

JP, Guil and thanks. helpful Very

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

Should think on line, & integration think I a I you as I lines. those curious had for what those about your in lines that if group for leverage sort bit primarily little little I you. the I revised couple about revised talked I doing maintaining recall what XXX hoping restructuring guidance, had May what pushed of coming costs to to cost get forward are to about and is the just I more if to targets mean a well obviously quarter, be Yes exactly quarters, get was thinking management correctly, of Natura group also taking more this those detail out any restructuring. think previous for would about useful. you about which targets. Co XXXX. hi! Thanks Latam then sort my a guidance also hoping And you and the those from how of was as details, was But had in question. for the especially of Thank was guidance, we little million. bit in indication that you've recur the bit you’re more lines magnitude, of a terms

you. deliver in right. of costs, from had year Good the you're the Yeah to QX for and Latam, this in Thank namely right, you, our on Irma. approximately for to hear And we that as to question. Thanks transformation is look, efficiencies is basically R$XXX that we transformation combination. continue integration International costs we as from course, people the Latam, course with integration / related Part that related of to costs is of well. right. of people million coming of Natura Avon And in find Avon the Avon

see our going impact We half the in in impacts expect to big a took second to we look decisions year forward. cost, find is that efficiencies some the QXl; continue was QX. should right, And the where group business that of efficiencies, was it basically as to last impact continue quarter. they So for this you're the there restriction we sustainable in

but XXXX, what in the in base mapped year. that XX%, in we're had number there savings that presentation, So his if in QX, not necessarily going of especially second around the cost that, that the number is the Fábio QX. beginning is basically half that to had impact mainly of a of we basically mentioned the see in That implemented

should was recurring we a estimate the short let's second our expenses are leaner restructuring the group the group term, as about. to towards you see course more, of as savings Fábio move to So drive in say mentioned. structure more and lighter Then coming question from sorry

Guidance.

that discussed we looking potential forecasts, account mean in is Irma, as bit the again the and It the commenting to autonomy savings gives challenges, not little BU’s, which continues be at we we're reacting the before for this market the impacting the this the I guidance financial a more and in will also structure, to point. for structure governance right. transition right, only we thanks in a but Guidance, new more can group right, of idea be to model, look, in so improve agile that there on analyze know No so our committee not yes. governance.

topic, of comment a So to the that review we’re in there formal on change to is any is there nothing communication assuming continuing our guidance. but at course and the absolutely point to the market, very make to QX this strategy, we’ll especially related important changing

Okay, thank you.

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

taking my morning. Hi everyone! question. Thanks Good for

bit could one cash Just second both I us here. pretty improving you driven the generation was take quarter, so what you you Thanks a through the just in detail of much. I quick very a flow. about know hoping Guil, large little quarter. that talked mean a this has cash about and that Fabio consumption of

question. you Richard, for thank the

flow the the main quarter cash and correct? be is second to drivers, clear, about the in just question that is So the

correct, yes. That's

okay, perfect. Yeah

company I Now I to term, has of priority think Fabio said become BU’s that to mentioned, short we think already well of holding right. but that deliver to right. the is, important focus, top I don’t as for again, course want terms repetitive, very in the incentivized look, the the right. – flow right as especially be I'm again going in And say as the Cash

to So the for cash it is continue to right. firm on important very focus generation

management the mentioned, right. happy and not and We more happy capital, some to working not diligent some in short do the investment the but and term, course right. we results, and of inventory QX, the revenue that. of better Even in the one-offs already thorough some that on there results again, QX as projects up I are are terms QX a especially in – we see inventory do though understand are level catch on with the there We of as CapEx we return on on

priorities be we the it's the Richard, before there. us, We’ll for management mentioned right, I cash continue the believe continue to conversion, inventory on that of have biggest three one we'll at look working we As alternatives which to be capital. when we

are important and HX seasonality seasonal which a in but sense the the of HX, on and geography quarter second flow, cash will category the bad profitability especially through, from very tax the at to It’s where course continue again we were again also well. be we to tax we’ll of especially some especially and in of see quarter finally markets as percentage to better I not Aesop. and in, to though cash &Co to QX generation that that QX course huge for look clear and I rates, of and of cash to be see half when that the HX, in in right, catch that to basically another and that continue of a the a cash we coming lever by continue debt, to year continuing very diligent of payables, improvements, terms We is a want evolve we’ll in lever in Natura the again an again that with Aesop happy in CapEx sense. with revenues. right. results a especially up And in even we we And important continue countries for and the generation very on we is receivables; right, HX, business not understand even highlight see expect But in quarter payables be cash has in for as they most satisfactory in that in continue QX and consumption the basically right, the the year, be the big investments we especially BUs side. way and we very to in Natura have I seen in second mentioned of as critical for highlight historically net our think planning for operate to

and the answer, to HX my very delivering of beginning in deliver that focused in on the the as are flow incentivized remain important more we front. this, all BUs said cash So on much I mobilizing,

Okay, thanks very Guil. much

comes Eiger question of from go next The Danniela Investimentos. Please ahead. XP

Hi! question. for taking Thank you my

is the on expenses. The up a first follow one restructuring

was related You mainly made about the mentioned Guil this adjustments QX. on that

year. to second is wanted particular the on transformation one second on that expect understand top the if continue it just the if And could I the obviously how speech on that very bit tone continue, and may half understood in the cash on second expenses coming year Just dynamics as of of in wanted you line. across we just constructive for cautious the but provide regarding more know And of color actually release of and I more to this two maybe correct know are generation. thinking regarding the is or brands. the should about that's the half I one little the integration to quarters? you my those focused profitability, if regarding a line my it margin I last leverage. should

thinking in but just there I this you. cash about under Given wanted the about on you that businesses. the Thank that a that you're feeling to How both is forward? front you're again very lot generation, have restructuring on on view of going going a forward? know macro are focused the greater of how headwind,

corporate If in QX three basically the XXXX, but… I the reais think related million R$XX previous to anything, Thank know, of questions. you, decrease try cover in R$XXX to forget the to in to Danniela. million corporate the going year me right. a saw in the one your expenses. I quarter, the, of all of first than is more expense from let We QX I’m

we in stick. Just containment discussed course savings of There are year the expenses, cost stated phasing mainly million to going savings are release, driven as before, was actions QX clear, be that the approximately were this and announced that of by right, related to they of in as in and R$XX to are there's we already that there QX.

structure, to beginning leaner though course and deliver expect especially expect lighter we’ll the throughout continue for the we to leaner as as we term. of to do or not line again have announcements more the into come continue any expenses we even a these corporate giving of Fabio coming savings short significant savings structure continue call, flow for term we the holding of guidance that about the are But the at and bottom to to made and from mentioned level, the Now, we make in the medium type QX.

as to I was few the Look, other so fluid challenging related The places, to a a the second our are news and right. tone good of a from again bit you is the per and little on, coming think HX question, outlook a right. can I get results still showing right, environment some places sense about very think situation and

cautious, HX. being the we're So yes, about

in revenue that only inflationary gross the short term. commodities are terms BU’s you're better been We a categories see commodities of in the the still has pricing right, in to not continue expecting that We’ll pressure and which to QX, expect our second we are us But as into mix to basically play see role, course, play And margin. course, cautiously views. to quarter and I of margins, to as right, expecting we basically and revenues saw in we think we're basically still of sorry, our to QX to expecting role right, for a continue trend offset and through increases in – we saw expecting discount through HX management, a most better, but of focus our also a we in trend the in HX. QX, we our flow seeing versus of are trending management,

on margin working We are side. thorough the

not even HX, expenses one margin is just in delivering example much that scenario that are of that holding some the focused think the with I that, BU’s very challenges experiencing. you saw. are But As the only corporate the in all on

geopolitical still are markets. the is So we how yes, in it's fluid think I most certain how is and how it's by given impacted and of the the a inflation and tensions being – situation – situation the

I to providing are the about second right. though for a deliver terms type for mind of as QX the half, I cash the in right. second keep margins margins that terms course have of seasonality, margin cautious of any that is also good - even we're repeat in we again a us in the of guidance But We year. not flow half quarter results, of repeat And that, critical

we we're question we are when that Yes, to was margin, comparing third think So not that related a say we the previous our necessarily year. of HX, I but margins to I on things on look, impacted being leverage. comparing And the are leverage. cautious that to the couple think of

the there, actions EBITDA Cash supposed one of holding and and be we right. they The is perspective, through into course first of P&L Latam in of closely, so Both cash And priority. the continue margins incentivizing you of bottom should the in and again debt the course line according, as the right. of aware to has you recovering, maturity. I the Though savings the is terms transformations transformations in of level a those results and are discussed future. financial have the right. them costs – very supporting restructuring benefit of for reported priority, impact a see again, chart those us BU’s we that attract Avon are in either all think we saw From the are of an a course of or to of and more is corporate and the that cash our we priority integration

and that again comfortable as doesn't the correct. we but for term mean on We short that you were that, with in is shouldn't focus priority a us are leverage

Thank typical. you. That’s

closing our question-and-answer would back to any concludes Fabio like for This turn remarks. session. the to Barbosa conference over I

much, very us being for today. you Thank with

it we are a But how? a and was all operating to known, strategy. more This the again, have in deliver widely here challenging priority As to defined are clearly extensively environment. is is and likely discussed we

rails direction right allowing that we by all need on the by from on we the specificities. are go to focus guard which increasingly who And incentives to their go. First, BU’s the believe action, close in to people for two, setting holding the the

So thank great you and your a Good have bye! weekend! attention for

now disconnect. conference attending today's Thank The for concluded. you has and you may now presentation