Key facts
- Natura's Q2 net profit fell 92.1% to 35 million reais.
- Higher net financial expenses were the primary driver of the profit decline.
- Consolidated net revenue decreased by 9.1% to 5.17 billion reais.
- Operational issues in Brazil impacted product availability and sales.
- EBITDA declined 5.9% to 620 million reais.
- Lotus fund acquired an 8% stake in Natura.
Natura Cosméticos reported a significant 92.1% year-on-year decline in its second-quarter net profit, reaching 35 million reais ($6.85 million). This drop was primarily attributed to a substantial increase in net financial expenses, exacerbated by currency fluctuations and derivative settlements. The company's consolidated net revenue also fell by 9.1% to 5.17 billion reais ($1.01 billion), falling short of analyst expectations.
Operational challenges within Brazil significantly impacted the company's performance. Natura cited issues with product availability, stemming from difficulties in stabilizing integrated systems, SAP updates, and the relocation of production following the closure of its Interlagos factory. These operational bottlenecks, combined with a temporary ICMS-ST tax mismatch in São Paulo, led to a 14.8% decrease in Brazilian net revenue and pressured the EBITDA margin. The Natura brand saw a 14.5% sales drop, while Avon experienced a 22.5% retraction.
Consolidated EBITDA for the quarter was 620 million reais ($12 million), a 5.9% decrease compared to the same period last year. Analysts had projected a figure of 528 million reais. In contrast, Natura's operations in Hispanic America saw revenue growth of 7.2% (excluding currency effects), driven by increased commercial activity and cross-brand sales, with Mexico being a key contributor.
In response to its performance, Natura revised its 2026 outlook, prioritizing long-term business health over margin expansion that would require cutting essential investments in brand, research, development, and marketing. The company also confirmed the entry of the Lotus fund, managed by Advent International, which acquired an 8% stake. Natura's net debt stood at 3.9 billion reais, with leverage at 2.06 times EBITDA, supported by positive free cash flow generation.