Natura &Co net income more than doubles in Q3

SÃO PAULO, Nov. 8, 2018 /PRNewswire/ -- Natura &Co posted another strong quarter of growth in 2018, with consolidated sales rising by 37.1% in Q3 on a reported basis, reaching R$3.24 billion. On an adjusted¹ basis, consolidated net revenue grew 16.6% in the third quarter of 2018, compared to the same period last year, with strong performance across all three businesses. In the first nine months of the year, reported sales were up by 48.1%, reaching R$ 9.1 billion, and adjusted net revenue improved by 13.7%.

Reported net income more than doubled in the third quarter, with a rise of 118% to R$132.8 million, driven by higher EBITDA and lower financial expenses. This strong result was achieved despite hyperinflationary accounting effects in Argentina and The Body Shop's transformation costs. Underlying operating income grew on an adjusted basis by 10.2% in the third quarter, to R$326.6 million, and by 30.4% in 9M18, to R$754.1 million.   

Roberto Marques, Natura &Co's Executive Chairman of the Board stated: "Natura &Co posted another quarter of solid performance, providing new evidence of the growing momentum and strength of our global, multi-brand, multi-channel group. Natura in Brazil and Latam grew in core categories and online, while The Body Shop's sales increased boosted by head franchise orders and stable company stores sales. Aesop maintained its stellar growth, both in like-for-like store sales and online".

On the back of market share gains and rising productivity per consultant, Natura's revenue (Brazil and Latam) was up by 4.5% in Q3 and 7.4% in 9M18 on a reported basis. In Brazil, net revenue increased 9.4% in the third quarter, with continued gains in market share, outperforming the market in key categories. The eighth consecutive quarter of productivity gains by consultants also showed the dynamism of its new commercial model (Relationship Selling). In Latin America, reported revenue was down by 7.8% in the quarter and up 11.1% in 9M18, negatively impacted by the adoption of hyperinflationary accounting rules in Argentina. Comparable net sales, excluding these effects, were up 16.9% at constant exchange rates, driven by increased number of consultants and strong performance in Mexico, Argentina and Chile.

Boosted by head franchise sales, The Body Shop's adjusted revenue increased by 3.6% (constant exchange rates) both in the quarter and in the first nine months of the year, and 26.8% in Brazilian Reais in Q3 and 21.5% in 9 months. The brand continued to show progress in the implementation of its transformation plan and adjusted EBITDA more than doubled in the quarter, excluding expected transformation costs. This demonstrates new advances in operational efficiency, mainly driven by store closures, and reflects a lower discount level.

Aesop continued its remarkable growth, with reported revenue up by 34.8% in Q3 and 33.9% in 9M18, at constant exchange rate, with solid performance in all channels and geographies. Signature store's like-for-like sales were up by 17.0% in Q3-18, and there were 6 store launches in the quarter, including the first store in Rome.  

Natura &Co's EBITDA registered solid growth, reaching R$483 million in the third quarter, up by 7.2% on a reported basis. Adjusted EBITDA grew by a strong 33.7% in Brazilian Reais in the third quarter of 2018 vs the same period last year, to R$496.6 million.

Net debt to EBITDA ratio improved to 3.27 times in Q3, from 3.52 times in the same period of last year, in line with expectations.

The company also continued to make a positive social and environmental impact. The Body Shop submitted to the United Nations a petition signed by over 8.3 million people supporting its global campaign against animal testing in cosmetics.

This campaign was also supported by Natura, which recently received two key certifications attesting that it does not test products on animals: The "Leaping Bunny" label granted by Cruelty Free International (The Body Shop's partner in its petition campaign) and a seal granted by People for the Ethical Treatment of Animals (Peta), a leading animal rights organization. Aesop committed to a three-year partnership agreement with an Indigenous cooperative-owned Australian grower and producer of native Sandalwood oil. "With these solid achievements, Natura &Co is on track to deliver on its medium-term financial targets while making a positive social and environmental impact, underscoring its commitment to building a global purpose-driven Group that creates value for its stakeholders", stated Roberto Marques.

About Natura &Co
Resulting from the combination of Natura, Aesop and The Body Shop, the corporate brand Natura &Co consolidates the creation of a global, multi-channel and multi-brand cosmetics group that is driven by purpose. The three companies that form the group are committed to generating positive economic, social and environmental impact. Founded in 1969, Natura is a Brazilian multinational in the cosmetics and personal care segment, leader in direct sales. Founded in 1976 in Brighton, England, by Anita Roddick, The Body Shop is a global beauty brand that seeks to make a positive difference in the world. The Australian beauty brand Aesop was established in 1987 with a quest to create a range of superlative products for skin, hair and the body.

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¹ Adjusted: Excludes The Body Shop's transformation costs and acquisition expenses, hyperinflation effects in Argentina and other effects in Brazil; Includes The Body Shop pre-acquisition figures, for comparable purposes. 

SOURCE Natura &Co