Natura Cosméticos (NATU3) investor relations material

Executive summary

• Q1 2026 results were challenging, with net revenue at BRL 4.7 billion, down 7.7% year-over-year, and net loss of BRL 445 million, impacted by margin pressure, reorganization expenses, and mark-to-market on USD-denominated debt derivatives.

• Performance was affected by slower Natura-brand recovery in Brazil, macro headwinds in Argentina, and continued Avon decline, despite early signs of improvement in sell-out and channel recovery.

• The company accelerated its transition to a client-oriented, single operating model, executing 75% of planned administrative headcount reduction, aiming for a leaner organization and lower G&A.

• One-off restructuring costs and operational disruptions weighed on results, but initiatives are underway to drive margin expansion and cash generation by 2026.

Financial highlights

• Net revenues were BRL 4,745 million, down 7.7% year-over-year, with Brazil down 5.5% and Hispanic Latam down 10.5%.

• EBITDA margin was 7.3%, down 790 bps year-over-year, mainly due to BRL 221 million in non-core reorganization expenses and operational deleverage.

• Net loss was BRL 445 million, up from a BRL 50 million loss in Q1 2025, mainly due to one-off expenses and financial impacts.

• Free cash flow to firm was BRL -315 million, mainly reflecting non-core cash outflows.

• Net debt increased to BRL 4.0 billion, up BRL 565 million sequentially, with leverage ratio rising to 2.12x.

Outlook and guidance

• Margin expansion, cash generation, and shareholder returns for 2026 are reaffirmed, with significant cost savings from the new operating model expected to materialize from Q2.

• Revenue recovery is expected to be gradual, with execution risk tied to SAP system replacement in June.

• Majority of savings from the new operating model expected to be captured, with substantial reduction in restructuring expenses.