Natura Cosméticos (NATU3) Q1 2026 earnings summary

Executive summary

• Net revenues declined 7.7% year-over-year to BRL 4,745 million, with Brazil down 5.5% and Hispanic Latam down 10.5%, mainly due to macro headwinds and ongoing recovery challenges in Argentina.

• Net loss reached BRL 445 million, worsening by BRL 395 million year-over-year, primarily from lower EBIT, higher non-core reorganization expenses, and deteriorated net financial results.

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

• The company accelerated its new operating model, executing 75% of planned administrative headcount reduction, with cost savings expected to materialize from Q2 onward.

• Early signs of improvement are visible in sell-out and omni/digital channels, but Q1 remained challenging with expected cash burn and margin pressure.

Financial highlights

• Gross margin decreased 160 bps year-over-year to 65.8%, reflecting pressure in Argentina and Brazil.

• Net debt increased to BRL 4.0 billion, up BRL 565 million sequentially, with leverage ratio rising to 2.11x.

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

• G&A expenses rose as a percentage of net revenues, mainly from higher employee health insurance costs in Brazil.

• Cash and equivalents at BRL 1.7 billion; total funding liabilities at BRL 6.9 billion.

Outlook and guidance

• Management reaffirms FY-26 commitments: EBITDA margin expansion over FY-25's 14.1% and robust cash generation, with cost savings from the new operating model expected to materialize from Q2 onward.

• 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 significant reduction in restructuring expenses.