Natura Cosméticos (NATU3) Q3 2025 earnings summary

Executive summary

• Q3-25 results were impacted by macroeconomic headwinds, with Brazil facing a consumer slowdown and Argentina experiencing operational disturbances from the integration of Natura and Avon brands, while Mexico showed sequential improvement post-integration.

• Corporate simplification advanced, including the sale of Avon Central America and Dominican Republic, agreement to sell Avon International (ex-Russia), and completion of Avon CARD divestment; Avon Russia remains held for sale.

• Profitability contracted due to G&A deleverage outweighing gross margin and selling expense efficiencies, with net income from continuing operations at BRL -119 million.

• ESG initiatives advanced, including early sustainability reporting, Amazon agroforestry projects, and recognition for diversity and climate leadership.

Financial highlights

• Q3-25 net revenues were BRL 5,194 million, down 13.1% YoY, mainly due to Brazil's slowdown and integration issues in Argentina and Mexico, with FX and hyperinflation further impacting results.

• Underlying EBITDA for Q3-25 was BRL 577 million (11.1% margin), down 33.7% YoY; net loss from consolidated results was BRL -1,926 million, including a non-cash impairment of BRL 1.8 billion for Avon International.

• Net debt stood at BRL 4.0 billion, with Net Debt/EBITDA at 2.53x; leverage would be 1.87x excluding one-time effects.

• Free cash flow from continuing operations was an outflow of BRL -101 million in Q3-25, down from BRL +1,300 million in Q3-24.

Outlook and guidance

• Tactical actions in Q3 are expected to drive expense efficiencies in Q4, with stabilization in Mexico and improved performance in Argentina anticipated to support profitability rebound.

• Management maintains FY-25 guidance for underlying EBITDA margin expansion YoY, with structural efficiency initiatives expected to yield benefits from 2026.