background image
1
September, 2009 - Conferences:
Barclays Capita
Back-to-School Consumer Conference, Boston
Deutsche Bank
Global Emerging Markets Conference, New York
Morgan Stanley
12
th
Annual Latin America Conference, London
background image
Our history
background image
Our history
70's
80's
90's
00's
A small
laboratory and
two passions:
cosmetics and
human
connections
(1969)
Direct sales
model
(1974)
Strong growth
driven by regional
and product
portfolio expansion
Commitment to
social and
environmental
responsibility
Quest for Excellence
in Management
Implementation of
Corporate
Governance
Standards and
release of Annual
Reports (GRI)
Sustainable
Development
Ekos Line (2000)
Espaço Natura,
Cajamar (2001)
Initial Public
Offering (Bovespa -
2004)
Present Moment
Further develop
leadership position
in Brazil
New growth cycle in
other Latin
American countries
Continuous
improvement of
Management Model
3
Sales Volume Evolution (in US$ million)
170
657
3,552
5
background image
Business evolution: 2004 (IPO) vs. 2008
Natura's market share in Brazil:
Consolidated EBITDA (in R$ million)
and EBITDA margin:
4
Number of consultants in Brazil (in thousands):
Number of consultants - other LatAm
countries (in thousands):
Source: Company
1
Excluding Brazil
Sipatesp
Euromonitor
Source: Company
Source: Company
Source: Sipatesp (core market) and Euromonitor (total market)
11.4%
12.9%
21.6%
19.2%
2004
2008
7 LatAm
1
countries and
flagship store in France
4 LatAm
1
countries
background image
Value
proposition
background image
Differentiated value proposition
Social:
>
Wealth creation to consultants
>
R$ 55 million invested in CSR
1
>
Benefits extended to extractivist
communities
Delivery of "Triple Bottom Line":
Economic:
>
Strong cash flow generation
>
Attractive growth and profitability
>
Consistent dividend payments
Environmental:
>
Carbon neutral operations
>
Utilization of refill packages
>
Sustainable extraction
>
Use of recycled and recyclable materials
6
Attractive market with
differentiated growth profile
1
Corporate and Social Responsibility
channel
products
corporate
behavior
brand
background image
Relevant and resilient market with
differentiated growth...
Countries
2008
CAGR %
`04- `08
United States
$52
1.8%
Japan
$34
1.5%
Brazil
29
12.9%
Mexico
8
7.2%
Argentina, Chile, Colombia
and Peru
8
11.3%
Countries in which Natura operates
46
11.5%
World
333
5.4%
Size of CF&T market
(in US$ billion)
7
Source: Euromonitor
The markets in which Natura operates represent 13.8% of the global CF&T market
and have a growth rate of 2.3x that of the total market
Core market growth in real terms vs. GDP in
Brazil
GDP
growth
Core market
growth in real
terms
2002
2.7%
2.5%
2003
1.1%
7.0%
2004
5.7%
12.2%
2005
3.2%
9.6%
2006
3.8%
10.1%
2007
5.4%
8.3%
2008
5.1%
10.8%
CAGR `02- `08
3.8%
8.7%
Market grew on
average 2.3 times the
GDP
Source: IBGE, Central Bank and Abihpec
Demand drivers in Brazil
>
Increasing purchasing power of B and C income classes
>
Greater participation of women in the labor market
>
Cultural emphasis on personal and aesthetic treatments
market
background image
... and increasing share of direct sales
Distribution channels in Brazil
8
Source: Euromonitor
Direct sales share in the CF&T Market
Region
Direct Sales (%)
Latin America
26.6%
Asia Pacific
10.3%
North America
9.3%
Western Europe
3.2%
Australasia
3.2%
Africa / Middle East
2.1%
Source: Euromonitor
market
background image
Leadership in the Brazilian market
12.9%
8.2%
12.8%
9.9%
9.0%
7.6%
0.5%
7.0%
7.9%
6.0%
6.2%
5.6%
2002 2003 2004 2005 2006 2007 2008
Natura
Unilever
Avon
Procter
Colgate
Boticário
Natura's market share in the CF&T market
1
Source: Companies
1
According to Euromonitor
2
CF ­ Cosmetics and Fragrances; T ­ Toiletries
9
2008
12.9%
T: 6.8%
CF: 20.9%
Natura's market share by segment
1,2
market
background image
Leading brand with strong recognition in Brazil
CF&T brands by preference (%)
Natura
2
nd
Place
Source: Latin Panel, Interbrands and Bloomberg as of June 05, 2009
Notes:
1
Source: Interbrands
2
Considers Ambev's Market Cap
Ranking
Company
Brand
value
(in R$
BN)
Mkt. Cap
(in R$
BN)
Bradesco
(Bank)
12.1
82.8
Itaú
(Bank)
9.9
119.6
Banco do Brasil
(Bank)
8.4
55.9
Skol
2
(Beverages)
4.1
71.1
Natura
(Cosmetics)
4.0
11.0
Most valuable brands among Brazilian
public companies (2008)
1
10
brand
background image
Corporate behavior
1
Until 2006 awards were granted by segment (pharmaceutical, toiletry and cosmetic products). After 2007 awards were granted for the entire consumer market
sector.
corporate
behavior
Best Consumer Company
1
Company of the Year (Exame)
2004, 2006, 2007, 2008 and 2009
1998 and 2009
Most Admired Company in the Brazilian CF&T Market
(Carta Capital)
2001, 2003, 2004, 2005, 2006,
2007 and 2008
Best Company in the Brazilian CF&T Market
(Valor Econômico ­ Valor 1000)
2005, 2006 and 2008
"Empresa de Valor" award (Valor Econômico)
2005
>
Focus on maintaining strong relationships with all stakeholders
>
Delivers "Triple Bottom Line" results integrating economic, social, and environmental dynamics
>
One of the first companies listed on Bovespa's Novo Mercado
>
First Latin American company to adopt the 2001 Global Reporting Initiative (GRI)
>
Part of ISE Index (Corporate Sustainability Index) since its inception
>
Natura has received extensive industry and corporate recognition...
11
background image
Product innovation
Number of new products &
innovation index
Investment in innovation
Source: Company
Note:
1
Percentage of new products in the company's revenues
Number of
new products
Innovation index
1
Investments in innovation in R$ million
& as a percentage of net revenues
>
Sustainable use of
Brazilian biodiversity
12
>
Open Innovation
exceeded 50% of the
projects
>
Products with
functional, emotional
and philosophical
benefits
products
background image
Channel strength
1
Source: Company, ABEVD (Brazilian Association of Direct Sales Companies)
2
HAY Consultant annual opinion poll for consultants satisfaction
Available consultants (in thousands)
Channels differentiations
CAGR: 18%
13
Strong
growth
CAGR `04 ­ `08
of 18%
High productivity
1
2.3 times higher than
its peers
High satisfaction
2
88% in 2008
Training
458,000
consultants
trained in 2008
Low
turnover
30% on
average
>
Consultants are Natura's first
consumers
>
Drive sales through personal
relationships
>
Channels disseminate Natura's
values with consultants acting as
agents of social transformation
Business model that
generates income
and work
channel
background image
Innovation in the commercial model:
Consultora Natura Orientadora (CNO)
CNO Model
Old Model
GR
CN
CN
CN
CN
CN
CN
CN
CN
CN
CNO
CNO
CNO
CN
CN
CN
GR
CN
CN
CN
1 CNO : up to 150 CNs
1 GR: 600 CNs
14
1 GR: up to 15 CNOs
1 GR: up to 2,250 CNs
Hired under CLT regulations
· Platform for channel growth
· Stronger and more productive relationship with our consultants
· Greater emphasis on training
channel
background image
Triple
bottom line
results
background image
Social and environmental indicators
CO
2
emissions (CO2 emitted / Kg of
product sold)
Power consumption per product sold
(Kjoules / unit)
Water consumption per product sold
(liters / unit)
2008 Highlights
Source: Company
Note:
1
Evaluated according to ABEVD estimates on business volume
>
20% sales through refills
>
R$ 55 million invested in Corporate and
Social Responsibility (CSR)
>
587 thousand students of public schools
benefited from the "Crer pra Ver" Program
>
Relationship with wealth creation to 1,895
extractivist families
>
R$ 2 billion of wealth generated to
consultants
1
16
background image
Solid historical growth...
Net Revenues
(in R$ million)
Source: Company
CAGR `04-`08 = 19.6%
Net Income and net Income
Margin (in R$ million)
CAGR `04-`08 = 14.6%
Net
income
Net income
margin (%)
EBITDA and EBITDA Margin
(in R$ million)
CAGR `04-`08 = 18.3%
EBITDA
EBITDA
Margin (%)
17
background image
...combined with strong cash flow generation...
Leverage
Dividends paid and pay-out ratio
(in R$ million)
Source: Company
CAGR `04-`08 = 23.3%
216
319
360
415
500
2004
2005
2006
2007
2008
Dividends paid
Pay-out ratio
136
110
188
2006
2007
2008
Capex and EBITDA
(in R$ million)
Capex
EBITDA
706
655
847
72%
80%
78%
89%
96%
Net Debt / EBITDA
18
2006 2007 2008 1H09
0.2x
-0.1x
0.2x
0.1x
background image
...position Natura as the benchmark within the
CF&T market
Source: Companies
1
Calculated based on the respective local currency
2
Dividends paid in 2008 divided by share price on the date of each respective release
6.5% 7.1%
8.3% 8.4%
17,9%
18.6%
L
'
O
r
e
a
l
B
e
i
e
r
s
d
o
r
f
E
s
t
e
e
L
a
u
d
e
r
A
v
o
n
N
a
t
u
r
a
O
r
i
f
l
a
m
e
19
Gross revenues growth
(CAGR `04-`08)
1
EBITDA Margin (2008)
1
Dividend yield
2
13.4%
14.3%15.3%
16.3%
19.2%
23.4%
E
s
t
e
e
L
a
u
d
e
r
A
v
o
n
B
e
i
e
r
s
d
o
r
f
O
r
i
f
l
a
m
e
L
'
O
r
e
a
l
N
a
t
u
r
a
background image
Looking
ahead
background image
Looking ahead
>
BRAZIL
·
Continue enhancing leadership via brand and channel strength
·
Opportunity to gain its market share in sub-categories
1
2
3
>
LATIN AMERICA
·
New growth cycle with relevant market share
·
Business model focused on increased customization
·
Widely-recognized model due to corporate behavior
>
MANAGEMENT
·
Business units and regional units
·
Leadership developments
·
Further strengthen relationship with consumer
21
background image
·
Focus on product innovation
·
Commercial model enhancement
·
Effective investments in communications and
marketing, funded by productivity gains and
operational efficiency (R$400 million)
·
Implementation of regional and business
units
·
Continue emphasis on organizational culture
and relationships with all stakeholders
Brazil: increase leadership by leveraging the strength of the
Natura brand, network, and market growth
>
Action plan: 2008-2010
>
Growth in sub-categories
>
Differentiated Value Proposition
Quarterly net revenues growth rate (YoY)
channel
products
corporate
behavior
brand
22
12,1%
21,4%
20,1%
24,4%
17,0%
9,7%
9,0%
6,8%
10,6%
2
Q
0
7
3
Q
0
7
4
Q
0
7
1
Q
0
8
2
Q
0
8
3
Q
0
8
4
Q
0
8
1
Q
0
9
2
Q
0
9
background image
New growth cycle in other
Latin American countries
>
Well recognized value proposition
>
Financial break-even in Argentina, Chile and
Peru
>
Base of 119 thousand consultants in 2008
vs. 20 thousand in 2004
>
Develop a "local" marketing approach
-
Products
-
Channel
-
Communication
>
Utilize positive recognition based on
corporate behavior to further develop
relationships
>
Improvements in operational efficiency
Current status
Future strategy
23
New Growth
Cycle
Note:
1
Argentina, Chile and Peru
"Export" Model
"Local" Model
background image
Improvement of management model
>
Development of leaderships
>
Strengthening of corporate culture based on Natura's core values
>
Implementation of regional and business units
24
A B C
D
São Paulo Metro
São Paulo
Countryside
Mid West
1
North/Northeast
South
R
e
g
i
o
n
a
l

U
n
i
t
C
h
a
n
n
e
l
s
Business Units
Management by Category and Brands
>
Proximity to market
>
Regionalization of marketing mix
>
Increased autonomy and accountability
>
Leadership development opportunities
Note:
1
Includes the Mid West region and the following states: Minas Gerais, Rio de Janeiro and Espírito Santo
background image
Final remarks
>
Focus on attractive and resilient markets with differentiated growth potential within the
direct sales model in Brazil and in other Latin American countries, with the ambition and
potential to expand in to other regions/countries
>
Industry-leading position and a benchmark in corporate behavior
>
Differentiated value proposition
>
Preferred brand among consumers
>
Consistent innovation focused on biodiversity and sustainability
>
Efficient and growing sales channel with income generation for consultants
>
Corporate behavior focused on the "Triple Bottom Line" and relationship with all
stakeholders
>
Unique combination of growth, profitability, low capital needs and consistent distribution of
dividends
25
Natura is poised to continue growing and innovating its value proposition to
be the front-runner in contributing for the development of a society based on
sustainability model aligned with our vision
background image
Vision
26
Because of its corporate behavior, the
quality of the relationships it
establishes and the quality of its
products and services, Natura will be
an international brand, identified
with the community of people who are
committed to building a better
world, based on better relationships
among themselves, with others, with
nature of which they are part,
with the whole.
background image
Back-up
background image
28
Beliefs
Life is a chain of relationships.
Nothing in the universe exists
alone. Everything is
interdependent.
We believe that valuing relationships
is the foundation of an enormous
human revolution in the search for
peace, solidarity, and life in all of its
manifestations.
Continuously striving for
improvement
develops individuals,
organizations,
and society.
Commitment to the truth
is the route to perfecting the quality
of relationships.
The greater the diversity,
the greater the wealth and vitality of the
whole system.
The search for beauty,
which is the genuine aspiration of
every human being, must be free of
preconceived ideas and manipulation.
The company, a living organism, is a
dynamic set of relationships
Its value and longevity are connected to
its ability to contribute to the evolution
of society.
background image
Reason for being
Our reason for being is to create and sell
products and services that promote well-
being/being well.
Well-being
is the harmonious, pleasant
relationship of a person with
oneself, with one's body.
Being well
is the empathetic,
successful, and gratifying
relationship of a person
with others, with nature
and with the whole.
background image
Casas Natura
background image
31
P
r
e
s
t
i
g
e
M
a
s
s
t
i
g
e
M
a
s
s
Brand Position
background image
Prestige
R$ 11,20 /each
1 unit package
Mass
R$ 2,80 /each
5 unit package
"Masstige"
R$ 4,60 /each
3 unit package
background image
Natura
Cosméticos
S.A.
Free Float
Others
Controlling
Shareholders
Shareholders Structure
73.2%
0.5%
26.3%
60.0%
1
0.5%
1
39.5%
1
Pre-Offering
Post-Offering
33