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1
14th Santander Annual LatAm Conference
Cancun | January, 2010
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Our history
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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 Time
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
Our history
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4
» Revenues
net revenues 9M09: R$ 2.9 bi (19.7% vs.9M08), 2008: R$3.6 bi
gross revenues 9M09: R$ 4.0 bi (20.4% vs.9M08), 2008: R$4.9 bi
» EBITDA Margin
9M09: 24.1% (-0.7 p.p. vs.9M08), 2008: 23.7%
» Leadership in Brazil
Market Share in Brazil of 12.9% according to Euromonitor
(2008)
Market Share
1
in Brazil of 22.3% according to Sipatesp
(6M09)
» Direct selling ­ bi level (in Brazil)
Natura reached 1 million consultants worldwide in October, 2009
» International presence
Argentina, Chile, Peru, Mexico, Colombia and France
» Casas Natura
5 in Brazil and 10 in International Operations
» R&D investments
2.9% of net sales
(2008)
/
innovation index: 68.8%
(2008)
» Strong brand equity
Natura is the most desired brand in the Brazilian CF&T market with 47% in
consumer's preference
(2008)
1. Sipatesp / Abihpec Core market: Skin care, sunscreen, makeup, perfumes, fragrances, hair care, shaving products and deodorant -
excludes diapers, nail polishes, sanitary pads, hair dyes, oral hygiene and others
Company overview
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Value proposition
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Social:
>
Wealth creation to consultants
>
R$ 55 million invested in CSR
1
in 2008
>
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
Differentiated value proposition
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Relevant market with
differentiated growth in LatAm...
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
market
Direct sales share in the CF&T Market
24.9%
Peru
24.0%
Brazil
24.0%
Argentina
23.1%
Chile
42.1%
Colombia
30.2%
Mexico
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
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... leveraged in the Brazilian context
Distribution of Brazilian population
(in % by classes)
and total Brazilian population
(in million)
Source: Cetelem/Ipsos Research 2005/2006/2007/2008
market
0.2%
2009E
8.7%
3.8%
CAGR `02- `08
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%
2010E
5.0%
Core market growth in real terms vs.
GDP in Brazil
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
182,1
189,8
15%
15%
34%
45%
40%
51%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2005
2008
A and B
C
D and E
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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
Leadership in the Brazilian market
market
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CF&T brands by Prefence (%)
Natura
2
nd
Place
10
Leading brand with strong
recognition in Brazil
brand
22
27
32
23
26
22
2006
2007
2008
Top of mind (%)
Source: Ipsos Brand Essence
Natura
2
nd
Place
Source: Ipsos Brand Essence
43
42
47
19
18
16
2006
2007
2008
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1
Until 2006 awards were granted by segment (pharmaceutical, toiletry and cosmetic products). After 2007 awards were granted for the entire consumer market
sector.
>
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
Corporate behavior
Corporate
behavior
2005, 2006 and 2008
Best Company in the Brazilian CF&T Market (Valor
Econômico ­ Valor 1000)
2004, 2006, 2007, 2008 and 2009
Best Consumer Company¹
1998 and 2009
Company of the Year (Exame)
2009
Most Admired Company in Brazil (Carta Capital)
2001, 2003, 2004, 2005, 2006, 2007,
2008 and 2009
Most Admired Company in Brazilian CF&T Market
(Carta Capital)
"Empresa de Valor" award (Valor Econômico)
2005 and 2009
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104
88
181
213 225
183
119
2004 2005 2006 2007 2008 9M08 9M09
63.2%
69.8% 58.3%
56.8%
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
72
72
104
109
88
67
47
2004 2005 2006 2007 2008 9M08 9M09
Investments in innovation in R$ million
& as a percentage of net revenues
2.7% 3.2% 3.2% 3.5% 2.9%
>
Sustainable use of
Brazilian biodiversity
12
>
Open Innovation
exceeded 50% of the
projects
68.8%
>
Products with
functional, emotional
and philosophical
benefits
Product innovation
66.9%
66.8%
3.0% 2.5%
products
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Product innovation ­ new products
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Product innovation ­ kits for christmas
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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
433
520
617
719
850
803
988
2004 2005 2006 2007 2008 9M08 9M09
CAGR: 18
%
15
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
>
Natura reached 1 million consultants
worldwide in October, 2009
Business model that
generates income
and work
Channel strength
channel
+23.0%
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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
16
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
Innovation in the commercial model:
Consultora Natura Orientadora (CNO)
9
CNO/GR
96
CN/CNO
873
Brazil (9M09)
CN/GR
channel
By the end of the 13
th
cycle.
Drivers for CNO commission
>
Number of active CNs
>
Productivity of CNs
>
Number of active CNs on
related groups
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Triple bottom line results
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2008 Highlights
1
Evaluated according to ABEVD estimates on business volume
>
20% sales through refills
>
R$ 55 million invested in Corporate and Social
Responsibility (CSR) in 2008
>
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
>
Carbon free since 2007, we are committed to reducing
relative emissions by 33% between 2007 and 2011 in
relation to total emissions in 2006.
18
Social and environmental indicators
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300
397
461 465
518
379
497
2004 2005 2006 2007 2008 9M08 9M09
1.770
2.282
2.757
3.073
3.576
2.442
2.923
2004 2005 2006 2007 2008 9M08 9M09
Net Revenues
(in R$ million)
Source: Company
CAGR `04-`08 = 19.2%
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 (%)
19
+19.7%
+31.1%
15% 17%
17% 17% 17%
15%
14%
432
564
655
706
847
704
605
2004 2005 2006 2007 2008 9M08 9M09
+16.3%
25% 24%
24%
25%
23% 24%
24%
Solid historical growth
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20
... 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
Capex and EBITDA
(in R$ million)
Capex
EBITDA
706
655
847
72%
80%
78%
89%
96%
Net Debt / EBITDA
2006 2007 2008 9M09
0.2x
-0.1x
0.4x
0.1x
704
136
110
77
188
2006
2007
2008
9M09
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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%
18,6%
17,6%
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21
Gross revenues growth
(CAGR `04-`08)
1
EBITDA Margin (2008)
1
Dividend yield
2
6.0%
3.3%
2.4%
1.7%
1.7%
1.4%
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23.7%
19.2%
16.3%
15.3%
14.3%
13.4%
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... position Natura as the benchmark
within the CF&T market
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... Performing above IBOVESPA and other
consumer companies
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Looking ahead
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>
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
24
Looking ahead
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·
Focus on product innovation
·
Commercial model enhancement
·
Effective investments in communications and
marketing, funded by productivity gains and
operational efficiency (R$400 million)
·
Savings R$ 203MM (Since 2007)
·
Investments R$ 183MM (Since 2007)
·
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 gross revenues growth rate
(YoY)*
5,6%
8,4%
5,7%
7,9%
15,9%
14,3%
23,6%
19,7%16,4%
3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09
25
*
Results for 2008 and 2009 adjusted for Law 11,638/07.
* The quarters of 2008 and 2009 have a reclassification of raw material sales for processing by third parties, previously considered revenue. We emphasize that
this adjustment does not affect the absolute value of the consolidated gross margin.
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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
26
New Growth
Cycle
Note:
1
Argentina, Chile and Peru
"Export" Model
"Local" Model
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Improvement of management model
>
Development of leaderships
>
Strengthening of corporate culture based on Natura's core values
>
Implementation of regional and business units
27
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
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>
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
28
Final remarks
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Vision
29
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.
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Back-up
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31
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.
Beliefs
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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.
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Casas Natura
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34
P
r
e
s
t
i
g
e
M
a
s
s
t
i
g
e
M
a
s
s
i
v
e
Brand position
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R$ 12.80 each
Natura Aquarela
R$ 27.50 each
Natura Diversa
R$ 8.90 each
Natura Faces Zip
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Natura
Cosméticos
S.A.
Free Float
Others
Controlling
Shareholders
73.2%
0.5%
26.3%
60.0%
1
0.5%
1
39.5%
1
Pre-Offering
Post-Offering
36
Shareholders structure
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37
Size of CF&T market
Retail Price, 2009 (US$ billion)
Source
: Euromonitor
our operations
Peru
1994
Chile
1982
Argentina
1994
France
2005
Mexico
2005
Colombia
2007
8,3
2,7
1,3
1,7
2,8
16,1
Guatemala
2009 El Salvador
2009
Honduras
2009
Brazil
1969
28,8