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5
th
Annual Latin American CEO Conference
Itaú Conference
New York, US | May, 2010
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Company Overview
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3
70s
80s
90s
00s
Current Moment
170
657
4.300
5
3
A small
laboratory and
two passions:
cosmetics and
relationships
(1969)
Choice to purse
a direct sales
platform
(1974)
Strong growth
based on regional
expansion and
products portfolio
Commitment with
social and
environmental
responsibility
Seek to excel in
management
Sustainable
development focus
Natura Ekos Line
developed (2000)
Natura Space,
Cajamar site opened
(2001)
IPO on the Bovespa
(2004)
Management model
evolution
New circle of growth
among other Latin
American countries
Increased
leadership in Brazil
Sales Volume Evolution (retail) in US$ million
Our History
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4
Size of CF&T Market
Retail Price, 2009 (US$ billion)
Source
: Euromonitor
Peru
Chile
Argentina
France
Mexico
Colombia
7.4
3.0
1.4
1.7
2.9
Brazil
28.4
Where we are...
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Highlights
»
Leadership in Brazil since 2004, 100 bps market share gain in 2009 (
Euromonitor
)
»
More than 1 million consultants
»
Innovation Index 67.1%
»
46% Brand Preference in Brazil
»
Follow on: Free float growth from 26% to 40%
»
Net revenues
2009: R$ 4.2 billion (+19%) / 1Q10: R$ 1 billion (+22%)
»
EBITDA
2009: R$ 1 billion (23.8%)
»
Dividends 2009: R$ 600 million (87% pay out ratio)
»
International operations: 7% of net revenues (2009)
»
Supplier communities: engaged 26 communities benefiting 2,084 families
»
Carbon free since 2007
5
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Value Proposition
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Social:
>
Wealth creation to consultants
>
R$ 60 million invested in CSR
1
in 2009
>
Benefits extended to extractives
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
7
Attractive market with
differentiated growth profile
1
Corporate and Social Responsibility
channel
products
corporate
behavior
brand
Differentiated Value Proposition
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8
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)
Source: Euromonitor 2008
The markets in which Natura operates
represent
14%
of the global CF&T market
and have a growth rate of
2.3x
that of the
total market
Direct sales share in the CF&T Market
Region
Direct Sales (%)
Latin America
26.6%
Brazil
24.0%
Argentina
24.0%
Chile
23.1%
Colombia
42.1%
Mexico
30.2%
Peru
24.9%
Asia Pacific
10.3%
North America
9.3%
Western Europe
3.2%
Australasia
3.2%
Africa / Middle East
2.1%
Source: Euromonitor 2008
Market
Relevant market with
differentiated growth in LatAm...
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... leveraged in the Brazilian
context
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%
2009
-0.2%
10.4%
CAGR `02- `09
3.4%
8.9%
2010E
5.5%
Core market growth in real terms vs.
GDP in Brazil
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
9
Market
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Leadership position in Brazil
10
Market Share Total CF&T (Euromonitor)
(Percentage)
Core Market (ABIHPEC / SIPATESP)
Natura Market Share per Segment
2009
22.5%
T: 12.4%
CF: 34.0%
Market
10.5
13.2
12.6
9.9
2003
2004
2005
2006
2007
2008
2009
Natura
Unilever
Avon
Procter & Gamble
O Boticario
Colgate
7.9
9.5
7.3
6.1
6.3
6.3
2.9
6.7
Source: Euromonitor 2009
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11
Brand recognition
Source: Ipsos Brand Essence
CF&T brand by
preference (%)
Brand
42
47
46
18
16
16
2007
2008
2009
Natura
2nd place
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P
re
st
i
ge
Masst
i
ge
Massiv
e
12
Source: Booz & Company research, 2009
Brand Position
Market
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R$ 4.95 /each
3 unit package
R$ 2.94 each
5 unit package
R$ 10.50 /each
1 unit package
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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
High productivity
1
2.2 times higher than
its peers
High satisfaction
2
90% in 2009
Training
583,000
consultants
trained in 2009
Low
turnover
36% on
average
>
Consultants are Naturas 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 in October, 2009
Business model
that generates
income and work
14
Brazil
1Q: 885,000
(+19.3%)
632
731
875
2007
2008
2009
+19.8%
Int'l
1Q: 159,000
(+32.1% )
86
119
159
2007
2008
2009
+33.9%
Total
1Q:1,044
(+21.1%)
719
850
1,034
2007
2008
2009
+21.8%
Channel
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Commercial model - 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
15
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
Brazil (2009)
1 GR
10 CNOs
1 CNO
94 CNs
1 GR
956 CNs
By the end of the 18
th
cycle.
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183
123
113
13
14
56.7%
68.8%
67.6%
66.8%
67.1%
2007
2008
2009
1Q09
1Q10
>
Sustainable use of
Brazilian biodiversity
>
Open Innovation
exceeded 50% of the
projects
>
Products with
functional, emotional
and philosophical
benefits
Innovation
16
Number of new products &
innovation index¹
Source: Company
Note:
1
Percentage of new products in the companys revenues
* Percentage of net revenue invested in innovation
2.5%*
2.6%*
3.5%*
2.9%*
2.6%*
Product
Number of launches
Innovation Index
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Launches 2010
KAIAK Pulso
Tododia
Todanoite
Ekos
Pitanga Preta
Tododia Verão
Uva Verde e Água de Coco
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Corporate behavior
18
»
Evolution on relationship quality
»
Systematic process of stakeholder engagement:
Consultants, employees, consumers, supplier communities and investors
»
1,500 people involved
»
Third company to be publicly listed on the Bovespa Novo Mercado
»
First Latin American Company to adopt the 2001 Global Reporting Initiative (GRI)
»
Part of ISE ­ Corporate Sustainability Index
»
Best company (Exame); Most admired company in Brazil, 2009 (Carta Capital)
Corporate
Behavior
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19
Triple Bottom Line Results
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Social and Environmental Results
20
CO
2
emissions
(CO2 emitted / Kg of
product sold)
Power consumption
per product sold
(Kjoules / unit)
»
Carbon Free since 2007
»
Ekos 10th anniversary: Sustainable use of biodiversity and cultural heritage.
Engagement with 26 communities, benefiting 2,084 families
»
Crer Para Ver program ­ improvement of brazilian public education: 7.1% of
the consultants joined the voluntary product selling
»
Climate research
»
consultants: 90% in 2009
»
employees: 74% in 2009
»
suppliers: 82% in 2009
4.02
3.82
3.63
2007
2008
2009
598.9
552.1
447.3
2007
2008
2009
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465
518
684
139
142
15.1%
16.1%
16.6%
14.0%
2007
2008
2009
1Q09
1Q10
Consolidated net income
Net Margin
706
860
1,008
188
243
23.0%
23.8%
22.6%
24.0%
2007
2008
2009
1Q09
1Q10
Consolidated EBITDA
EBITDA Margin (%)
3,073
3,576
4,242
834
1,014
2007
2008
2009
1Q09
1Q10
Economics
21
Net Revenues
(R$ million)
Source: Company
CAGR ,,07-,,09 = 17.5%
EBITDA and Margin
(R$ million)
CAGR ,,07-,,09 = 19.5%
21.7%
17.2%
29.5%
32.0%
2.0%
Net Income and Margin
(R$ million)
CAGR ,,07-,,09 = 21.2%
18.6%
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Economics
Leverage
(Net debt / EBITDA)
Dividends paid and pay-out ratio
(in R$ million)
CAGR ,,07-,,09 = 20.0%
Capex
(in R$ million)
Source: Company
22
136
110
141
250
2007
2008
2009
2010E
415
500
598
89%
96%
87%
2007
2008
2009
Dividends
Pay Out Ratio
0.2
0.1
0.2
2007
2008
2009
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(28)
(38)
(42)
(11)
(6)
2007
2008
2009
1Q09
1Q10
Economics ­ International operations
23
Net revenues (R$ million)
EBITDA (R$ million)
121
164
219
46
49
2007
2008
2009
1Q09
1Q10
+ 6.5%
(30.7% in local currency)
Op
er
ati
ons
i
n cons
oli
dat
i
o
n
(R
$

Mi
l
l
i
on)
(Argenti
na
,

Chi
l
e,

P
eru)
Op
er
ati
ons
i
n i
m
ple
m
e
nt
at
i
on
(R
$

Mi
l
l
i
on)
(Me
xi
co
an
d
Col
ombi
a)
22
44
66
14
19
2007
2008
2009
1Q09
1Q10
+ 38.7%
(89.7% in local currency)
(5)
(1)
9
2
(4)
2007
2008
2009
1Q09
1Q10
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»
Launch: Mexico, cicle 4/2010
»
Eau de Parfum, 50ml, Floral
»
Launch events
»
Website
»
Sampling
»
Advertising on TV and magazines
magazine
sampling
website
24
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25
Looking Ahead
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Looking ahead
Management Model
Managing through processes
Strengthening organizational
culture
Leadership development
Business and regional units
Latin America
New growth cycle
Business model focused on
increased customization
Corporate behavior
Brazil
Continue enhancing leadership via
brand and channel strength
Opportunity to gain its market
share in sub-categories
Consistent investments: Increase in CAPEX
IT (commercial and logistic processes
Logistic Model
Production capacity
26
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Management model
>
Leadership development
>
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
eg
i
ona
l

U
ni
t
Ch
a
nn
el
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
Corporate
Behavior
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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.
Vision
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Back Up
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7.2
8.3
33.0%
34.0%
2008
2009
8.0
9.3
11.3%
12.4%
2008
2009
Mercado Alvo
Market Share Natura (%)
(1) Core market: Skin care, sunscreen, makeup, perfumes, fragrances, hair care, shaving products and deodorant - excludes diapers, nail
polishes, sanitary pads, hair dyes and oral hygiene. Source: Sipatesp/ ABIHPEC.
Core Market CF&T - Brazil
30
15.2
17.5
21.6%
22.5%
2008
2009
CF&T Market¹
(R$ billion)
Cosmetics and Fragrances
(R$ billion)
Toiletries
(R$ billion)
+ 96 bps
+ 104 bps
+ 95 bps
+14.8%
+15.5%
+15.2%
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Productivity - Brazil
Consultant Productivity
1
in Brazil (R$ per average available consultant
)
2.3%
(1)
At retail prices
.
31
9,495
9,622
9,493
1,997
2,042
2007
2008
2009
1Q09
1Q10
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8
8
6
CNO Model
· Platform for channel growth
· Stronger and more productive relationship with our consultants
· Greater emphasis on training
GV / GR: Hired under CLT regulation
Brazil (1Q10)
CNO/GR
10
CN/CNO
94
CN/GR
956
By the end of the 4
th
cycle.
CNO Model
Channel
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NATU3 Performance
33
Natu3
Ibovespa
NATU3
26/04/2004
R$6.67
2004
2005
2006
2007
2008
2009
NATU3: +87.2%
Ibov: +33.0%
NATU3: +37.9%
Ibov: +28.3%
NATU3: +51.1%
Ibov: +29.1%
NATU3: -41.4%
Ibov: +47.4%
NATU3: +18.0%
Ibov: -41.4%
NATU3: +101.6%
Ibov: +82.7%
2010
NATU3: -0.2%
Ibov: -3.9 %
558%
258%
NATU3
30/04/2010
R$36.90