background image
São Paulo, July 21
st
, 2010 ­ Natura
Cosméticos S.A. (BM&FBovespa: NATU3)
announces today its results for the second
quarter of 2010 (2Q10).
Except where stated
otherwise, the financial and operating information in this
report is presented on a consolidated basis, in
accordance with International Financial Reporting
Standards (IFRS).
1. FINANCIAL PERFORMANCE

Natura posted good results in the second quarter of 2010. Consolidated net revenue grew
by 24.1% to R$1,283.6 million. EBITDA achieved R$331.8 million, improving by 32.2% and
margin of 25.9%, while net income came to R$191.5 million, up by 13.8%.

In the first half of the year, consolidated net revenue was R$2,298.0 million, 23.0% up on
the same period in 2009. EBITDA amounted to R$575.3 million, 31.0% higher than in
2009, and margin of 25.0%. Net income was R$333.1 million in the first six months, up by
8.5% year on year.

The innovation index
1
remained high at 68.1% in the first six months (versus 64.6% in
1H09). The second quarter featured various important launches: a new perfume "Kaiak
Pulso" set a sales record at 1.9 million units sold in the product launch cycle; relaunch of
"Chronos" line, with a whole new way of differentiating skin care - in addition to
chronological age, consumers can also select products based on the intensity of visible
signs - accompanied by improvements in the product formulations; and "Tododia Inverno",
which features six body and bath products that offer innovative moisturizing solutions. In
all, 38 products were launched in the quarter, which, together with 14 products launched in
1Q10, represent a total of 52 new products in the first half of this year.

It is also important to note the solid execution of our strategies for Mother's Day and
Valentine's Day, with strong marketing support for consultants and final consumers, which
had positive impacts on sales.

Also on the subject of innovation and in line with our strategic guideline to continually
lower the environmental impacts caused by our packaging, we recently announced a
partnership with Braskem
2
for the launch of the first cosmetics product in Brazil with
packaging made from green polyethylene, which is also known as green plastic. Made from
sugarcane, a renewable source, this innovation will help to reduce greenhouse gases
emission. Green polyethylene will be gradually rolled out on our refill packages, beginning
last quarter this year.
1
Percentage of new products in the company's revenues
2
Brazilian petrochemical and thermoplastic resins producer.
background image
2
Our sales channel continued to growth vigorously. At the close of the quarter, our
consolidated consultant base totaled 1,118,900, up 19.2% over the same period last year.
In Brazil, we reached 941,900 consultants, 17.9% up, reflecting the full ramp-up and
efficient operation of the Natura Super Consultant (CNO) sales model, which was fully
implemented in May last year. The number of consultants in international operations
increased by 26.3% to 177,000.

In Brazil, quarterly net revenue grew by 24.3% to R$ 1,190.8 million (growth of 23.4% to
R$ 2,133.2 million in 1H10). The EBITDA margin in the quarter was 28.9%, versus 28.5%
in 2Q09 (28.6% margin in 1H10, versus 28.0% a year earlier). Our market share in the
target market was 23.7% in the first two months of 2010, up by 90 basis points, according
to the São Paulo State Perfumery and Toiletry Association (SIPATESP) and the Brazilian
Association for the Cosmetics, Toiletry and Fragrance Industry (ABIHPEC).

The additional investments made in the marketing mix since the Action Plan was initiated in
2008 totaled R$281.0 million, and were financed by the productivity gains of R$335.0
million until the first half this year.

Net revenue from current international operations recorded growth of 40.0% in weighted
local currency between 2Q09 and 2Q10. In the six months to June 30th, this growth was
39.7% in local currency. Excluding Venezuelan operations, net revenue grew by 43.3% in
2Q10 and 43.1% in the first semester in weighted local currency. Operations in
consolidation (Argentina, Chile and Peru) posted positive results, with EBITDA of R$5.4
million in the second quarter and R$1.8 million in the first six months.
O
perations in
implementation (Mexico and Colombia) recorded negative results of R$6.4 million in 2Q10,
compared with negative results of R$14.0 million in 2Q09. In 1H10, these losses totaled
R$12.8 million.

As previously announced, we are increasing customization in our Latin America operations.
In order to sustainably accelerate our growth in these markets, we have been increasing
our efforts to localize concepts and products, adapting them to local consumers. These
measures include the implementation of a sales model (CNO) adjusted to the local culture
expected for 2011 and 2012; and the beginning of outsourced local production of some
items of our portfolio, leading to economic benefits, costs reductions, and environmental
gains due to lower greenhouse gas emissions from transportation. The model will focus on
local products, instead of own manufacturing. We plan to begin production in at least one
country by December 2010 and intensify these actions next year.

International operations are defined as our business in Argentina, Chile, Peru, Mexico,
Colombia and France, distributors in Bolivia and Central America and corporate
expenditures with our structure, currently based in Argentina, and with projects dedicated
to these initiatives. In these operations, 177,700 consultants are managed by 833 sales
supervisors, meaning 213 consultants per sales supervisor in 2Q10, a 26.7% increase over
2Q09.
background image
3
At the close of the quarter, our total debt was R$637.5 million, already including the R$350
million non convertible debentures launched last May, designed to extend our debt profile.
Demand for the debentures was more than double the offer.

Standard & Poor's assigned "brAAA" ratings to Natura Cosméticos and its debentures
issuance. This was the first time Natura was subject to this rating. As a result of the
transaction, two-thirds of the company's debt is currently long term. Net debt ended the
quarter at R$181.5 million, which corresponds to 0.2x LTM EBITDA.

2. SOCIAL AND ENVIRONMENTAL PERFORMANCE
Over the years, we have established clear commitments to improve our performance
indicators, as part of our effort to continually optimize our sustainability management. We
currently monitor 16 indicators, which make up what we call the social and environmental
budget and which are related to priority sustainability issues: Biodiversity, Greenhouse
Gases, Education, Impact of Products (solid waste) and Quality Relationships.

In the second quarter of 2010, we reduced relative greenhouse gas emissions sharply by
4.1%, thanks to improvements in the logistics process, especially the transportation of
products to final consumers and exports to international operations. In addition, we have
exceeded the annual target for collections for the "Crer par Ver" (Believing is Seeing)
program, which aims to improve the quality of public education in Brazil, confirming the
ability of our sales team to mobilize in favor of education, a key sustainability issue.
Indicator
2009 Commitment
2009 Results
2010 Commitment
1H10 Results
Greenhouse gases
Reduce greenhouse gas
emissions by 33% by 2011,
considering the inventory we
conducted in 2006.
-5,20%
Reduce greenhouse gas
emissions by 33% by 2011,
considering the inventory we
conducted in 2006.
-4,10%
Water
consumption
None
0.527 liter/unit billed
Reduce water consumption per
unit billed by 10%.
0.515 liter/unit billed
Collections CPV
Collect R$ 3.744 million from
the sales of products
R$ 3.768 million
Collect R$ 6 million from the
sales Crer Para Ver line.
R$ 6.153 million
background image
4
3. THE COSMETICS, FRAGRANCES AND PERSONAL CARE SECTOR IN BRAZIL

The target market for cosmetics, fragrances and personal care products in Brazil continues
to perform well. According to data from SIPATESP/ABIHPEC
3
, the target market posted
growth of 12.7% in the first two months of this year, with the cosmetics & fragrances
segment growing by 18.4% and the personal care segment expanding by 8.8% in the
same period. Our market share in the first two months of 2010 was 23.7%, up from 22.8%
in the same period a year earlier.

The table below shows Natura's share in both the cosmetics & fragrances and personal care
segments.
> CF&T Core Market Net Revenues Breakdown and Natura's Market Share in Brazil
2M10
2M10
Change %
2M10
2M10
Change %
Cosmetics and Fragrances
1.011,9
854,5
18,4%
38,7%
37,3%
1,4
Toiletries
1.383,8
1.271,6
8,8%
12,7%
12,0%
0,6
Total
2.395,7
2.126,1
12,7%
23,7%
22,8%
0,9
Source: SIPATESP
Market Share - Natura (%)
Core Market (R$ million)
According to 2009 data from EUROMONITOR
4
, the total cosmetics & fragrance and personal
care segments (CF&T) grew by 14.7% in Brazil. Natura increased its leadership position in
the total CF&T market (first achieved in 2005), with a market share of 13.2%, up by 30
basis points in the year.
3
São Paulo State Perfumery and Toiletry Industry Trade Union /
Brazilian Association for the Cosmetics, Toiletry and
Fragrance Industry
.
4
Euromonitor mesures companies market share over retail prices in total CFT market.
background image
5
4. CONSOLIDATED RESULTS
2Q10
2Q09
Change %
1H10
1H09
Change %
Total Consultants - end of period*
(in thousand)
1.118,9
938,8
19,2
1.118,9
938,8
19,2
Unit sold ­ items for resale
(in million)
98,5
89,4
10,2
98,5
89,4
10,2
Gross Revenues
1.736,2
1.412,8
22,9
3.117,7
2.552,6
22,1
Net Revenues
1.283,6
1.034,3
24,1
2.298,0
1.867,9
23,0
Gross Profit
883,6
732,5
20,6
1586,3
1304,6
21,6
Gross Margin (%)
68,8%
70,8%
-2,0 pp
69,0%
69,8%
-0,8 pp
Sales Expenses
(413,8)
(365,1)
13,3
(762,6)
(661,3)
15,3
General and Administrative Expenses
(150,4)
(137,0)
9,8
(277,4)
(244,0)
13,7
Management compensation
(2,8)
(3,5)
na
(6,8)
(7,5)
na
Other Operating Income / (Expenses), net
(12,4)
0,7
na
(13,2)
0,6
na
Financial Income / (Expenses), net
(12,8)
(19,7)
-34,9
(19,4)
(12,8)
51,3
Earnings Before Taxes
291,5
208,0
40,1
506,9
379,5
33,6
Net Income (Losses)
191,5
168,3
13,8
333,1
307,0
8,5
Net Margin (%)
14,9%
16,3%
-1,4 pp
14,5%
16,4%
-1,9 pp
EBITDA**
331,8
250,9
32,2
575,3
439,1
31,0
EBITDA Margin (%)
25,9%
24,3%
1,6 pp
25,0%
23,5%
1,5 pp
> Consolidated Financial Summary
(R$ million)

Consolidated net revenue was R$1,283.6 million in 2Q10, up by 24.1% from 2Q09
(R$2,298.0 million in 1H10, 23.0% up). In Brazil, net revenue came to R$1,190.8 million in
the quarter, 24.3% more than in the same quarter a year ago (R$2,133.2 million in 1H10,
23.4% up).

Total international operations recorded net revenue of R$92.8 million in 2Q10, up by
21.8% from 2Q09 and 40.0% in weighted local currency (R$164.8 million in 1H10, for
growth of 18.2% and 39.7% in Brazilian currency and weighted local currency,
respectively). International operations accounted for 6.9% of net revenue in the quarter,
versus 7.0% in 2Q09. In the first half of the year their contribution to net revenue stood at
6.9%.
background image
6
In Brazil our consultant base posted strong growth of 17.9%, driven by the CNO model.
Productivity
5
in the first half of the year grew by 2.5% (R$4,498 in 2010, versus R$4,386
in the previous year), reflecting the more consistent policy for price increases, good
launches in the period and successful strategies for Mother's Day and Valentine's Day.

Cost of Goods Sold (COGS) increased from 29.2% of net revenue in 2Q09 to 31.2% in
2Q10, squeezing gross income by 200 basis points. This variation is explained by the
higher volume of losses resulting from the policy of increasing inventories in 2009, the
higher share of Mother's Day's and Valentine's Day's kits in sales, and the unfavorable
currency translation impact on international operations. In the first half of the year, COGS
totaled 31%, versus 30.2% in 1H09, due to the same reasons.

The table below presents the main components of COGS:
2Q10
2Q09
1H10
1H09
RM/PM*
26,2
23,9
25,5
24,2
Labor
2,2
2,1
2,4
2,5
Depreciation
0,9
1,0
1,0
1,1
Others
1,9
2,1
2,0
2,4
Total
31,2
29,2
31,0
30,2
(*) Raw material and packaging material
> Composition of Cost of Good Sold
(% Net Revenues)

Selling expenses corresponded to 32.2% of net revenue in 2Q10, down by 310 basis
points from 35.3% in 2Q09. In the first six months of the year, selling expenses
corresponded to 33.2% of net revenues, or 220 basis points down from the 35.4%
recorded in 1H09. Investments in marketing remain robust, with an emphasis on
supporting new product launches, as well as training and events for the sales team, which
should intensify in the second half of the year. More efficient logistics and lower costs with
our catalog, combined with dilution of international expenses, also favored by impacts from
currency translation, reduced these expenses as a percentage of net revenue.

General and administrative expenses also recorded a dilution of 140 basis points in the
quarter (13.1% of net revenue in 2Q09, versus 11.7% in 2Q10) and 90 basis points in the
first six months (13.0% in 1H09 and 12.1% in 1H10).
5
Productivity measured at retail prices
background image
7
Other operating expenses/revenue amounted to R$12.4 million in 2Q10 and R$13.2
million in 1H10, due to complement for employees under the post-retirement healthcare
plan, increasing actuarial liabilities and the physical counting performed in the plant and
distribution centers, according to the prevailing policy.

Consolidated net income before income tax and social contribution was R$291.5
million in 2Q10, an increase of 40.1% from a year earlier. Consolidated net income was
R$191.5 million in the quarter, up by 13.8% from R$168.3 million in 2Q09. In the first six
months, consolidated net income came to R$333.1 million, 8.5% up on 1H09. In 2009,
income tax and social contribution effective rates were lower due to the accelerated
amortization of goodwill in the period, a benefit that expired that year. This year, the
effective tax rate applied is 34.3%.

Consolidated EBITDA was R$331.8 million in 2Q10, up by 32.2% from R$250.9 million in
2Q09. Margin expanded from 24.3% in 2Q09 to 25.9% in 2Q10. In the first half of the
year, EBITDA was R$575.3 million, 31.0% up year on year, while margin improved from
23.5% in 1H09 to 25.0% in 1H10. We reiterate our commitment to maintaining EBITDA
margin at a minimum of 23.0% for 2010.
2Q10
2Q09
Change %
1H10
1H09
Change %
Net Revenues
1.283,6
1.034,3
24,1
2.298,0
1.867,9
23,0
(-) Cost of Sales and Expenses
979,4
806,6
21,4
1.771,7
1.475,7
20,1
EBIT
304,3
227,6
33,7
526,3
392,3
34,2
(+) Depreciation/Amortization
27,6
23,3
18,3
49,0
46,8
4,8
EBITDA
331,8
250,9
32,2
575,3
439,1
31,0
> EBITDA (R$ million)
2Q10
2Q09
Change %
1H10
1H09
Change %
Brazil
343,8
273,2
25,8
610,7
483,2
26,4
Argentina, Chile and Peru
5,4
3,7
45,7
1,8
5,2
(64,6)
Mexico, Venezuela and Colombia
(6,4)
(14,0)
(54,1)
(12,8)
(25,4)
(49,6)
France and USA
(10,8)
(11,9)
(8,7)
(24,4)
(25,6)
(4,9)
Total
331,8
250,9
32,3
575,4
437,4
31,5
> EBITDA pro-forma by areas of operation (R$ million)
background image
8
> CASH FLOW
2Q10
2Q09
Var %
Net income
333,1
307,0
8,5
(+) Depreciation and amortization
49,0
46,8
4,8
Internal cash generation
382,1
353,8
8,0
Cashflow (Increase) / Decrease
60,6
(58,9)
(203,0)
(+) Non-cash
4,5
(21,1)
(121,3)
Operating cash generation
447,2
273,9
63,3
Capex
(63,0)
(46,6)
35,3
Free cash flow*
384,2
227,3
69,1
(*) (Internal cash generation) +/- (changes in working capital and long-term assets and liabilities) ­ (acquisitions of property, plants, and
equipment).
> Consolidated cash flow ­ pro-forma (R$ million)
Internal cash flow was R$ 382.1 million in 1H10, up by 8.0%, reflecting net income growth
of 8.5% due to the end of the tax benefits from goodwill amortization in 2009. This total
included a reduction of R$60.6 million in working capital as well as investments of R$63.0
million in fixed assets. As a result, free cash flow grew by 69.1% to R$384.2 million in
2010.

As announced, inventory coverage days continued to decline. We are continuing to work
on structural measures to increase the flexibility and integration of the supply chain,
improve the continuous planning process and optimize the distribution network in the
medium and long term.

Recoverable taxes returned to the levels recorded at the end of 2009, reflecting the
effectiveness of our negotiations with the government, which should reduce the balance
even further in the coming quarters.

For 2010, we are maintaining our Capex estimate of R$250 million, which will be
concentrated in logistics capacity and information systems.
5. Pro-Forma Income Statements

The profit margin of Brazilian exports to international operations was subtracted from the
COGS of the respective operations in order to show the actual impact of these subsidiaries
on the company's consolidated result. Thus, the pro-forma Income Statement for the
Brazilian operations presents only domestic sales figures.

background image
9
5.1 BRAZILIAN OPERATIONS ­ Pro-Forma Income Statement
> Financial Highlights - Brazil
(R$ million)
2Q10
2Q09
Change %
1H10
1H09
Change %
Total Consultants -
end of period
*
(in thousand)
941,9
798,7
17,9
941,9
798,7
17,9
Unit sold ­ items for resale
(in million)
88,5
82,2
7,6
174,8
155,9
12,1
Gross Operating Revenues
1.618,9
1.317,1
22,9
2.909,8
2.376,9
22,4
Net Operating Revenues
1.190,8
958,0
24,3
2.133,2
1.728,4
23,4
Gross Profit
827,5
680,5
21,6
1.488,1
1.211,7
22,8
Gross Margin (%)
69,5%
71,0%
-1,5 pp
69,8%
70,1%
-0,3 pp
Sales Expenses
(363,8)
(312,4)
16,5
(666,7)
(564,4)
18,1
General and Administrative Expenses
(132,0)
(114,5)
15,3
(204,6)
(174,3)
17,4
Management compensation
(2,8)
(3,5)
(18,0)
(6,8)
(7,5)
(9,1)
Other Operating Income / (Expenses), net
(11,3)
1,0
(1207,0)
(11,2)
1,4
(883,6)
Financial Income / (Expenses), net
(12,4)
(20,4)
(39,0)
(17,7)
(12,7)
39,8
Earnings Before Taxes
305,2
230,8
32,2
546,6
426,5
28,1
Net Income (Losses)
207,5
194,6
6,6
376,8
360,0
4,7
EBITDA
343,8
273,2
25,8
610,7
483,2
26,4
EBITDA Margin (%)
28,9%
28,5%
0,4 pp
28,6%
28,0%
0,7 pp
The number of consultants in Brazil achieved 941,900 at the close of 2Q10, 17.9%
more than in 2Q09, reflecting the full implementation of the CNO model beginning
May 2009. In 2Q09, the CNO model was implemented in Brazil's North and South
regions as well as in the city of São Paulo.
As a result of the action plan implemented in 2008, we continue to observe an
increase in orders placed over the Internet, which accounted for 84.0% of all orders
in the quarter, versus 68.6% in 2009.
background image
10
5.2 OPERATIONS IN CONSOLIDATION (Argentina, Chile and Peru)
2Q10
2Q09
Change %
1H10
1H09
Change %
Total Consultants -
end of period
*
(in thousand)
123,7
101,0
22,5
123,7
101,0
22,5
Unit sold ­ items for resale
(in million)
6,8
5,2
32,1
12,4
9,7
28,2
Gross Revenues
85,0
71,2
19,3
149,3
131,9
13,2
Net Revenues
64,9
54,7
18,5
114,0
100,9
13,0
Gross Profit
40,1
37,9
5,9
68,8
67,8
1,5
Gross Margin (%)
61,8%
69,2%
-7,4 pp
60,4%
67,2%
-6,8 pp
Sales Expenses
(29,8)
(29,7)
0,2
(57,1)
(53,9)
5,9
General and Administrative Expenses
(4,6)
(5,3)
(11,7)
(9,4)
(10,0)
(6,0)
Others Income / (Expenses), net
(1,1)
0,2
-
(2,0)
0,3
-
Financial Income / (Expenses), net
(0,6)
0,5
-
(0,3)
(0,2)
-
Earnings Before Taxes
4,0
3,6
10,7
0,1
4,1
(96,7)
Net Income (Losses)
2,2
1,0
122,7
(3,0)
(0,0)
11093,6
EBITDA
5,4
3,7
45,7
1,8
5,2
(64,6)
EBITDA Margin (%)
8,3%
6,7%
1,5 pp
1,6%
5,2%
-3,6 pp
> Financial Highlights - Operations under Consolidation
(Argentina, Chile and Peru)
(R$ million)
Net revenue from operations in consolidation was R$64.9 million in 2Q10, up by
34.3% in weighted local currency on 2Q09, and R$114.0 million in 1H10, up by
32.7% in weighted local currency.
The number of consultants increased by 23.3% to 123,700 at the end of 2Q10.
In the second quarter, operations in consolidation recovered to once again posted
positive results, with EBITDA of R$5.4 million in 2Q10, versus R$3.7 million in 2Q09,
and R$1.8 million in 1H10, versus R$5.2 million in 1H09. The gross margin narrowed
in 2Q10, the increase in prices being insufficient to offset the depreciation of the
currency basket, although this was mitigated by the dilution of selling and
administrative expenses and the postponement of marketing expenses.
5.3 OPERATIONS IN IMPLEMENTATION (Mexico, Colombia and Venezuela)
background image
11
2Q10
2Q09
Change %
1H10
1H09
Change %
Total Consultants -
end of period
*
(in thousand)
52,1
38,1
37,0
52,1
38,1
37,0
Unit sold ­ items for resale
(in million)
3,0
1,9
53,1
5,7
3,5
63,7
Gross Revenues
27,7
20,2
37,4
50,2
36,1
39,0
Net Revenues
23,9
17,6
36,0
43,3
31,6
37,2
Gross Profit
13,4
11,8
13,8
24,9
20,9
19,1
Gross Margin (%)
56,2%
67,2%
-11,0 pp
57,5%
66,2%
-8,7 pp
Sales Expenses
(17,1)
(18,9)
(9,9)
(32,1)
(35,3)
(9,0)
General and Administrative Expenses
(3,4)
(6,9)
(51,2)
(6,5)
(10,9)
(40,1)
Financial Income / (Expenses), net
0,2
0,3
-
(1,4)
0,1
-
Earnings Before Taxes
(6,8)
(14,3)
(52,8)
(15,1)
(26,3)
(42,6)
Net Income (Losses)
(7,2)
(15,2)
(52,3)
(16,0)
(28,0)
(42,8)
EBITDA
(6,4)
(14,0)
(54,1)
(12,8)
(25,4)
(49,6)
EBITDA Margin (%)
-26,9%
-79,8%
52,9 pp
-29,6%
-80,6%
50,9 pp
> Financial Highlights - Operations under Implementation
(Mexico, Venezuela and Colombia)
(R$ million)
Net revenue from operations in implementation totaled R$23.9 million in 2Q10,
62.5% up in weighted local currency (excluding Venezuela in 2009); in 1H10, this
figure increased by 67.0% to R$ 43.3 million.
The number of consultants increased by 37.0% to 52,100 at the end of 2Q10.
These operations recorded EBITDA loss of R$6.4 million in 2Q10, versus EBITDA loss
of R$14.0 million in 2Q09. In the first six months, EBITDA loss was R$12.8 million,
versus EBITDA loss of R$25.4 million in 1H09, when results were impacted by the
discontinuation of our operations in Venezuela. The gross margin narrowed in the
quarter due to the devaluation of the currency basket.
TINA (
Other investments in international operations recorded loss (EBITDA) of R$10.8 million in
2Q10, versus a loss of R$11.9 million in 1Q09. In 1H10, this figure was a loss of R$24.4
million, versus a loss of R$24.2 million in 1H09.
5.4 OTHER INTERNATIONAL INVESTMENTS
background image
12
In 2010, these investments consist of our French operations and projects and expenses
relating to our Latin America corporate office in Buenos Aires, whose team is still being
formed. In 2009, investments include our French operations and expenses with the
deactivation of the U.S. operations.

On July 21
st
, 2010, the Board of Directors approved the management's proposal, ad
referendum of the Annual Shareholder's Meeting to be held in 2011, for the payment, on
August 12
th
, 2010, of dividends related to net income recorded in the first half of 2010 and
interest on equity related to the period from January to July, 2010, in the amounts of
R$253.9 million and R$35.4 million (R$30.1 million, net of withholding tax), respectively.

Jointly, dividends and interest on equity related to the first six months of 2010 will
represent a net payment of R$0.6597 per share to be paid on August 12
th
, 2010 to
shareholders on July 27
th
, 2010, from July, 28
th
our shares will be traded "ex" dividends
and "ex" interest on equity. Interest on equity will be recorded on July 31
st
, 2010.
6. DIVIDENDS
background image
13
> CONFERENCE CALL & WEBCAST

Portuguese:
Friday, July 23
rd
, 2010
10:00 a.m. ­ Brasília time
English:
Friday, July 23
rd
, 2010
12:00 pm ­ Brasília time
Brazilian callers: +55 11 4688-6341
U.S. callers: Toll Free +1 800 860-2442
Callers from other countries: +1 412 858-4600
Access code: Natura
Live Webcast at: www.natura.net/investidor
> INVESTOR RELATIONS

Telephone: +55 11 4196-1421
Helmut Bossert,
helmutbossert@natura.net
Patrícia Anson,
patriciaanson@natura.net
Bruno Caloi,
brunocaloi@natura.net




background image
14
> Consolidated summary income statement for the year
R$ million
2Q10
2Q09
1H10
1H09
NET REVENUES
1.283,6
1.034,3
2.298,0
1.867,9
Cost of sales
(400,1)
(301,8)
(711,8)
(563,4)
GROSS PROFIT
883,6
732,5
1.586,2
1.304,6
Operating expenses
(566,9)
(505,6)
(1.046,8)
(912,9)
Financial income (expenses), net
(12,8)
(19,7)
(19,4)
(12,8)
Other operating income (expenses), net
(12,4)
0,7
(13,2)
0,6
INCOME BEFORE INCOME TAX
AND SOCIAL CONTRIBUTION
291,5
207,9
506,9
379,5
Income tax and social contribution
(100,0)
(39,7)
(173,9)
(72,5)
NET INCOME FOR THE YEAR FROM CONTINUING OPERATIONS
191,5
168,2
333,1
307,0
Attributable to:
Shareholders
191,5
168,2
333,1
307,0
Non-controllers
-
-
-
-
EARNINGS PER SHARE - R$
Basic
0,4448
0,3915
0,7738
0,7146
Diluted
0,4428
0,3907
0,7704
0,7133
background image
15
> Consolidated summary balance sheet as of 6/30/2010 and 12/31/2009
ASSETS
2Q10
4Q09
LIABILITIES AND SHAREHOLDERS' EQUITY
2Q10
4Q09
CURRENT ASSETS
CURRENT LIABILITIES
Cash and cash equivalents
456,0
500,3
Loans and financing
155,8
569,4
Trade accounts receivable
437,1
452,9
Trade and other payables
260,2
255,5
Inventories
541,0
509,6
Payroll, profit sharing and related taxes
127,1
130,8
Recoverable taxes
146,6
191,2
Taxes payable
452,8
341,3
Other receivables
59,2
62,5
Reserve for tax, civil and labor contingencies
-
1,5
Total current assets
1.639,9
1.716,4
Derivatives
2,2
8,7
Other payables
38,8
30,0
NONCURRENT ASSETS
Total current liabilities
1.037,0
1.337,1
Recoverable taxes
112,7
63,9
Deferred income tax and social contribution
160,7
146,1
NONCURRENT LIABILITIES
Escrow deposits
278,9
232,4
Loans and financing
481,7
135,0
Other financial assets
8,2
7,4
Reserve for tax, civil and labor contingencies
117,8
120,0
Property, plant and equipment
488,3
492,3
Other payables
16,0
9,3
Intangible assets
87,2
82,7
Total noncurrent liabilities
615,5
264,3
Total noncurrent assets
1.135,9
1.024,9
SHAREHOLDERS' EQUITY
Capital
409,8
404,3
Capital reserves
144,9
143,0
Earnings reserves
256,3
253,7
Treasury shares
(0,0)
(0,0)
Proposed additional dividends
-
357,6
Retained earnings
332,3
-
Other comprehensive income (expenses)
(20,0)
(18,7)
Shareholders' equity attributable to controlling shareholders
1.123,3
1.139,8
NON-CONTROLLING INTERESTS
-
-
Total shareholders' equity
1.123,3
1.139,8
TOTAL ASSETS
2.775,8
2.741,2
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
2.775,8
2.741,2
background image
16
> Consolidated summary cash flow statement
R$ million
1H10
1H09
CASH FLOW FROM OPERATING ACTIVITIES
Net income for the quarter
333,1
307,0
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
49,0
46,7
Reserve for losses on swap and forward derivative contracts
(7,9)
(6,0)
Reserve for tax, civil and labor contingencies
(1,4)
8,3
Deferred income tax and social contribution
(14,5)
(18,5)
Loss on sale of property, plant and equipment and intangible assets
11,5
5,5
Interest and exchange rate changes on loans and financing and other liabilities
(1,0)
(5,6)
Expenses on stock option plans
3,8
1,6
Allowance for doubtful accounts
2,8
2,4
Allowance for losses on inventories realization
21,8
(2,3)
Subtotal
397,2
339,0
(INCREASE) DECREASE IN ASSETS
Current:
Trade accounts receivable
13,0
98,9
Inventories
(53,3)
(94,5)
Recoverable taxes
44,6
-
Other receivables
3,3
(6,3)
Noncurrent:
Escrow deposits
(46,6)
(4,0)
Recoverable taxes
(48,8)
(49,1)
Other receivables
(0,7)
2,1
Subtotal
(88,4)
(52,9)
INCREASE (DECREASE) IN LIABILITIES
Current:
Trade accounts payable
4,8
33,3
Payroll, profit sharing and related taxes
(3,7)
(20,4)
Taxes payable
190,8
48,0
Other payables
8,8
(9,3)
Noncurrent:
Other payables
4,4
(9,5)
Subtotal
205,1
42,2
OTHER CASH FLOWS FROM OPERATING ACTIVITIES
Payments of income tax and social contribution
(79,3)
(69,2)
Payments of derivative transactions
1,4
9,0
Payments of interest on loans and financing
(19,2)
(9,2)
NET CASH PROVIDED BY OPERATING ACTIVITIES
416,8
258,9
CASH FLOW FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment and intangible assets
(63,0)
(46,6)
Proceeds from sale of property, plant and equipment and intangible assets
2,1
-
NET CASH USED IN INVESTING ACTIVITIES
(60,9)
(46,6)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of loans and financing - principal
(546,0)
(254,3)
Funds of loans and financing
497,6
280,3
Payment of dividends and interest on capital
(357,6)
(303,1)
Capital increase through subscription of shares
5,5
9,7
NET CASH USED IN INVESTING ACTIVITIES
(400,5)
(267,4)
Effects of exchange rate changes on cash and banks
0,3
0,1
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(44,3)
(54,9)
Cash, banks and cash investments at beginning of quarter
500,3
350,5
Cash, banks and cash investments at end of quarter
456,0
295,6
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(44,3)
(54,9)
background image
17
2010-0654A
EBITDA is not used in the accounting practices adopted in Brazil, and thus it does not represent the cash flow for the periods.
Also, it must not be deemed as an alternative to net income as an indicator of the operating performance or as an alternative
to cash flow as an indicator of liquidity. EBITDA does not have a standardized meaning and its definition by the company may
eventually not be comparable to the Brazilian LAJIDA or to EBITDA as defined by other companies. Although EBITDA does not
provide, according to the accounting practices adopted in Brazil, a measure of cash flow, the Management utilizes it to
measure the Company´s operating performance. Furthermore, we understand that certain investors and financial analysts
utilize EBITDA as an indicator of the operating performance and/or cash flow of a company.

This report contains forward-looking statements. This information represents not only historical facts, but also reflects the
wishes and expectations of Natura's management. The words "anticipate", "wish", "expect", "forecast", "intend", "plan",
"predict", "project", "aim" and similar terms identify statements that necessarily involve known and unknown risks. Known
risks include uncertainties that are not limited to the impact of price and product competition, product acceptance in the
market, product transitions of the Company and its competitors, regulatory approval, currencies, currency fluctuation, supply
and production difficulties and changes in product sales, among other risks. This report also contains "pro forma" information
prepared by the Company to be used exclusively for information and reference purposes, since they are not audited. This
report is updated up to the present date and Natura does not undertake to update it in the event of new information and/or
future events.
* * * * *