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International Conference Call
Quarter 2012 Earnings Results
July 27, 2012

Operator: Good morning ladies and gentlemen. At this time we would like to
welcome everyone to Natura's 201
2 2
Quarter Conference Call.

Today with us we have Mr. Alessandro Carlucci, the CEO; Mr. Roberto Pedotte,
the CFO; and Mr. Fabio Cefaly, the Investor Relations. We would like to inform
you that this event is being recorded and all participants will be in a listen-only
mode during the company's presentation. After Natura's remarks are completed
there will be a question and answer section. At that time further instructions will
be given.

Should any participant need assistance during this call please press star zero
(*0) to reach the operator.

We have simultaneous webcast that
may be accessed through Natura's IR
website at
. The slide presentation may be downloaded
from this website. There will be a replay facility for this call on the website.

Before proceeding let me mention that forward looking statements are being
made under the safe harbor of the Securities Litigation Reform Act of 1996.
Forward looking statements are based on the beliefs and assumptions of
Natura Management and on information currently available to the company.
They involve risks, uncertainties and assumptions because they relate to future
events and, therefore, depend on circumstances that may or may not occur in
the future.

Investors should understand that general economic conditions, industry
conditions and other operating factors could also affect the future results of
Natura and could cause results to differ materially from those expressed in such
forward looking statements.

Now I will turn the conference over to Mr. Alessandro Carlucci, the CEO. Mr.
Carlucci you may now begin.

Mr. Carlucci:
Good morning everyone. Welcome to Phoenix's earnings
conference call for 2Q 11. We are pleased to once again have an opportunity to
share with you the latest information on our performance. We are very satisfied
with the results of 2Q, especially the improvement in our service level, our sales
and our channel, which reached 1.5 million consultants. Consolidated net
revenue grew by 15.4% with growth of 12.5% in Brazil and 26.2% in our
international operations in local currency.

First I would like to comment on some of the main points of our operation in
Brazil. The new level of service quality and the recovery in the efficiency of our
promotions made to very important contributions to the recovery of our sales
revenue in Brazil. We have begun to enjoy the benefits of the strategic, logistics
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and IT investments made over the last few years, which will allow us to improve
the level of our service quality in relation to last year and our historical levels as
well. To give you an example, in the last quarter our average delivery time to
consultant was 4.5 days compared to the average of 6 days during the same
period of 2011. We continue to evolve in order to improve services, reduce
costs, lower CO2 emissions and optimize inventories.

Another important factor was the excellent reception of the Mother's Day kits,
which highly exceeded our expectations. Because of this revenue growth on 2Q
exceeded our expectations.

In July we also continued to make gradual progress on implementing the set of
initiatives to increase the productivity of our consultants. The innovation index
stood at 67.9% with investments in research and development close the aligned
with our strategy. We made relevant product launches during the first half of the
year, such as the perfumes Kaiak Urbe and Humor no Ar.

I would also like to share with you our market share data for the first four
months of the year. According to Sipatesp our target market grew by 14% in the
period while our market share contracted by 160 bps to 23.8%.

In our international operations, which have already grown to represent 10.8% of
consolidated net revenue we continued on the path of consistent growth and
higher profitability. In Chile, Colombia and Peru we concluded the
implementation of the CNO model and are confident that it will leverage growth
in our consultant base. In Mexico, after implementing the sustainable relation
network model we continue to make adjustments based on the learning

In Argentina we are feeling the effects of the more challenging institutional
environment, which has led to higher product shortages compared with the
historical average. We are managing the situation and intensifying local
production, which to date stands at around 50% in order to meet the demand
from consultants and customers. Note that the recent hearing of imports in the
country has allowed us to rebuild our inventories for the short term.

I also want to highlight our social and environmental results which registered
important progress, in line with the commitment assumed at the start of this
year. For example we reduced our greenhouse gas emissions by 6.4%
compared to last year and have already raised R$ 6 million through the Crer
para Ver Project which is allocated to initiatives that improve public education
through Instituto Natura.

Those were the topics I wanted to cover today, so I will now hand the call over
to Roberto will present the details of our financial results.

Mr. Roberto Pedotte: Good day everyone. As Alessandro mentioned our
consolidated net revenue grew by 15% in 2Q compared to the year ago period
with growth of 12.5% in Brazil and 26.2% in the international operations in local
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currency. Consolidated Ebitda was R$ 391 million with Ebitda margin of 24.3
pending by 90 bps on a year earlier.

Gross margin in the quarter expanded 30 bps to 70.7% driven by the
improvement in our international operations, which benefit from the better
management of costs and promotions as well as the favorable foreign exchange

During 2Q we observed a slight increase in the (inaudible 08:05) levels; but we
do not see any signs of further deterioration and we expect to return to historical
levels in the second half of the year.

Consolidated net income in the first six months of the year was R$ 366 million
with free cash flow of 433 million, improvement of 180% on the same period last
year. This improvement was driven by lower working capital as a consequence
of better management of inventories and suppliers and recovery of taxes.

Closing I would like to comment also that the board of directors approved the
payment of dividends and interest on equity for the first six months of the year in
the net amount of R$ 0.83 per share, which will be paid on August 15 to
shareholders of record on July 31.

Those were the main points I wanted to cover today. Thank you very much, let
us go now to the question and answer session
Q&A Session

Operator: Thank you. Ladies and gentlemen we will now begin the Question
and Answer Session. If you would like to pose a question please press the star
key followed by the one (*1) key on your touchtone phone. If at any time you
would like to remove yourself from the questioning queue, press star two (*2).

Excuse me. Our first question comes from Ms. Lore Serra from Morgan Stanley.

Ms. Lore Serra:
Good morning, thanks for the call and congrats on the results.
I just wanted to ask a couple of questions. Maybe I could ask you first,
Alessandro, for your perspective on... someb
ody mentioned if you are
implementing right now in terms of trying to incentivize more the productivity of
consultants, how you see that progress and give us any sense of a kind the
timing when you see... you hope to see improvements on a sustained basis in
terms of your productivity. The second quarter was a good piece of news; but
obviously that compared with the challenge you had in the past couple of years.
That would be really helpful.

Mr. Carlucci: Hi Lore how are you? Well as you know we started to focus the
company to increase productivity since the last months of the year and from that
moment we started to implement some initiatives. The first two of them that are
already impacting our results are, as I mentioned, the improvement in the
services and also the better efficiency in the promotions and we are already
being... we are already improving the productivity... better, not improving but we
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are changing the curve and starting to decrease the rates on productivity. So
those two things already happened.

What we are doing now? We are starting to implement also some changes in
the sales force management driving our salespeople to boost productivity and
also we are changing a little bit the way that the CNO they received their
commission also to boost productivity. At the same time we are implementing
better communication and better relationship initiatives like training recognition
to boost until the rest of the year the productivity.

And on top of this we are also working - and this is not something that we
started now, we have been working in the last years - to produce innovation to
occupy some white spaces with new categories are sometimes new price

So this is the set of initiatives that are going to improve productivity and as we
mentioned to you before the effects of all this program we are going to see
gradually during the year. So this is mainly the description of the program that
we presented to you some months ago.

Ms. Serra: Great. Can I ask a question about the market share? I understand it
is only four months; but when I look at the market share decline in toiletries it is
real strong relative to your share in toiletries and maybe on the longer basis it
will look different. But can you comment on what you are seeing in that space?
What are the areas where the market share is under more pressure? And I
know you do not want to talk about innovation; but do you see this trend
changing if we look out over the next one or two years?

Mr. Carlucci: Lore first of all I would like to reme
mber that CIPATESP's market
data is based on the industry revenue. In other words it is more a sell-in market
share; therefore growth in the first four months of the year could have been
influenced by a stocking trend at retails. When we look at the first two months of
the year which registered a growth of 17% - and this was driven by toiletries
such as soap, which is a category with high penetration - that does in fact
appear to have been stalking trend at retailers and not the change in
consumption and when you compare the 17% of the first two months with 11%
of the third and the fourth months we strongly believe that this is more a sell-in
effect in some categories then a change in consumption.

In addition this indicator does not yet consider the acceler
ation in Phoenix's
revenues especially in May and June, which registered a recovery in growth.
We expect market growth this year to be slightly stronger than last year and
therefore we expect Phoenix to maintain its market share stable this year. At the
end of the year we believe that we are going to be either slightly higher or
slightly lower, but with sign of stability in market share.

Ms. Serra: Ok and I guess last question for Roberto: you have talked about a
goal of having flat Ebitda margin this year excluding some of the one-time
income you got last year from some tax credits and you are doing a really good
job on margins so far this year, but 4Q last year was a really strong margin
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quarter for you. Are you still comfortable with the view of that flat Ebitda margin
for the year?

Mr. Pedotte: Hi Lore. Yes, we believe that we continue to say that to look for
last year excluding the nonrecurring items I think that is a good basis to think
about this year - a little bit higher, a little bit lower - but this seems to be a good
basis for the year.

Ms. Serra: Thank you very much.

Mr. Pedotte:
Thank you Lore.

Operator: Excuse me. Ladies and gentlemen as a reminder, to pose the
question please press star one. Excuse me. Once again, to pose a question
please press star one.

Excuse me. T
his concludes today's
Question and Answer Session. I would like
to invite Mr. Carlucci to proceed with his closing statements. Please sir, go

Mr. Carlucci: Thank you for participating in today's conference call. I would like
to emphasize that 2Q results reaffirm that we are moving in the right direction.
We continue to focus on the challenge of gradually improving our service quality
and productivity of our consultants while investing to optimize our model and
enhance the buying experience of our consumers over the medium-term.

Thank you and I look forward to our next meeting in October to discuss the
results for 3Q of the year. So good morning and have a nice weekend

Operator: Thank you. That does conclude the Natura audio conference call for
today. Thank you very much for your participation and have a good day.