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1
São Paulo, February 21, 2006 ­ Natura Cosméticos S.A. (São Paulo Stock Exchange:
NATU3) announces today its results for the fourth quarter 2005 (4Q05) and full year 2005
(FY05). The financial and operating information below, except where otherwise indicated, is
presented on a consolidated basis, according to the Brazilian Corporate Law.
>
2005 HIGHLIGHTS
Gross revenues amounting to R$3,243.6 million (growth of 27.7% over 2004)
Ebitda of R$564.4 million (growth of 30.8% over 2004)
Net income totaled R$396.9 million (growth of 32.2% over 2004)
Investments in the conclusion of the new vertical warehouse and of the third automatic
separation line (picking)
Inauguration of Natura's flagship store in Paris - France
Start-up of Mexico operations
519 thousand consultants in Brazil and in international operations (Argentina, Chile and
Peru) at the end of 2005.
>
Consolidated Gross Revenues (R$ million)
(1) Natura Empreendimentos figures.
429
587
688
1,016
1,168
1,411
833
806
1,910
1995
1996
1997
1998
1999
2000
2001
2002
2003
1
1
2004
2,540
+33.0%
3,244
2005
+27.7%
CAGR (1995-2005) = 22.4%
+35.4%
>
Consolidated Gross Revenues (R$ million)
(1) Natura Empreendimentos figures.
429
587
688
1,016
1,168
1,411
833
806
1,910
1995
1996
1997
1998
1999
2000
2001
2002
2003
1
1
2004
2,540
+33.0%
3,244
2005
+27.7%
CAGR (1995-2005) = 22.4%
+35.4%
4Q05 AND FY05 EARNINGS RELEASE
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2
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2005 FINANCIAL SUMMARY - CONSOLIDATED
4Q05
4Q04
% change
2005
2004
% change
Units sold ­ items for resale
(in million) - Brazil
1
67.8
53.4
27.0%
216.0
173.4
24.5%
Gross Revenues
1,029.7
801.3
28.5%
3,243.6
2,539.7
27.7%
Net Revenues
725.9
563.8
28.8%
2,282.2
1,769.7
29.0%
Gross Profit
494.0
384.6
28.4%
1,551.0
1,194.4
29.9%
Gross margin (%)
68.1%
68,2%
-
68.0%
67.5%
-
Ebitda
2
194.9
142.7
36.5%
564.4
431.7
30.8%
Ebitda margin (%)
26.8%
25.3%
-
24.7%
24.4%
-
Net Income
138.5
99.4
39.2%
396.9
300.3
32.2%
Net margin (%)
19.1%
17.6%
-
17.4%
17.0%
-
EPS (R$)
4.67
3.54
31.8%
Dividends + Interest on Capital
3
per share (R$)
Total consultants in Brazil
4
(in thousands)
482.8
406.7
18.7%
482.8
406.7
18.7%
Total consultants in Latin America
36.2
26.3
37.7%
36.2
26.3
37.7%
>
Financial Summary ­ Consolidated (R$ million)
4
(in thousands)
1.63
1.17
39.0%
3.70
2.50
48.0%
5
-
-
-
4Q05
4Q04
% change
2005
2004
% change
Units sold ­ items for resale
(in million) - Brazil
1
67.8
53.4
27.0%
216.0
173.4
24.5%
Gross Revenues
1,029.7
801.3
28.5%
3,243.6
2,539.7
27.7%
Net Revenues
725.9
563.8
28.8%
2,282.2
1,769.7
29.0%
Gross Profit
494.0
384.6
28.4%
1,551.0
1,194.4
29.9%
Gross margin (%)
68.1%
68,2%
-
68.0%
67.5%
-
Ebitda
2
194.9
142.7
36.5%
564.4
431.7
30.8%
Ebitda margin (%)
26.8%
25.3%
-
24.7%
24.4%
-
Net Income
138.5
99.4
39.2%
396.9
300.3
32.2%
Net margin (%)
19.1%
17.6%
-
17.4%
17.0%
-
EPS (R$)
4.67
3.54
31.8%
Dividends + Interest on Capital
3
per share (R$)
Total consultants in Brazil
4
(in thousands)
482.8
406.7
18.7%
482.8
406.7
18.7%
Total consultants in Latin America
36.2
26.3
37.7%
36.2
26.3
37.7%
>
Financial Summary ­ Consolidated (R$ million)
4
(in thousands)
1.63
1.17
39.0%
3.70
2.50
48.0%
5
-
-
-
(1) Total consolidated number of Cosmetics, Fragrances and Toiletries products resold by consultants. Therefore, units sold exclude samples, gifts,
resale support material, Crer para Ver products, among others.
(2) EBITDA = income from operations before financial effects + non-operating income + depreciation and amortization.
(3) Consider the dividends and interest on capital per share (net of income tax retained at source) relative to the results for the 2005 financial year,
subject to referral to the Annual General Meeting to be held on March 29, 2006.
(4) Position at the end of the period of the 17
th
sales cycle.
(5) Argentina, Chile and Peru.
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COSMETICS, FRAGRANCE AND TOILETRIES (CF&T) SECTOR IN BRAZIL ­
NATURA'S TARGET MARKET FIGURES (10 months 2005 x 10 months 2004)
In 2005, Cosmetics, Fragrances and Toiletries sector in Brazil posted another strong
performance. According to data from the sector associations Sipatesp/Abhipec
1
, for the ten-
month period, the sector had a 16.5% nominal term growth. Real term growth was of 9.5%,
deflated by 6.4% of IPCA.
(1) Sipatesp/Abhipec ­ Brazilian Cosmetics, Fragrance and Toiletries Association.
The table below shows the target market
2
breakdown between two segments: cosmetics and
fragrances and personal hygiene, in addition to Natura's share in these two segments.
(2) Target Market: skin care, sunscreen, make-up, perfums, fragrances, hair care, shaving products and deodorants ­ does not include diapers,
nail polishes, sanitary pads, hair dyes and oral hygiene.
Target Market (R$ million)
Natura's Market Share (%)
10mos04
10mos05
%
growth
10mos04
10mos05
% points
change
Cosmetics & Fragrances
2,909
3,437
18.2%
30.6%
33.3%
2.7
Personal Hygiene
3,932
4,534
15.3%
9.7%
11.0%
1.3
Total
6,841
7,972
16.5%
18.6%
20.6%
2.0
>
CF&T Target Market Net Revenues Breakdown and Natura's Market Share in Brazil
Source: Sipatesp/Abhipec
Target Market (R$ million)
Natura's Market Share (%)
10mos04
10mos05
%
growth
10mos04
10mos05
% points
change
Cosmetics & Fragrances
2,909
3,437
18.2%
30.6%
33.3%
2.7
Personal Hygiene
3,932
4,534
15.3%
9.7%
11.0%
1.3
Total
6,841
7,972
16.5%
18.6%
20.6%
2.0
>
CF&T Target Market Net Revenues Breakdown and Natura's Market Share in Brazil
Source: Sipatesp/Abhipec
Natura's market share of this target market grew by 2.0 percentage points, from 18.6% in the
first ten months of 2004 to 20.6% in the same period of 2005.
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CONSOLIDATED GROSS REVENUES
Natura's 4Q05 gross revenues were R$ 1,029.7 million, up 28.5% over the same period of
2004 (R$ 801.3 million). Investments accomplished in 2005 coupled with storage
management improvement, allowed for a better quality in the services provided to our
consultants, therefore reduction in timescale for delivery of orders.
FY05 gross revenues amounted to R$3,243.6 million, 27.7% increase Y-o-Y. Of this total,
97.1% were from the domestic market and 2.9% from the foreign operations, compared to
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2.6% in 2004. This increase relatively to the total revenues is a result of a good performance
in 2005.
As previously highlighted, Cosmetics, Fragrances and Toiletries sector in Brazil grew by
16.5%, in the ten-month period of 2005 over the same period of 2004. Natura's higher
growth compared to the sector was due to sales channel expansion, up 18.7% in Brazil,
combined with the continuous process of innovation.
In 2005, 156 new products were launched. The total innovation index, which measures the
proportion of revenues from products launched in the last 24 months, was 69.8% in 2005,
reassuring process vitality.
The company maintains its strategy of concentrating some of its efforts relating to innovation
to the development of products that use Brazilian biodiversity as a platform for technological
development. The highlight in 2005 was the launch of Chronos Spilol, an anti-aging cream
whose main active ingredient is derived from a native plant known as "Jambu".
Another important event during 2005 was the "vegetablization" of the whole soap line range,
which is made with the oil extracted from the palm fruit.
>
Gross Revenues (R$ million)
CAGR (2001-2005) = 29.1%
>
Total number of Consultants (thousands)
300
321
375
433
519
2001
2002
2003
2004
2005
CAGR (2001-2005) = 14.7%
1,168
1,411
1,910
2,540
3,244
2001
2002
2003
2004
2005
+27.7%
+19.8%
* Consultants at Argentina, Brasil, Chile and Peru.
>
Gross Revenues (R$ million)
CAGR (2001-2005) = 29.1%
>
Total number of Consultants (thousands)
300
321
375
433
519
2001
2002
2003
2004
2005
CAGR (2001-2005) = 14.7%
1,168
1,411
1,910
2,540
3,244
2001
2002
2003
2004
2005
+27.7%
+19.8%
* Consultants at Argentina, Brasil, Chile and Peru.
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>
Consolidated Net Revenues Seasonality
1Q
2Q
3Q
4Q
2002
17%
24%
24%
35%
2003
18%
24%
25%
33%
2004
19%
24%
25%
32%
2005
19%
24%
25%
32%
>
Consolidated Net Revenues Seasonality
1Q
2Q
3Q
4Q
2002
17%
24%
24%
35%
2003
18%
24%
25%
33%
2004
19%
24%
25%
32%
2005
19%
24%
25%
32%
>
COST OF SALES
The cost of sales posted a slight increase in relation to net revenues, from 31.8% in 4Q04 to
31.9% in 4Q05.
Even considering the average appreciation of the Real and the gains in scale that occurred
between 4Q04 and 4Q05, cost of sales remained at practically at the same level relative to net
revenue, due basically to greater promotional efforts in 4Q05.
The table below shows the breakdown of cost of sales detailed by its main items:
Item
4Q05
4Q04
2005
2004
RM/PM*
26.7
26.0
25.8
25.9
Labor
2.1
2.2
2.5
2.4
Depreciation
0.9
1.0
1.0
1.2
Others
2.2
2.6
2.8
2.9
Total
31.9
31.8
32.0
32.5
>
Composition of Cost of Sales (% of net revenues)
* Raw material and packaging material
Item
4Q05
4Q04
2005
2004
RM/PM*
26.7
26.0
25.8
25.9
Labor
2.1
2.2
2.5
2.4
Depreciation
0.9
1.0
1.0
1.2
Others
2.2
2.6
2.8
2.9
Total
31.9
31.8
32.0
32.5
>
Composition of Cost of Sales (% of net revenues)
* Raw material and packaging material
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Cost of sales related to net revenues, reduced from 32.5% to 32.0% Y-o-Y. This reduction
was primarily to (i) real appreciation and (ii) gains in scale obtained during the year.
Selling expenses changed from 29.2% in 4Q04 to 30.4% in 4Q05, in relation to net
revenues. Main contributors to this increase are the international expansion process and
marketing expenses.
For the year, selling expenses increased by 0.8 percentage points, from 30.3% to 31.1%
Y-o-Y, relatively to net revenues. The rise in these expenses was solely explained by (i)
increase in the international expansion process efforts and (ii) the improvement in the receipts
profile of the consultants, which resulted in a reduction in the company's interest revenue.
Marketing expenses, defined as total amounted spent on advertisement, communication,
qualification, consultants acknowledgement, coupled with testing and products launching
events, remained stable as percentage of net revenues Y-o-Y.
Administrative expenses over net revenues changed from 13.6% in 4Q04 to 12.2% in
4Q05. This reduction was primarily due to gains in scale and greater incidence of non-
recurring entries in 4Q04.
In the twelve months, these expenses posted a slight reduction from 12.3% of net revenues
in 2004 to 12.1 in 2005. Even considering the growth in expenses related to the processes of
international expansion and innovation - which would have increased administrative expenses
over net revenue by 1.22 percentage points - the reduction was possible due to gains in scale
and a smaller incidence of non-recurrent entries recorded in 2005 (in 2004, for example, we
accounted R$9.3 million in expenses relating to the process of going public ­ IPO).
If these non-recurring entries had been excluded, both in 2004 and 2005, administrative
expenses would have risen 0.5 percentage points over net revenues instead of a reduction of
0.2 percentage points.
>
EBITDA AND NET INCOME
4Q05 EBITDA amounted to R$194.9 million, up 36.5% compared to 4Q04 (R$142.7 million).
EBITDA margin changed from 25.3% in 4Q04 to 26.8% in 4Q05.
In 2005, EBITDA totalized R$564.4 million, 30.8% growth over 2004 (R$431.7 million).
EBITDA margin showed a slight increase from 24.4% to 24.7% Y-o-Y.
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4Q05
4Q04
% change
2005
2004
% change
Net Revenues
725.9
563.8
28.8%
2,282.2
1,769.7
29.0%
(-) Cost and Expenses
-544.9
-429.6
26.8%
-1,760.6
-1,371.5
28.4%
Ebit
181.0
134.2
34.9%
521.6
398.2
31.0%
(-) Non-operating results
1.1
-0.0
n/a
-1.2
-0.9
43.0%
(+) Depreciation/amortization
12.7
8.5
49.5%
44.0
34.3
28.2%
Ebitda
194.9
142.7
36.5%
564.4
431.7
30.8%
>
EBITDA
(R$ million)
4Q05
4Q04
% change
2005
2004
% change
Net Revenues
725.9
563.8
28.8%
2,282.2
1,769.7
29.0%
(-) Cost and Expenses
-544.9
-429.6
26.8%
-1,760.6
-1,371.5
28.4%
Ebit
181.0
134.2
34.9%
521.6
398.2
31.0%
(-) Non-operating results
1.1
-0.0
n/a
-1.2
-0.9
43.0%
(+) Depreciation/amortization
12.7
8.5
49.5%
44.0
34.3
28.2%
Ebitda
194.9
142.7
36.5%
564.4
431.7
30.8%
>
EBITDA
(R$ million)
In 2005, Ebitda, whose growth was very close to growth in sales, should be analyzed, taking
into consideration that during this year there was an increase in expenses relating to
innovation and the international expansion program, both of which investments are
considered strategic for the company.
The following table shows the quarterly seasonality of the consolidated Ebitda for the last four
years.
>
Consolidated EBITDA Seasonality
2002
17%
24%
24%
35%
2003
18%
24%
25%
33%
2004
19%
24%
24%
33%
2005
17%
23%
26%
35%
1Q
2Q
3Q
4Q
>
Consolidated EBITDA Seasonality
2002
17%
24%
24%
35%
2003
18%
24%
25%
33%
2004
19%
24%
24%
33%
2005
17%
23%
26%
35%
1Q
2Q
3Q
4Q
4Q05 net income totaled R$138.5 million, 39.2% growth over 4Q04 (R$99.4 million).
Net profit grew more than was indicated by EBITDA due to an increase in net financial
revenues, because of the increase in average net cash in 4Q05, when compared to 4Q04. This
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increase in net financial revenue more than compensated the increase in the average rate of
IR/CSLL (Income tax/social contribution).
Increase of the net average rate of IR/CSLL (income tax/social contribution) resulted primarily
from the lower proportion of goodwill amortization on the income tax and social contribution
calculation base and an increase in losses, generated in the international operations as a
result of the opening of new subsidiaries.
In 2005, net income amounted to R$396.9 million (R$300.3 million in 2004). Earnings per
share, excluding treasury shares, was of R$4.67 in 2005 (R$3.54 in 2004), 31.8% growth.
>
INVESTMENTS
Investments in 2005 totaled R$111.6 million, main highlights were: (i) conclusion of new
vertical warehouse, (ii) acquisition of third automatic separation line ­ picking and (iii)
increase in manufacturing capacity and production process automation.
For 2006 estimated investments will total R$180 million. The main investments scheduled for
2006 are: (i) increase in manufacturing capacity, (ii) flexibilization and expansion of our
logistics capacity (investments in lines 1 and 2 for separation of orders), (iii) construction of a
new R&D center and (iv) new IT projects.
The table below shows real capacity for FY05 against expected capacity for FY06, in
manufacturing and separation of orders.
>
Capacity (million of units)
manufacture
2006E
370
1
290
320
345
separation
2005
(1) The amount for 2006 includes the estimated outsourcing
of shampoo production capacity during the year.
>
Capacity (million of units)
manufacture
2006E
370
1
290
320
345
separation
2005
(1) The amount for 2006 includes the estimated outsourcing
of shampoo production capacity during the year.
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>
INTERNATIONAL OPERATIONS
>>
Argentina, Chile and Peru
4Q05
4Q04
% change
2005
2004
% change
Units sold - items for resale
(in million)
2.2
1.4
54.9%
7.0
4.7
49.6%
Net Revenues
8.9
5.8
53.1%
27.8
18.5
50.2%
Income (loss) from operations
-1.1
-1.0
-
-3.6
-3.1
-
Operating margin
-12.9%
-17.5%
-
-12.9% -16.7%
-
>
Financial Highlights - Argentina, Chile and Peru (US$ million)
4Q05
4Q04
% change
2005
2004
% change
Units sold - items for resale
(in million)
2.2
1.4
54.9%
7.0
4.7
49.6%
Net Revenues
8.9
5.8
53.1%
27.8
18.5
50.2%
Income (loss) from operations
-1.1
-1.0
-
-3.6
-3.1
-
Operating margin
-12.9%
-17.5%
-
-12.9% -16.7%
-
>
Financial Highlights - Argentina, Chile and Peru (US$ million)
Note: Figures shown on the table above do not include Mexico and Venezuela operations. Structuring expenses regarding new
operations in other Latin America countries were excluded (US$1.1 million in 2005 and US$0.2 million in 2004).
4Q05 gross revenues from Argentina, Chile and Peru operations grew, in dollars, by 53.7%.
Considering the growth in local currency weighted by the share in dollars of each operation,
the growth reached 51.1% in 4Q05.
In 2005, gross revenues from these operations grew, in dollars, by 50.3%. Considering the
growth in local currency weighted by the share in dollars of each operation, the growth
reached 45.4%.
The number of consultants in these operations grew by 37.7%. Productivity measured by
revenues per average active consultant, grew by 3.0% in local currency, an important result
given that, when there is a considerable growth in the distribution base, the hiring of new
sales consultants reduces the channel's average productivity.
Operating loss in dollar grew by 16.1%, climbing from US$3.1 million in 2004 to US$3.6
million in 2005. Despite an increase in losses, in absolute terms, operating margin improved
under the compared periods. It is worth noting that this increase in sales did not help to
reduce the overall loss, as the company continued to invest heavily in the development of new
sales sectors. It is expected that the combination of these operations reach breakeven at the
end of 2007.
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10
>>
Other Operations
France
In April 2005, Natura inaugurated its store in Paris and results are in accordance with the
company's expectations, which represents good acceptance towards the brand in France.
In 2006 we hope to expand our portfolio of products and start tests on a direct sales
distribution model that will be adapted to the conditions in that market.
Mexico
Mexican operation started up in August 2005 and results, in this early beginning of activities,
are in accordance with the company's expectations.
Venezuela and Colombia
Next steps for Natura's international expansion process in Latin America include the beginning
of activities in Venezuela in May 2006 and in Colombia in earlier 2007.
>>
International expansion process
In 2005, international expansion process generated investments of R$37.8 million (2004:
R$12.2 million). This amount was slight lower than the estimated of R$41.0 million. These
amounts refer to the consolidated loss from already existing operations (Argentina, Chile and
Peru), added to losses from new operations (Mexico and France) and the impact of the change
in exchange rate when translating the balance sheets of subsidiary companies.
In 2006 investments in the international expansion process will be shown after deduction of
the profit on exports from Brazil to our international operations. If we were to consider this
profit the investment in 2005 reduces from R$37.8 million to R$31.8 million and in 2006,
using the same basis, the company estimate is R$35.0 million.
>
CASH FLOW
2005 gross cash generation
1
stood at R$483.5 million, up 25.4% over the same period last
year. Of this total, R$36.3 million were allocated to working capital, long-term assets and
liabilities and R$111.6 million to CAPEX. Use of working capital was concentrated basically on
financing accounts receivable and stocks, as a direct result of the increase in sales in the
period. 2005 free cash flow
2
was of R$335.6 million.
Note 1: (Net income) + (Adjustments to reconcile net income to net cash provided by operating activities).
Note 2: (Net cash provided by operating activities) ­ (net cash used in investments activities).
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11
>
DIVIDENDS AND INTEREST ON CAPITAL
On February 21, 2006, the Board of Directors approved the proposal to be subject at the
Annual General Meeting to be held on March 29, 2006, regarding the payment of dividends
and interest on capital, referring to 2005 earnings results, amounting to R$285.2 million and
R$34.2 million (R$29.1 million net of income tax retained at source), respectively.
Of the total amount, the company already paid, on August 16, 2005, dividends and interest on
capital referring to 1H05 earnings result, totaling R$90.4 million and R$13.4 million (R$11.4
million net of income tax retained at source), respectively. The remaining balance, which will
be paid on April 4, 2006, to be ratified by Annual General Meeting, is of: (i) dividends
amounting to R$194.8 million and (ii) gross interest on capital of R$20.8 million (R$17.7
million net of income tax retained at source).
These 2005 dividends and interest on capital will result in a net yield of R$3.70 per share
(2004: R$2.50 per share), which represents 95.2% of free cash generation
1
(106.5% in 2004)
and 80.5% of the net income for 2005 (72.1% in 2004).
Note 1: (Net cash provided by operating activities) ­ (net cash used in investing activities).
>
SOCIAL CORPORATE RESPONSIBILITY
The year's social highlight was the mobilization of consultants (male and female) towards
Young and Adult Education (EJA), a Ministry of Education program supported by Natura. As a
result, 65,000 individuals above the age of 15 were sent back to primary school nationwide.
Consultants were also encouraged to persuade their clients to purchase product refills, thus
reusing the original packaging. As a result, refill volume increased from 15.3% of total
products, in 2004, to 17.4%, reducing the average environmental impact of packaging in
Brazil. Another important event was the official installation of the Cajamar Agenda 21
Permanent Forum following joint efforts by company representatives, the local community and
the municipal government.
The graph below shows total distribution of wealth to Consultants, which reached R$1.3 billion
in 2005.
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12
>
Distribution of Wealth to Consultants* (R$ million)
586
796
1,059
2002
2003
2004
2005
+27.3%
1,349
CAGR (2002-2005) = 32.1%
>
Distribution of Wealth to Consultants* (R$ million)
586
796
1,059
2002
2003
2004
2005
+27.3%
1,349
CAGR (2002-2005) = 32.1%
(*) Consultants at Argentina, Brazil, Chile and Peru.
As holders of the ISO 14001 Certificate, we are permanently concerned with and constantly
channel resources into improving environmental conditions in our production procedures. In
2005 we exceeded several environmental targets. Water consumption per product unit sold
fell by 5.6% over 2004; the average water re-use index increased from 39.5% to 55%; and
energy consumption per unit sold dropped 8.5%. The share of incinerated to total waste fell
from 5.4% to 2.8%; the ratio of waste sent to a landfill dropped from 21.2% to 16.1%; and
the recycled percentage climbed from 73.4% to 81.8%. Total waste generated per unit sold
grew by 8.2%, due to increased use of the Cajamar site and, especially, the increase in scrap
volume.
As a consequence of our constant pursuit of excellence, we were also granted the NBR ISO
9001 Certificate in 2005. Yet another major achievement was Natura's official recognition as a
"renowned trademark" by INPI (National Institute of Industrial Property). Such trademarks are
of unquestioned marketplace authority and prestige and have achieved household-name
status thanks to their tradition, proven quality and the trust they inspire. As a result, our
trademark is protected throughout every area of economic activity, not only in the cosmetics
sector.
Natura was also considered to be the country's 4
th
most valuable brand name and first among
non-financial entities by the Instituto InterBrand and the magazine IstoÉ Dinheiro.
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13
>
CONFERENCE CALL & WEBCAST
Portuguese:
Thursday, February 23, 2006
08:00AM ­ US EST
In Brazil: 11-4613-0501
International: 1-412-858-4600
English:
Thursday, February 23, 2006
10:00AM ­ US EST
In Brazil: 11-4613-0501
International: 1-412-858-4600
Live webcast will be available at:
www.natura.net/investor
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14
ANNEX 1 ­ STATEMENT OF INCOME (CONSOLIDATED)
(in R$ million)
4Q05
% NR
4Q04
% NR
% change
2005
% NR
2004
%NR
% change
Gross sales to domestic market
1,000.6
97.2%
783.3
97.8%
27.7%
3,149.7
97.1%
2,472.0
97.3%
27.4%
Gross sales to foreign market
28.6
2.8%
17.7
2.2%
62.0%
92.6
2.9%
66.8
2.6%
38.7%
Other sales
0.4
0.0%
0.3
0.0%
1.3
0.0%
0.8
0.0%
61.8%
GROSS OPERATING REVENUES
1,029.7
100.0%
801.3
100.0%
28.5%
3,243.6
100.0%
2,539.7
100.0%
27.7%
Taxes on sales, returns and rebates
(303.7)
-29.5%
(237.5)
-29.6%
27.9%
(961.4)
-29.6%
(770.0)
-30.3%
24.9%
-
NET OPERATING REVENUES
725.9
100.0%
563.8
100.0%
28.8%
2,282.2
100.0%
1,769.7
100.0%
29.0%
Cost of sales
(231.9)
-31.9%
(179.2)
-31.8%
29.5%
(731.1)
-32.0%
(575.3)
-32.5%
27.1%
GROSS PROFIT
494.0
48.0%
384.6
68.2%
28.4%
1,551.0
68.0%
1,194.4
67.5%
29.9%
OPERATING (EXPENSES) INCOME
Selling
(220.7)
-30.4%
(164.4)
-29.2%
34.2%
(709.2)
-31.1%
(535.9)
-30.3%
32.3%
General and administrative
(88.2)
-12.2%
(76.7)
-13.6%
15.0%
(276.1)
-12.1%
(216.9)
-12.3%
27.3%
Management & employee profit sharing
(0.8)
-0.1%
(3.7)
-0.7%
-77.8%
(28.6)
-1.3%
(31.6)
-1.8%
-9.6%
Management compensation
(5.5)
-0.8%
(5.6)
-1.0%
-3.0%
(12.3)
-0.5%
(11.8)
-0.7%
4.2%
Other operating expenses, net
2.2
0.3%
-
0.0%
(3.2)
-0.1%
0.0%
INCOME FROM OPERATIONS BEFORE
FINANCIAL EFFECTS
181.0
24.9%
134.2
23.8%
34.9%
521.6
22.9%
398.2
22.5%
31.0%
Financial expenses
(7.1)
-1.0%
(8.6)
-1.5%
-18.2%
(43.5)
-1.9%
(38.2)
-2.2%
13.8%
Financial income
15.2
2.1%
4.4
0.8%
245.9%
54.7
2.4%
35.4
2.0%
54.6%
INCOME FROM OPERATIONS
189.1
26.0%
129.9
23.0%
45.6%
532.9
23.3%
395.4
22.3%
34.8%
Nonoperating income, net
1.1
0.2%
0.0
0.0%
(1.2)
-0.1%
(0.9)
0.0%
43.1%
INCOME BEFORE DEBENTURES
PARTICIPATION
190.2
26.2%
129.9
23.0%
46.4%
531.6
23.3%
394.5
22.3%
34.7%
Debentures participation
-
0.0%
-
0.0%
-
0.0%
(7.2)
-0.4%
INCOME BEFORE TAXES ON INCOME
190.2
26.2%
129.9
23.0%
46.4%
531.6
23.3%
387.3
21.9%
37.2%
Income and social contribution taxes
(51.8)
-7.1%
(30.5)
-5.4%
69.8%
(134.7)
-5.9%
(87.1)
-3.4%
54.7%
NET INCOME BEFORE MINORITY
INTEREST
138.5
19.1%
99.4
17.6%
39.2%
396.9
17.4%
300.3
17.0%
32.2%
Minority interest
0.0
0.0%
0.0
0.0%
-53.5%
(0.0)
0.0%
0.0
0.0%
NET INCOME
138.5
19.1%
99.4
17.6%
39.2%
396.9
17.4%
300.3
17.0%
32.2%
Depreciation
12.7
1.8%
8.5
1.5%
49.5%
44.0
1.9%
34.3
1.9%
28.2%
EBITDA
194.9
26.8%
142.7
25.3%
36.6%
564.4
24.7%
431.7
24.4%
30.8%
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15
ANNEX 2 ­ BALANCE SHEET (12/31/2005 AND 12/31/2004)
(in R$ million)
ASSETS
12/31/05 12/31/04 LIABILITIES
12/31/05 12/31/04
CURRENT ASSETS
CURRENT LIABILITIES
Cash and banks
56.2
29.6
Loans and financing
68.3
62.4
Cash investments
330.2
202.0
Domestic suppliers
148.0
89.3
Trade accounts receivable
316.3
250.1
Foreign suppliers
4.1
4.2
Inventories
152.3
122.0
Payroll and related charges
73.1
67.6
Recoverable taxes
24.0
18.2
Tax payable
89.1
62.4
Advances to employees
5.3
6.9
Dividends
195.1
113.6
Related parties
-
-
Interest on capital
17.7
13.6
Deferred income & social contribution taxes
25.8
21.6
Freights payable
13.8
10.0
Other receivables
14.8
6.1
Other provisions
9.0
4.8
Total current assets
924.9
656.4
Other payables
13.6
12.8
Reserve for losses on swap contracts
2.7
6.1
Total current liabilities
634.5
446.9
LONG-TERM ASSETS
Receivables from shareholders
0.1
0.2
Tax incentives
9.6
3.8
LONG-TERM LIABILITIES
Deferred income & social contribution taxes
29.3
21.3
Loans and financing
119.2
72.0
Escrow deposits
29.5
24.3
Reserve for contingences
90.6
59.6
Other receivables
0.5
2.9
Other payables
3.2
1.9
Cash investments
4.0
-
Total long-term liabilities
213.0
133.4
Total long-term assets
73.0
52.5
MINORITY INTEREST
0.0
0.0
PERMANENT ASSETS
SHAREHOLDER'S EQUITY
Investments
5.8
8.7
Capital
230.8
230.8
Property, plant and equipment
365.3
298.8
Capital reserves
120.7
113.1
Total permanent assets
371.0
307.5
Profit reserves
170.7
93.3
Treasury shares
(0.8)
(1.1)
Total shareholders' equity
521.4
436.1
TOTAL ASSETS
1,368.9
1,016.4
TOTAL LIABILITIES
1,368.9
1,016.4
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16
ANNEX 3 ­ STATEMENT OF CASH FLOW (CONSOLIDATED)
(in R$ million)
2005
2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
396.9
300.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortisation
44.0
34.3
Monetary and exchange variations, net
3.9
8.8
Reserve for losses on swap and forward transactions
12.1
4.2
Reserve for contingencies
21.6
31.6
Reserve for obsolete inventories
1.9
7.0
Other reserves
11.8
1.4
Deferred income and social contribution taxes
(12.2)
(9.6)
Proceeds from sale and disposal of permanent assets
2.2
1.8
Debentures participation, net of taxes
-
5.7
Minority interest
0.0
(0.0)
482.4
385.6
(INCREASE) DECREASE IN ASSETS
Current assets:
Accounts receivable
(66.2)
(68.5)
Inventories
(32.3)
(49.7)
Other receivables
(0.2)
0.5
Long-term assets:
Escrow deposits
(2.7)
(9.1)
Other receivables
(1.6)
0.1
Subtotal
(103.0)
(126.6)
INCREASE (DECREASE) IN LIABILITIES
Current liabilities:
Suppliers
51.2
31.5
Payroll and related charges
7.1
24.0
Taxes payable
14.1
(20.7)
Other payables
(5.9)
(6.2)
Long-term liabilities:
Other payables
1.3
(1.4)
Subtotal
67.8
27.2
NET CASH PROVIDED BY OPERATING ACTIVITIES
447.2
286.2
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
(111.6)
(76.9)
Investments
-
(6.2)
NET CASH USED IN INVESTING ACTIVITIES
(111.6)
(83.1)
FINANCING ACTIVITIES
Decrease - short-term loans
(75.1)
(47.9)
Increase - long-term loans
120.4
38.8
Payment of dividends
(203.8)
(130.0)
Payment of interest on capital
(30.1)
(11.4)
Others
0.7
-
Sale of treasury share
4.9
0.6
Payment of receivables from shareholders
2.3
-
NET CASH USED IN FINANCING ACTIVITIES
(180.7)
(149.9)
Merger of Natura Empreendimentos S.A. & Natura Participações S.A., net assets
-
42.3
NET INCREASE IN CASH AND BANKS
154.8
95.5
Cash and banks at the beginning of year
231.6
136.1
Cash and banks at the end of year
386.4
231.6
CHANGE IN CASH AND BANKS
154.8
95.5
SUPPLEMENTARY CASH FLOW DISCLOSURE:
Income and social contribution taxes paid
111.6
84.4
Interest on paid on loans and financing
6.6
12.1
Swap and forward contracts paid
15.5
9.2
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17
>
INVESTOR RELATIONS
Contacts: 5511-4446-2180
Helmut Bossert,
helmutbossert@natura.net
Ricardo Capella,
ricardocapella@natura.net
Sandra Matsumoto,
sandramatsumoto@natura.net
This press release contains forward-looking statements. Such statements are not statements of historical fact, and reflect the
beliefs and expectations of the Natura's management. The words "anticipates", "wishes", "expects", "estimates", "intends",
"forecasts", "plans", "predicts", "projects", "targets" and similar words are intended to identify these statements, which
necessarily involve known and unknown risks and uncertainties. Known risks and uncertainties include, but are not limited to,
the impact of competitive products and pricing, market acceptance of products, product transitions by the Company and its
competitors, regulatory approval, currency fluctuations, production and supply difficulties, changes in product sales mix, and
other risks. This press release also includes pro-forma information prepared by the Company for information and reference
purposes only, which has not been audited. Forward-looking statements speak only as of the date they are made, and the
Company does not undertake any obligation to update them in light of new information or future developments.