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1
Apresentação
Brazil Equity Opportunities Conference
JP Morgan Conference / April 2010
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highlights 2009
» Market
CF&T market growth 16.1% (10M09)
Market Share 22.1% (+0.7pp)
» Channel: Direct Selling ­ Bilevel
Commercial model - CNO (More than 1 million consultants)
» Brand Preference
46% in consumer´s preference
» Innovation Index: 67.6%
» Action Plan
Additional marketing investments R$ 204 million (R$ 252 million savings)
» Management Model
Leadership & regional and business units
2
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highlights 2009
» Supplier communities
Engaged 26 communities, benefiting 2,084 families
» Environment
1st WWF climate savers.
» Revenues
Gross revenues: R$ 5.8 billion (+19.3% vs 08)
» EBITDA
EBITDA: R$ 1 billion (+17.2% vs 08)
EBITDA Margin: 23.8%
» International operations growth
6.9% of net revenues (5.9% in 08)
» Follow on
Free float growth from 26,3% to 39,5%
3
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7,2
8,3
33,0%
34,0%
2008
2009
Mercado alvo
Market Share Natura (%)
8,0
9,3
11,3%
12,4%
2008
2009
Mercado alvo
Market Share Natura (%)
15,2
17,5
21,6%
22,5%
2008
2009
Mercado alvo
Market Share Natura (%)
CF&T Market¹
(R$ billion)
CF&T market and
Naturas Market Share
4
Cosmetics and Fragrances
(R$ billion)
(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.
Toiletries
(R$ billion)
+14.8%
+15.5%
+15.2%
+ 96 bps
+66 bps
+ 104 bps
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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 thousand)
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
>
More than 1 million consultants in 2009
Business model
that generates
income and work
5
Brazil
632
731
875
2007
2008
2009
+19.8%
International
86
119
159
2007
2008
2009
+33.9%
Total
719
850
1,034
2007
2008
2009
+21.8%
CAGR
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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
6
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)
CNO/GR
10
CN/CNO
96
CN/GR
929
By the end of the 18
th
cycle.
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Brand recognition
Source: Ipsos Brand Essence
CF&T brand by preference (%)
42
47
46
18
16
16
2007
2008
2009
Natura
2nd place
7
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>
Sustainable use of
Brazilian biodiversity
>
Open Innovation
exceeded 50% of the
projects
>
Products with
functional, emotional
and philosophical
benefits
Innovation
8
Number of new products &
innovation index
Source: Company
Note:
1
Percentage of new products in the companys revenues
183
119
113
56,8%
68,8%
67,6%
2007
2008
2009
New products
Innovation Index¹
3.5%*
2.9%*
2.6%*
* Percentage of net revenue
invested in innovation
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Novos
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Action plan
Marketing investments
»
2008 ­ 2010: additional
R$ 400 million
(versus 2007)
»
Figures accumulated 2008-2009:
»
R$ 204 million
­ in marketing investments
»
R$ 252 million
­from productivity gains
»
More efficient process management reducing product
losses
»
Gains in production and raw materials
»
Natura magazine cost cutback
»
Increase in internet orders (71% in 2009 vs 44% in
2007)
11
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Action Plan - Management model
>
Leadership development
>
Strengthening of corporate culture based on Natura's core values
>
Implementation of regional and business units
12
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
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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13
Results Triple Bottom Line
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Social and environmental results
14
»
Evolution on relationship quality
»
Systematic process of stakeholder engagement: consultants,
employees, consumers, suppliers, supplier communities and
investors
»
1.500 people involved
»
WWF Climate Savers
»
Natura was the 1st Brazilian company to join WWF climate savers
»
Ekos 10th anniversary
»
Sustainable use of biodiversity and cultural heritage
»
Engagement with 26 communities, benefiting 2,084 families
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Social and environmental results
»
Environmental
»
Relative carbon emissions per product kg: 5,2% reduction
»
Water consumption per unit billed (L/un): 4,3% reduction
»
Energy consumption per unit billed (kj/un): 1,5% reduction
»
Crer Para Ver program ­ improvement of Brazilian public education
»
7,1% of the consultants joined the voluntary product selling.
»
Net revenue 2009: R$ 3.7 million
»
Trilhas program ­ fighting functional illiteracy­ more than 200 thousand
students
»
Climate research
»
consultants: 90% in 2009 (90% in 2008)
»
employees: 74% in 2009 (72% in 2008)
»
suppliers: 82% in 2009 (74% in 2008)
15
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465
518
684
15%
14%
15%
2007
2008
2009
Net Income
Net Margin
3,073
3,576
4,242
2007
2008
2009
706
860
1.008
23%
24%
24%
2007
2008
2009
EBITDA
EBITDA Margin (%)
Economics ­ Consolidated Results
16
Net Revenues
(R$ million)
Source: Company
CAGR ,,07-,,09 = 17.5%
Net Income and Margin
(R$ million)
CAGR ,,07-,,09 = 21.3%
EBITDA and Margin
(R$ million)
CAGR ,,07-,,09 = 19.5%
+19%
+17%
+32%
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(5)
(1)
9
Economics ­ International Results
Op
er
ati
ons
i
n
i
m
ple
m
e
nt
at
i
on
(R
$

Mi
l
l
i
on)
(Me
xi
co
,

V
ene
z
uel
a*

an
d
Col
ombi
a)
Net Revenues
EBITDA
121
164
219
2007
2008
2009
+32.9%
+36.6% in
Local Currency
22
44
66
2007
2008
2009
+62.2% in
Local Currency
+51.1%
* Venezuela Operation was closed in 2009. Without Venezuela the growth is
58,3% or 74,2% in local currency
17
Net Revenues
EBITDA
(28)
(38)
(42)
CAGR ,,07-,,09 = 75.0%
CAGR ,,07-,,09 = 34.3%
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)
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Capex, Leverage and Dividends
Leverage
(Net debt / EBITDA)
Dividends paid and pay-out ratio
(in R$ million)
CAGR ,,07-,,09 = 20.0%
Capex
(in R$ million)
Source: Company
18
0.2
0.1
0.2
2007
2008
2009
136
110
141
250
2007
2008
2009
2010E
415
500
598
89%
96%
87%
2007
2008
2009
Dividends
Pay Out Ratio
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19
Looking Ahead
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Looking ahead
20
20
Brazil
Continue enhancing leadership via
brand and channel strength
Opportunity to gain its market share
in sub-categories
Latin America
New growth cycle
Business model focused on
increased customization
Corporate behavior
Consistent investments: Increase in CAPEX
IT (commercial and logistic processes
Logistic Model
Production capacity
Management Model
Managing through processes
Strengthening organizational
culture
Leadership development
Business and regional units
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Vision
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.
21
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Back Up
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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
23
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)
24
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
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
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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
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%
N/A
CAGR `02- `08
3.8%
8.7%
2010E
5.5%
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
25
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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
Naturas market share in the CF&T
market
1
Source: Companies
1
According to Euromonitor
2
CF ­ Cosmetics and Fragrances; T ­ Toiletries
26
2008
12.9%
T: 6.8%
CF: 20.9%
Naturas market share by segment
1,2
Leadership in the Brazilian market
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Brand Position
P
re
st
i
ge
Masst
i
ge
Massiv
e
27
Source: Booz & Company research, 2009
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28
Peru
Chile
Argentina
France
Mexico
Colombia
8.3
2.7
1.3
1.7
2.8
Brazil
28.8
International Operations
Size of CF&T market
Retail Price, 2008 (US$ billion)
Source
: Euromonitor
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29
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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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.
Reason for being