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1
Morgan Stanley
Global Consumer
Roberto Pedote
Chief Financial, Legal
Affairs and IR Officer
NOVEMBER, 14 2012
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2
reason
for being
OUR REASON FOR BEING
IS TO CREATE PRODUCTS
AND SERVICES THAT
PROMOTE
WELLBEING/BEING-WELL
WELL-BEING
Is the harmonious and
gratifying relationship of a
person with oneself and
with one's body
BEING-WELL
is the empathetic, pleasing
and rewarding relationship
of a person with others,
with nature and with the
whole
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3
triple
bottom
line
value
proposition
brand
essence
CHANNEL
PRODUCT
CORPORATE
BEHAVIOR
economic
_strong cash generation
_growth and profitability
_consistent dividend
payout
social
_wealth creation for
consultants
_benefits shared with
communities involved in
extractive activities
environmental
_carbon neutral
_use of refill packaging
_sustainable extraction
_use of recycled and recyclable
materials
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4
Countries
2011
CAGR %
`06- '11
United States
63
1.4%
Japan
47
-0.5%
Brazil
43
12.3%
Mexico
10
7.6%
Argentina,
Chile,
Colombia
and Peru
12
11.8%
Countries in
which
Natura operates
65
11.4%
World
425
5.0%
SIZE OF CF&T MARKET
(in US$ billion, Fixed FX)
Source: Euromonitor 2011
The markets in which Natura operates represent 15% of
the global CF&T market and have a growth rate more
than 2 times of the total market
Market growth
in nominal terms
2004
20.7%
2005
15.9%
2006
13.5%
2007
13.2%
2008
16.2%
2009
14.4%
2010
13.1%
2011
8.2%
CAGR
`04- `11
13.5%
YoY BRAZIL TARGET
MARKET GROWTH
(nominal)
Region
Direct Sales
(%)
Latin America
29.1%
Brazil
28.6%
Argentina
27.4%
Chile
18.8%
Colombia
35.1%
Mexico
30.9%
Peru
41.1%
Eastern Europe
19.3%
Asia Pacific
11.8%
Australasia
8.9%
North America
7.4%
Western Europe
3.4%
Africa / Middle
East
3.1%
DIRECT SALES SHARE
IN THE CF&T MARKET
Source: Euromonitor 2011
Source: Sipatesp / ABEVD 2011
we are in relevant markets with
differentiated growth
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5
Best standard for corporate governance
_ Natura was the first Brazilian Company to voluntarily obtain the SOx certification
_ Around 250 investors (particular our individual investors) attend to our Ordinary
General Shareholders' Meeting
_ Management Compensation System linked to Triple Bottom Line dimensions:
Consolidated Ebitda, Organizational Climate Surveys; CO2 Emission and Stock out index
Socio-Environmental
Commitments and Targets:
2011 Awards and Recognitions
_ The second most sustainable
company in the world by the Canadian
Research Institute
_ The 8th most innovative Company
worldwide by Forbes Magazine
_ Water
_ Education
_ Climate Change
_ Sociobiodiversity
_ Solid Waste
_ Sustainable
Entrepreneurship
_ Relationship Quality
best standards of corporate behavior and
continually strives for excellence in this area
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_Products with functional.
emotional and philosophical
benefits
_ Innovation index stood at 67.3% in 9M12 (64.6% in 9M11);
_ Investments in R&D in 9M12 corresponded to 2.6% of Net Revenues
(2.8% in 9M11).
1
Products launched in last 24 months as a percentage of the company's revenue
Number of product
launches
Innovation Index
(% of revenue from products
launched in last 24 months)
6
7
.
3
%
113
2.6%
2009
6
8
.
8
%
123
2.8%
2008
2010
6
5
.
7
%
191
2.8%
2011
6
4
.
8
%
168
2.7%
2007
5
6
.
8
%
183
2.9%
R&D % Net
Revenue
_Sustainable use of Brazilian
biodiversity
_Open Innovation exceeded 69%
of the projects
innovation to create products that provide an ongoing flow of
well being well
experiences for our consumers
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1
Source: Company. ABEVD (Brazilian Association of Direct Sales Companies)
2
HAY Consultant annual opinion poll for consultants satisfaction
Number of consultants
(thousand; CAGR `07- `10)
_
Consultants are Natura's first consumers
_
Sales driven through personal relationships
_
Channel disseminates Natura's values with consultants acting as
agents of social transformation
Channels differentiations
Strong
growth
CAGR `07 ­ `11
of 18.6%
High
productivity
1
2.2 times higher
than its peers
High
satisfaction
2
87% in 2011
Training
566.000
consultants
trained in
2011
Low
turnover
30% on
average
Business
model that
generates
income and
work
International
Brazil
2007
632
86
2010
1,029
193
2011
1,175
246
CAGR
17.6%
CAGR
30.9%
YoY
14.2%
YoY
27.5%
9M11
1,131
230
9M12
1,227
291
YoY
8.4%
YoY
26.6%
strategic focus to drive channel growth in the last 5 years
with the implementation of the CNO model
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8
Natura Penetration
(Household Consumption Panel, Kantar)
6
2
.
1
2007
2008
2009
2010
2011
3
9
.
3
4
7
.
4
5
2
.
0
5
7
.
2
2010
49
2009
46
2008
47
2007
42
2011
47
Brand Preference in Brazil's
CFT Market
(%)
% of households buying at least one Natura product in last 12 months
Source: Brand Essence / Ipsos
strong presence in Brazilian households
with the preferred brand in the CFT market
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% of households buying at
least one Natura product in
last 12 months
No. of categories
purchased
Market
Natura
4.4
3.6
26.5
99.5
13.5
92.7
91.3
24.5
91.1
29.1
28.7
75.2
8.0
17.7
32.5
63.8
21.2
11.2
36.5
99.9
61.8
Soap
Shampoo
Post-
Shampoo
Deo
Facial
Care
Body
Care
Oils
Fragrance
Sun
Care
Makeup
Total
13.2
Penetration by Category
(2011, %)
Basket Size
1 category
2 categories
3 categories
4 categories
>5 categories
50.1%
52.3%
61.8%
2009
43.9%
8.6%
8.0%
2010
38.0%
24.9%
17.2%
10.3%
9.6%
2011
36.2%
24.8%
17.5%
10.2%
11.3%
25.0%
14.6%
Source: Kantar World Panel
opportunity to expand Natura's consumption per
household and consultant productivity in Brazil
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Results of International Operations
(LatAm and France)
Net Revenue
(R$ million, nominal)
EBITDA
(R$ million, nominal)
2008
5
.
9
%
212.7
(82.2)
2009
6
.
9
%
292.6
(77.4)
2010
7
.
2
%
372.1
(78.4)
2011
9
.
0
%
503.8
(51.1)
9M12
1
1
.
3
%
504.4
(21.6)
Share
(% Consolidated Net Revenue)
in International Operations, over the last 5 years,
Natura grew revenue by 3.5 times
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Major Players in Brazil
(Euromonitor)
Natura
(Euromonitor)
Brazil
Operations in Consolidation
(Argentina, Chile and Peru)
Operations in Implementation
(Mexico and Colombia)
13.4
14.5
2.1
4.0
0.1
1.0
2007
2011
2011
Natura
Unilever
Avon
P&G
Boticário
L'Oréal
13.4
14.5
10.4
10.2
9.1
8.8
7.2
8.3
6.0
8.2
5.9
5.7
2007
leading company in Brazil since 2005, and increasing
market share in other LatAm countries
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_service excellence as a competitive advantage;
_intensifying the efficiency program;
_transforming our technological platform into a driver of the business;
_accelerating the recruiting and development of leadership and acquiring
new competencies.
_expanding our leadership in Brazil: CN and CF productivity;
_accelerated growth with profitability in Latin America, becoming a
relevant player;
_connecting and strengthening network relations through Biosphera.
strategic
focus
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Note: Productivity at retail prices = (gross revenue Brazil / average number of consultants) / consultant profit
1
Q
0
7
2
Q
0
7
3
Q
0
7
4
Q
0
7
1
Q
0
8
2
Q
0
8
3
Q
0
8
4
Q
0
8
1
Q
0
9
2
Q
0
9
3
Q
0
9
4
Q
0
9
1
Q
1
0
2
Q
1
0
2
Q
1
0
4
Q
1
0
1
Q
1
1
2
Q
1
1
3
Q
1
1
4
Q
1
1
Accelerated channel growth,
impacting Natura's average
productivity
Execution
problems
Need for higher
marketing investments
the productivity of our consultants
decreased in the last 5 years
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Service
Excellence
Service
Excellence
Adjustments in
the commercial
model
(sales team incentives)
Adjustments in
the commercial
model
(sales team incentives)
Product
Innovation
(White Spaces and Price
Points)
Product
Innovation
(White Spaces and Price
Points)
Cross-Category
(communication and
promotions)
Cross-Category
(communication and
promotions)
pillars of the
productivity program
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_complete review of Supplier chain
_complete review of Supplier chain
_modernization and improvement of transaction systems
_modernization and improvement of transaction systems
_integrated Supply Chain management solutions
_integrated Supply Chain management solutions
_expansion of own and outsourced production network
_expansion of own and outsourced production network
after a strong investment plan in supply chain in the
last years, we have a differentiated service level
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DC São Paulo
DC Curitiba
DC Canoas
DC Simões Filho
DC+Hub
Jaboatão
DC Castanhal
DC Uberlandia
DC Matias Barbosa
2010
Inauguration of DC Uberlândia
Inauguration of DC Castanhal
Expansion of DC Canoas
2011
Inauguration of DC São José
dos Pinhais - PR
Inauguration of new DC Matias
Inauguration of new DC
Jaboatão
Expansion of DC Simões
2012
Stabilization and Optimization
Enables 93% of orders
delivered within 48h
2013
New DCSP
Inauguration of new DCNE
2014
Inauguration of new HUB SP
Inauguration of new DCN
Inauguration of new HUB NE
International Operations
All DCs expanded 2010-2012
3x Capacity
New cycle starting in 2013
new logistic
network
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evolution in
service level
on-time deliveries
(% orders)
Jan/11 Mar
May
Jul
Sep
Nov
Jan/12
Mar
May
Jul
Sep
85%
96%
74%
deliveries D2
(%orders)
3.0%
21.1%
28.5%
35.3%
30.9%
34.2%
CN cycle duration
(days)
6.4
9.8
4.3
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Aug/12
Sep/12
_White Space
Tododia
Body Splash
Oct/12
_White Space
UNA
Fragrance
2013
Next Steps:
_new White
Spaces;
_ Cross-
Category
_continuous
evolution in
Service Level
Evolution in Service Level
_MAIS Natura
Program
_management of
Sales Team: CNO and
Relationship Managers
productivity
program status
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0.7%
-8.0%
5.8%
-1.5%
3.4%
-3.7%
2.2%
-0.6%
-10.0%
-5.7%
-2.6%
1.4%
1
T
0
7
2
T
0
7
3
T
0
7
4
T
0
7
1
T
0
8
2
T
0
8
3
T
0
8
4
T
0
8
1
T
0
9
2
T
0
9
3
T
0
9
4
T
0
9
1
T
1
0
2
T
1
0
3
T
1
0
4
T
1
0
1
T
1
1
2
T
1
1
3
T
1
1
4
T
1
1
1
T
1
2
2
T
1
2
3
T
1
2
1
Q
0
7
2
Q
0
7
3
Q
0
7
4
Q
0
7
1
Q
0
8
2
Q
0
8
3
Q
0
8
4
Q
0
8
1
Q
0
9
2
Q
0
9
3
Q
0
9
4
Q
0
9
1
Q
1
0
2
Q
1
0
2
Q
1
0
4
Q
1
0
1
Q
1
1
2
Q
1
1
3
Q
1
1
4
Q
1
1
1
Q
1
2
2
Q
1
2
3
Q
1
2
Recovery in service
level and market
efficiency
Launch of MAIS
Natura and
adjustments in
sales team
recovery on consultant
productivity during 2012
Note: Productivity at retail prices = (gross revenue Brazil / average number of consultants) / consultant profit
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Natura Consultants (CNs): 291,400
(3
rd
quarter 2012)
International
France
10.3
3.5
1.9
2.6
4.4
Mexico
DS: 30.9%
Argentina
DS: 27.4%
Chile
DS: 18.8%
Peru
DS:41.1%
Colombia
DS:35.1%
Total CF&T Market, US$ billion
Source: Euromonitor 2011
Growth drivers:
_Growing the channel:
_CNO model in Peru,
Colombia and Chile,
new model in
Mexico
_continuous
improvement in service
level
_building the branc
_Corporate behavior
a business platform in the International Operations,
with accelerated growth and profitability
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Innovate direct selling model, connecting and
strengthening consultant and consumer relationship
with the use of digital and technologies with the use
of digital and social technologies
Biosphera
project
_better and faster consumer purchase
experience
_increase consultant productivity and
capacity to generate business
_digital and social inclusion
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Dedicated team to implement a pilot, starting in
Nov 2012 with:
project
structure
_digital platform for
consultants
_direct delivery to final
consumer
_more options for payment
means
_use of CRM tools
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_service excellence as a competitive advantage;
_intensifying the efficiency program;
_transforming our technological platform into a driver of the business;
_accelerating the recruiting and development of leadership and acquiring
new competencies.
_expanding our leadership in Brazil: CN and CF productivity;
_accelerated growth with profitability in Latin America, becoming a
relevant player;
_connecting and strengthening network relations through Biosphera.
strategic
focus
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Net Revenue
(R$ million)
CAGR 09-11 = 14.8%
+8.9 %
+14.0 %
+13.4 %
+13.5 %
+11.7 %
+11.8%
EBITDA and Margin
(R$ million, % Net Revenue)
CAGR 09-11 = 18.9%
Net Income and
Margin
(R$ million, % Net Revenue)
CAGR 09-11 = 10.2%
consolidated
results
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CAGR 09-11 = 49.8%
Net Revenue
(R$ million)
EBITDA and EBITDA Margin
(R$ million, %)
CAGR 09-11 = 23.8%
Net Revenue
(R$ million)
International results Argentina, Chile and Peru
International results Mexico and Colombia
+36.1 %
in local currency
+27.2 %
in local currency
EBITDA and EBITDA Margin
(R$ million, %)
+55.6 %
in local currency
+35.9 %
in local currency
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Funding for the program
Crer Para Ver
(R$ million)
8
.
4
1
0
.
0
3
.
7
2009
2010
2011
+168%
-16%
9M12
8
.
2
Wealth distributed to
Supplier Communities
(R$ `000)
1
0
,
0
3
7
8
,
7
0
6
5
,
5
0
4
2009
2010
2011
+57%
+
15
%
9M12
8
,
8
0
0
sustainability
results
Relative Emissions
(kg CO2e / kg product invoiced)
3
.
1
2
3
.
3
0
3
.
5
5
-7.3%
-5.3%
2
.
9
6
2009
2010
2011
6M12
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Capital Expenditure
(R$ million)
Dividends and Payout
(R$ million, % Net Income)
consolidated
results
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28
_service excellence as a competitive advantage;
_intensifying the efficiency program;
_transforming our technological platform into a driver of the business;
_accelerating the recruiting and development of leadership and acquiring
new competencies.
_expanding our leadership in Brazil: CN and CF productivity;
_accelerated growth with profitability in Latin America, becoming a
relevant player;
_connecting and strengthening network relations through Biosphera.
strategic
focus