A purpose-driven, global, multichannel cosmetics group. Transaction close briefing 11th September 2017

Transcription

1 A purpose-driven, global, multichannel cosmetics group Transaction close briefing 11th September

2 2 Three brands, one vision Guilherme Leal TODAY'S AGENDA A renewed governance and management structure for enhanced execution Roberto Marques A transformational combination with a strong financial profile Robert Chatwin Next steps / Key takeaways Roberto Marques

3 T H R E E B R A N D S, O N E V I S I O N

4 T h r e e b r a n d s, o n e v i s i o n 4 NATURA, AESOP AND THE BODY SHOP: THREE BRANDS, ONE COMMON VISION Nourish through intelligent interactions We value all human endeavours undertaken with intellectual rigour, vision, and a nod to the whimsical. Every Aesop product is made with the same attention to detail we believe should be applied to life at large, taking into consideration a diversity of needs as well as seasonal and environmental conditions. bem estar bem Through our corporate behavior, the quality of the relations we establish and our products and services, we will be a group of brands with strong local and global expression, identified with the community of people committed to building a better world through a better relationship with themselves, with others, with the nature of which they are part, with the universe." Enrich not Exploit Enrich Not Exploit. For us, this means enriching people as well as our planet, its biodiversity and resources. We are committed to working fairly with our farmers and suppliers and helping communities to thrive. Our products enrich, but never make false promises and are never tested on animals."

5 T h r e e b r a n d s, o n e v i s i o n 5 A PURPOSE-DRIVEN GROUP A combination of three pioneering companies Committed to generating positive economic, social and environmental impact, delivering value in all businesses, brands and geographies Education subsidies and health benefits for our consultants Vegetable based products Traceable and sustainably sourced ingredients Community fair trade suppliers No animal testing Carbon neutral business Support to public education

6 T H E N E W N A T U R A G R O U P : A R E N E W E D G O V E R N A N C E A N D M A N A G E M E N T S T R U C T U R E

7 T h e n e w n a t u r a g r o u p : A r e n e w e d g o v e r n a n c e a n d m a n a g e m e n t s t r u c t u r e N A T U R A, A E S O P A N D T H E B O D Y S H O P 7 A NEW GOVERNANCE AND MANAGEMENT STRUCTURE TO BUILD NATURA GROUP N A T U R A B O A R D O F D I R E C T O R S Establish three global businesses based on consumer branding choices/profile: Natura, Aesop, TBS R O B E R T O M A R Q U E S E X E C U T I V E C H A I R M A N ¹ Each business will be run autonomously, with a CEO and its own Executive Committee G R O U P O P E R A T I N G C O M M I T T E E ( G O C ) A new, lean group governance (GOC) to be formed to capture synergies, allocate resources and carry out consolidation N A T U R A CEO TBS CEO A E S O P CEO CTO AB AB OTHER KEY FUNCTIONS Creation of a new position: Chief Transformation Officer (CTO) João Paulo Ferreira New CEO to be announced by October Michael O Keeffe Robert Chatwin New independent Director¹: Peter Saunders, former CEO of TBS 1.Pending confirmation by shareholders general meeting

8 T h e n e w n a t u r a g r o u p : A r e n e w e d g o v e r n a n c e a n d m a n a g e m e n t s t r u c t u r e 8 Assist with the development of Natura Group THE ROLE OF THE GROUP OPERATING COMMITTEE Define and allocate resources between business units Identify and prioritize synergies across each business unit (transversal view): Back Offices, Procurement, IT Platforms, Treasury Create and oversee Centers of Excellence between business units : Retail, Digital, Sustainability and Branding

9 A T R A N S F O R M A T I O N A L C O M B I N A T I O N

10 A t r a n s f o r m a t i o n a l c o m b i n a t i o n 10 KEY TRANSACTION TERMS TIMING Deal closing: September 7th, 2017 ENTERPRISE VALUE US$ 1.2 billion (EBITDA multiple of 13) VALUE CREATION TBS EBITDA to double in 5 years and EBITDA margin to reach 12%-14% in 2022 vs 8% today FINANCING Debt financed in Brazil in the short term Natura Group net debt to EBITDA ratio expected to return to pre-deal level by end 2022 LOCATION The Body Shop headquarters to remain in the UK

11 A t r a n s f o r m a t i o n a l c o m b i n a t i o n 11 A HIGHLY A further step in Natura's journey towards building a global, multibrand, multichannel group based on natural products COMPELLING STRATEGIC RATIONALE Leveraging its presence across multiple sales channels to be an omnichannel leader in personal care and beauty An expanded footprint with a broad geographic presence in key markets A broad product portfolio covering key categories

12 A tt r a n s ff o r m att ii o n al l c o m bii n att ii o n N A T U R A, A E S O P A N D T H E B O D Y S H12 O P THE COMBINATION Net sales by channel % 2016 CREATES A MULTICHANNEL GROUP 24 A powerful combination of independent consultants, franchisees and directly operated stores 92 Pre-acquisition Post-acquisition 64 Direct selling Own store Franchise Digital Other

13 A t r a n s f o r m a t i o n a l c o m b i n a t i o n N A T U R A, A E S O P A N D T H E B O D Y S H13 O P THE COMBINATION EXPANDS NATURA GROUP S FOOTPRINT Net sales by geography % An expanded footprint Preacquisition Postacquisition Existing locations (Natura & Aesop presence) Brazil Post-acquisiton of The Body Shop Latam (ex-brazil) Other countries

14 A t r a n s f o r m a t i o n a l c o m b i n a t i o n N A T U R A, A E S O P A N D T H E B O D Y S H O P 14 A SYNERGISTIC PRODUCT PORTFOLIO COVERING A BROAD RANGE OF CATEGORIES New Natura group net sales per category Bath and Body Fragrance Gifts Skin care Make up Hair care Others 6.1% 8.7% 10.4% 12.2% 16.6% 27.5% 18.5% Global top 5 position Global top 10 position Consolidates the company s strong position in body care, with labels that bring together biodiversity ingredients with innovation Enhance the presence of the group in skincare, the largest category in the beauty industry Further strengthen unique value proposition for fragrance. Natura is the only Latin American company to have an inhouse perfumer, and developed around 20 exclusive essential oils Leverage Natura s strength in categories in which The Body Shop does not have a strong presence, such as Fragrance and Baby and Child

15 A t r a n s f o r m a t i o n a l c o m b i n a t i o n N A T U R A, A E S O P A N D T H E B O D Y S H15 O P THE BODY SHOP: A STRONG STARTING POINT Most markets are healthy Most markets in which the company operates are either sound legacy markets or high growth markets. Only 25% of sales come from markets which need significant improvement. Strong brand awareness and consideration Higher level of awareness and consideration than peers Opportunity to improve consideration to purchase ratio Opportunities to increase digital retail E-commerce is growing above market rate in double digits, high penetration in early entry market, e.g,.30% in the USA Hybris platform successfully piloted in UK and US, to be rolled out in other markets High repurchase rates from loyal customers 15% of customers are responsible for 50% of sales Average spend per year by loyal customers: US$ 220 More positive online sentiment than competitors 15

16 A t r a n s f o r m a t i o n a l c o m b i n a t i o n N A T U R A, A E S O P A N D T H E B O D Y S H16 O P SEVERAL DRIVERS TO BOOST THE BODY SHOP S GROWTH REJUVENATE BRAND Bring back vocal brand activism and tribe spirit Roll out consistent store concept, recovering lost traffic Leverage strength of each brand to offer inspiring, sustainable products OPTIMIZE RETAIL OPERATION Renewal of store footprint Further energize the franchise network Improve consistency of store operations ENHANCE OMNICHANNEL Create seamless connection between online and offline Enhance presence in all touch points Increase digital marketing investment and roll-out Hybris E-commerce system (click & collect) IMPROVE OPERATIONAL EFFICIENCY Rationalize procurement costs Improve organizational productivity T O P L I N E B O T T O M L I N E

17 A t r a n s f o r m a t i o n a l c o m b i n a t i o n N A T U R A, A E S O P A N D T H E B O D Y S H17 O P WE WILL ALSO PURSUE ADDITIONAL SYNERGIES The Body Shop direct selling in Latin America Natura international growth acceleration Further Aesop growth Efficiency / scale gains Access to global Supply Chain Currency and geographic diversification

18 A t r a n s f o r m a t i o n a l c o m b i n a t i o n 18 N A T U R A, A E S O P A N D T H E B O D Y S H O P THE AESOP PRECEDENT NATURA S FIRST STEP TOWARDS CREATING A MULTIBRAND, MULTICHANNEL GROUP What we acquired In Feb 2013, Natura acquired a 65% interest in Aesop for a value of US$ ~70 million to capitalize on: What we achieved EBITDA Margin After its acquisition by Natura, Aesop s revenue increased 3-fold and EBITDA grew 4-fold in 4 years in USD Value alignment International & retail footprint % 20% Unique products & Growth Stores Markets Revenue US$mn EBITDA US$mn potential CAGR 30% 44%

19 A S T R O N G F I N A N C I A L P R O F I L E

20 A s t r o n g f i n a n c i a l p r o f i l e 20 N A T U R A, A E S O P A N D T H E B O D Y S H O P THE NEW NATURA GROUP: SCALE AND RESILIENCE 2016 figures Natura + Aesop TBS Natura Group (Natura + Aesop + TBS) Retail sales 1 US$ Billion Net revenue US$ Billion Gross margin % 69% 71% 70% EBITDA US$ Million 2 EBITDA margin % 17% 8% 14% Colleagues 8,000 10,000 18, Source: Euromonitor 2. Translated into US$ using 2016 average FX rate

21 A s t r o n g f i n a n c i a l p r o f i l e 21 N A T U R A, A E S O P A N D T H E B O D Y S H O P THE BODY SHOP S EBITDA TO DOUBLE IN 5 YEARS, DRIVEN BY IMPROVED OPERATIONAL EFFICIENCY IN THE SHORT - TERM AND TOPLINE GROWTH IN THE MEDIUM-TERM Expected EBITDA evolution US$ Million ~110 ~ Topline growth Costs improvement EBITDA baseline 2016A¹ 2019E¹ 2022E¹ 8.4% 10-11% 12-14% TBS EBITDA margin ¹Translated into 2016 average FX rate

22 A s t r o n g f i n a n c i a l p r o f i l e 22 N A T U R A, A E S O P A N D T H E B O D Y S H O P NATURA GROUP NET DEBT TO EBITDA RATIO EXPECTED TO RETURN TO PRE-TRANSACTION LEVEL BY 2022 Expected net debt to EBITDA ratio evolution END 2016 Pre-acquisition END-2017 Post-acquisition END x 3.6x 1.4x

23 A s t r o n g f i n a n c i a l p r o f i l e N A T U R A, A E S O P A N D T H E B O D Y S H23 O P TIMELINE AND NEXT STEPS T B S D I S E N T A N G L E M E N T ( S E P T - J A N ) By 9 J u n 7 S e p 1 4 N o v N o v 1 Q 1 8 O c t o b e r Deal announced Deal close TBS CEO announcement Q3 results General Shareholders Meeting Investors Presentation C H R I S T M A S P R E P A R A T I O N ( S E P T - D E C )

24 A s t r o n g f i n a n c i a l p r o f i l e N A T U R A, A E S O P A N D T H E B O D Y S H24 O P KEY TAKEAWAYS A POWERFUL COMBINATION TO DRIVE FUTURE GROWTH Creation of a unique group comprising three businesses/brands with strong identities that share a common vision and sense of purpose Implementation of a new governance and management structure that combines autonomous, entrepreneurial and empowered operations, while capturing synergies, best practices and resource allocation at group level. A decisive step towards Natura s strategic aim of building a global, multibrand, multichannel group with a synergistic product portfolio Strong value creation potential: The Body Shop s EBITDA should double in five years through a combination of operational improvements and top line growth The new Natura Group will deleverage its balance sheet and return to its pre-transaction indebtedness ratio within five years

25 Q&A N A T U R A, A E S O P A N D T H E B O D Y S H O P