Morgan Stanley 13 th Annual Latin America Conference London, UK September, 2010

Transcription

1 Morgan Stanley 13 th Annual Latin America Conference London, UK September, 2010

2 Company Overview

3 Our History 70 s 80 s 90 s 00 s Current Moment A small laboratory and two passions: cosmetics and relationships (1969) Choice to purse a direct sales platform (1974) Strong growth based on regional expansion and products portfolio Commitment with social and environmental responsibility Seek to excel in management Sustainable development focus Natura Ekos Line developed (2000) Natura Space, Cajamar site opened (2001) IPO on the Bovespa (2004) Management model evolution New circle of growth among other Latin American countries Increased leadership in Brazil Follow on BOVESPA Free Float to 40% (2009) Sales Volume Evolution (retail) in US$ million 3

4 Where we are France Mexico 7.4 Colombia 3.0 Peru Brazil Chile Argentina Size of CF&T Market Retail Price, 2009 (US$ billion) Source: Euromonitor 4

5 Value Proposition

6 Differentiated Value Proposition Attractive market with differentiated growth profile channel products brand corporate behavior Delivery of Triple Bottom Line : Economic: Strong cash flow generation Attractive growth and profitability Consistent dividend payments Social: Wealth creation to consultants R$ 60 million invested in CSR 1 in 2009 Benefits extended to extractives communities Environmental: Carbon neutral operations Utilization of refill packages Sustainable extraction Use of recycled and recyclable materials 1 Corporate and Social Responsibility 6

7 Relevant market with differentiated growth in LatAm Size of CF&T market (in US$ billion) Direct sales share in the CF&T Market Countries 2009 CAGR % Region Direct Sales (%) United States % Japan % Brazil % Mexico 7 7.4% Argentina, Chile, Colombia and Peru % Countries in which Natura operates % World % Source: Euromonitor 2009 The markets in which Natura operates represent 12.5% of the global CF&T market and have a growth rate of 2.4x that of the total market Latin America 27.3% Brazil 24.4% Argentina 23.8% Chile 19.5% Colombia 38.5% Mexico 31.6% Peru 28.0% Asia Pacific 11.7% North America 8.5% Western Europe 3.2% Australasia 9.2% Africa / Middle East 2.3% Source: Euromonitor

8 ... leveraged in the Brazilian context Core market growth in real terms vs. GDP in Brazil GDP growth Core market growth in real terms Demand drivers in Brazil Increasing purchasing power of C and D income classes % 2.5% % 7.0% % 12.2% % 9.6% % 10.1% Greater participation of women in the labor market Cultural emphasis on personal and aesthetic treatments % 8.3% % 10.8% % 10.4% CAGR % 8.9% 2010E 6.9% Source: IBGE, Central Bank and Abihpec 8

9 Leadership position in Brazil.. 12,6 Market Share Total CF&T (Euromonitor) (Percentage) 13,2 Core Market (ABIHPEC / SIPATESP) Natura Market Share per Segment 10,5 9,9 9,5 23.7% 7,9 7,3 6,3 6,7 6,3 6,1 CF: 38.8% 2,9 T: 12.7% st Bi 10 Natura Unilever Avon Procter & Gamble O Boticario Colgate Source: Euromonitor

10 ..gaining share in LATAM Sales Natura (at retail prices)¹ (US$ Million) Total Market (LATAM²) : US$53,6 billion 7,43% Share Natura 2009 LATAM 7,43% Share Natura % 0.45% 2.99% 4.52% 2.75% 1.46% 13.16% Evolução Share > pp LATAM Colombia +0.15pp Mexico +0.78pp Chile +0.67pp Peru +0.55pp Argentina +0.40pp +0.24pp Brazil (Natura) Total Natura Ranking Natura º 22º 9º 8º 6º 12º 1º Ranking Evolution Natura > º-> 23º 30º-> 22º 10º-> 9º 10º-> 8º 11º-> 6º 16º-> 12º Steady Top 3 Players (mkt share) Avon (11.1%) P&G (10.9%) Colgate (9.4%) P&G (16.2%) Colgate (11.3%) Unilever (8.3%) Unilever (15.5%) P&G (12.3%) L'Oréal (10.1%) P&G (15.7%) Unilever (9.8%) Belcorp (8.3%) Unilever (18.2%) Avon (12.2%) P&G (10.9%) P&G (13.7%) Unilever (10.5%) Avon (9.1%) Natura (13.2%) Unilever (9.9%) Avon (9.5%) Total sales at retail price (global ranking) (20º) (11º) (25º) (28º) (21º) (3º) ¹ Source: Euromonitor

11 Brand recognition in Brazil CF&T brand by preference (%) Most valuable brands among Brazilian public companies (2009)¹ Ranking Company Brand value (in R$ BN) Mkt. Cap (in R$ BN) 1º Petrobrás (Oil) º Bradesco (Bank) º Itaú Unibanco (Bank) º Banco do Brasil (Bank) Natura 2nd place º 6º Natura (Cosmetics) Skol 2 (Beverages) Natura 2nd place Source: Ipsos Brand Essence 1 Source: BrandAnalytics and Millward Institute 2 Considers Ambev's Market Cap 11

12 Massive Masstige Prestige Brand Position Source: Booz & Company research,

13 R$ 2.94 each 5 unit package R$ 4.95 /each 3 unit package R$ /each 1 unit package 13

14 Channel strength Available consultants (in thousands) Channels differentiations Brazil 2Q: (+17.9%) Int l 2Q: (+26.8% ) Total 2Q: 1,119.6 (+19.3%) High productivity times higher than its peers Training 583,000 consultants trained in % % % Low turnover 36% on average Business model that generates income and work High satisfaction 2 90% in H09 1H H09 1H10 Consultants are Natura s first consumers Drive sales through personal relationships Channels disseminate Natura's values with consultants acting as agents of social transformation Natura reached 1 million consultants in October, Source: Company, ABEVD (Brazilian Association of Direct Sales Companies) 2 HAY Consultant annual opinion poll for consultants satisfaction 14

15 Commercial model - CNO Platform for channel growth Stronger and more productive relationship with our consultants Greater emphasis on training Old Model CNO Model CN CN CN CN CNO Brazil (2010) CN CN GR CN CN CN CN CN CNO CN GR CNO CN CN CN 1 GR 11 CNOs 1 CNO 96 CNs 1 GR 1,048 CNs By the end of the 9 th cycle. 1 GR: 600 CNs 1 GR: up to 15 CNOs 1 CNO : up to 150 CNs GR Relationship Manager CNO Natura Super Consultant CN Natura s Consultant Hired under CLT regulations 1 GR: up to 2,250 CNs 15

16 Innovation Number of new products & innovation index¹ Products with functional, emotional and philosophical benefits 56,7% 68,8% 67,6% 64,6% 68,1% Sustainable use of Brazilian biodiversity Open Innovation exceeded 50% of the projects %* 2.9%* 2.6%* H09 1H10 Number of launches Innovation Index * Percentage of net revenue invested in innovation Source: Company Note: 1 Percentage of products launched in the last 24 months in the company s revenues 16

17 Summer Winter Launches 2010 Ekos Line Chronos Line 17

18 Amó Campaign

19 Corporate behavior»evolution on relationship quality»systematic process of stakeholder engagement: Consultants, employees, consumers, supplier communities and investors»1,500 people involved»third company to be publicly listed on the Bovespa Novo Mercado»First Latin American Company to adopt the 2001 Global Reporting Initiative (GRI)»Part of ISE Corporate Sustainability Index» Best company (Exame); Most admired company in Brazil, 2009 (Carta Capital) 19

20 Triple Bottom Line Results 20

21 Social and Environmental Results CO 2 emissions (CO2 emitted / Kg of product sold) 4,02 3,82 Power consumption per product sold 598,9 (Kjoules / unit) 552,1 447,3 3, » Carbon Free since 2007» Ekos 10th anniversary: Sustainable use of biodiversity and cultural heritage. Engagement with 26 communities, benefiting 2,084 families» Crer Para Ver program improvement of brazilian public education: 7.1% of the consultants joined the voluntary product selling» Climate research» consultants: 90% in 2009» employees: 74% in 2009» suppliers: 82% in

22 Economics Net Revenues (R$ million) CAGR = 17.5% EBITDA and Margin (R$ million) CAGR = 19.5% Net Income and Margin (R$ million) CAGR = 21.2% ,1% 25,0% 18.6% 23,8% 15,1% 23,5% 23,0% 14,5% % 23.0% 32.0% % ,1% 16,4% 14,5% Consolidated net incom 8.5% H09 1H H09 1H H09 1H10 Source: Company 22

23 Economics Capex (in R$ million) Leverage (Net debt / EBITDA) Dividends paid and pay-out ratio (in R$ million) CAGR = 20.0% % 96% 87% ,2 0,1 0, E Source: Company 23

24 Operations in consolidation (R$ Million) (Argentina, Chile, Peru) Operations in implementation (R$ Million) (Mexico and Colombia) Economics International operations Net revenues (R$ million) % in local currency 218, % in local currency 66,5 164,4 44,0 43,3 121,2 100,9 114,0 31,6 21, H09 1H10 EBITDA (R$ million) H09 1H10 8, H09 1H10 5,2 1,8 (12,8) H09 1H10 (1,4) (28,0) (25,4) (5,1) (37,9) (42,3) 24

25 Looking Ahead 25

26 Looking ahead 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 Management Model Managing through processes Strengthening organizational culture Leadership development Business and regional units Consistent investments: Increase in CAPEX IT (commercial and logistic processes) Logistic Model Production capacity 26

27 Regional Unit Channels Management model Leadership development Strengthening of corporate culture based on Natura's core values Implementation of regional and business units São Paulo Metro São Paulo Countryside Mid West 1 North/Northeast South Business Units Management by Category and Brands A B C D 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 27

28 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.

29 IR Team Helmut Bossert Patricia Anson Bruno Caloi

30 Back Up

31 Beliefs 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. 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. Commitment to the truth is the route to perfecting the quality of relationships. 31

32 Beliefs Reason for being Our reason for being is to create and sell products and services that promote wellbeing/being well. Being well Well-being is the harmonious, pleasant relationship of a person with oneself, with one's body. is the empathetic, successful, and gratifying relationship of a person with others, with nature and with the whole.

33 Core Market CF&T - Brazil Cosmetics and Fragrances (R$ billion) Toiletries (R$ billion) CF&T Market¹ (R$ billion) + 93 bps 33,0% 33,9% bps 11,2% 12,4% bps 21,5% 22,6% 17,5 15,3 7,2 8,3 8,1 9, % +14.7% +14.1% (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. 33

34 Productivity - Brazil Consultant Productivity 1 in Brazil (R$ per average available consultant) % 2.8% Q09 2Q10 1H09 1H10 (1) At retail prices. 34

35 NATU3 Performance NATU3: +87.2% Ibov: +33.0% NATU3: +37.9% Ibov: +28.3% NATU3: +51.1% Ibov: +29.1% NATU3: -41.4% Ibov: +47.4% NATU3: +18.0% Ibov: -41.4% NATU3: % Ibov: +82.7% NATU3: 15.9% Ibov: -3.6% NATU3 23/07/2010 R$41.10 Natu3 Ibovespa 632% NATU3 26/04/2004 R$ % 35

36 P&L Natura R$ million 2Q10 2Q09 1H10 1H09 NET REVENUES 1.283, , , ,9 Cost of sales (400,1) (301,8) (711,8) (563,4) GROSS PROFIT 883,6 732, , ,6 Operating expenses (566,9) (505,6) (1.046,8) (912,9) Financial income (expenses), net (12,8) (19,7) (19,4) (12,8) Other operating income (expenses), net (12,4) 0,7 (13,2) 0,6 INCOME BEFORE INCOME TAX AND SOCIAL CONTRIBUTION 291,5 207,9 506,9 379,5 Income tax and social contribution (100,0) (39,7) (173,9) (72,5) NET INCOME FOR THE YEAR 191,5 168,2 333,1 307,0 Ratios Gross Margin 68,8% 70,8% 69,0% 69,8% G&A / Net revenues 10,3% 11,8% 10,6% 11,6% Selling Expenses / Net revenues 32,2% 35,3% 33,2% 35,4% Net Margin 14,9% 16,3% 14,5% 16,4%

37 Ekos sustainable use of biodiversity

38 Chronos a truly beautiful woman

39 Todo Dia (every day) caring for body and mind

40 Mamãe e Bebê (mom and baby) the importance of the bond between parents and their children

41 Purchasing power is increasing in Brazil.. 42,4% Brazil- Social Income Classes 53,0% 36 million people will move up to Classes A,B and C (FGV) until ,2% 20 million people left poverty since ,4% 11,1% 18,2% 15,1% 13,7% Class AB Class C Class D Class E Class Income (R$) AB More than C D Source: FGV 2009 E Up to 804