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March 05 th -07 th, 2007 UBS Pactual Eighth Annual CEOs Conference.

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Presentation on theme: "March 05 th -07 th, 2007 UBS Pactual Eighth Annual CEOs Conference."— Presentation transcript:

1 march 05 th -07 th, 2007 UBS Pactual Eighth Annual CEOs Conference

2 highlights 2

3 Gross Revenues: R$ 3.9 billion in 2006 Market share: 22.8% in Brazilian core market in 2006 Total consultants: 617 thousand in December 2006 International presence: Brazil, Argentina, Chile, Peru, Mexico, France and Venezuela Opening of the first Casa Natura in Brazil, in the city of Campinas, state of São Paulo Expansion of the Distribution Center located in the city of Mathias Barbosa, state of Minas Gerais Start up direct sales tests and opening a research laboratory in Paris – France highlights

4 CF&T market 4

5 CF&T core market – Brazil > Core Market 1 – Net Revenues (R$ billion, nominal) CAGR ( ) = 16.5% % (1)Target market: Skin care, sunscreen, makeup, perfums, fragrances, hair care, shaving products and deodorant - excludes diapers, nail polishes, sanitary pads, hair dyes and oral hygiene. Source: Sipatesp/ ABHIPEC

6 market share – Brazil > Natura’s Market Share in the Core Market 1 (%) % 14.5% 17.1% 19.2% 21.4% +1.4 pp (1)Target market: Skin care, sunscreen, makeup, perfums, fragrances, hair care, shaving products and deodorant - excludes diapers, nail polishes, sanitary pads, hair dyes and oral hygiene. Source: Sipatesp/ ABHIPEC % 6

7 4Q06 and FY06 results 7

8 consolidated gross revenues > Consolidated Gross Revenues (R$ million) CAGR ( ) = 27.2% 1,168 1,411 1, ,540 3, ,030 4Q05 1,201 4Q % 3, % 8

9 consolidated gross revenues Significant change in our merchandising strategy at the end of the year Higher promotional kits sales (lower margins) Cannibalization of regular products 4Q06 gross revenues were R$1.2 billion, frustrating our expectation (+16.6% over 4Q05). Main drivers that contributed for this performance: 9

10 consolidated EBITDA > EBITDA (R$ million) CAGR ( ) = 36.9% * Q054Q % (*) Natura Empreendimentos %

11 consolidated EBITDA margin Q054Q06 > EBITDA Margin (%) -6.0 pp pp 11

12 Increase on promotional kits sales (lower margins) Increase on discounts and promotions in the total sales mix Some administrative expenses above expectations in the 4Q06 consolidated EBITDA 4Q06 EBITDA was R$178 million (-8,9% compared to 4Q05), as a result of: 12

13 CAPEX > CAPEX (R$ million) E 13

14 consolidated cash flow – pro forma Net income (+) Depreciation and amortization (=) Internal cash generation (-) Operating working capital 1 (-) Other assets and liabilities 2 (=) Operating cash generation (-) Capex (=) Free cash flow R$ million Change % (1) Assets – Accounts receivable, inventories and recoverable taxes short term. Liabilities - suppliers, salaries, profit sharing and related charges, taxes payable, provisions and accrued freight. (2) Assets - Advances to employees and suppliers, short term deferred income tax and social contribution, other credits and long term receivables. Liabilities: other short and long term payables and reserve for contingencies 14

15 channel innovation brand 15

16 consolidated number of consultants > Total Number of Consultants 1 (thousands) CAGR ( ) = 15.5% % (1) Consultants in Argentina, Brazil, Chile, Peru e Mexico. 16

17 productivity CAGR ( ) = 8.0% +1.9% > Productivity in Brazil (R$ thousand per average active consultant) Q054Q %

18 productivity > Productivity in Brazil – Natura vs. Direct Sales Industry (R$ thousand per average active consultant in 2006) Source: ABVED 8,2 12,5 Industry (except Natura) Natura 1.5x 18

19 brand perception Source: Survey commissioned by Natura. Conducted with 1,200 people across different social classes in three large Brazilian cities (São Paulo, Porto Alegre and Recife). 70% 68% % 70% nd in rank Innovation Quality 61% 52% Preference 43% 19% 19

20 innovation > Number of New Products – innovation + improvements > Total Innovation Index – innovation + improvements %

21 international expansion 21

22 > Financial Highlights – Argentina, Chile and Peru (US$ million) (1) Position at the end of the 17 th sales cycle period. 4Q064Q05 Change% Units sold – items for resale (in millions) Net Revenues Ebitda Ebitda Margin Gross Revenues Change% Total de Consultants % % % % -25.4%-16.3% % % % % % -16.3% % highlights – operations under consolidation 22

23 > Financial Highlights – Mexico, Venezuela and France (US$ million) 4Q064Q05 Units sold – items for resale (in millions) Net Revenues Ebitda Gross Revenues Total de Consultants (1) Position at the end of the 17 th sales cycle period. highlights – operations under implementation 23

24 international expansion > Total Net Expenses 1 (R$ million) 2007E (1) Considers operating loss from operations under consolidation (Argentina, Chile and Peru) added to operations under implementation (Mexico,Venezuela and France); and exchange rate impact on controlled companies balance sheet translations, excluding reported gains in trading from Brazil to these companies. 24

25 perspectives 25

26 perspectives Improve efficiency in our marketing actions, and better balance between short and long-term actions Freeze on administrative structure expenses for the coming two years Search for productivity gains – operational processes Maintain autonomous administrative structure dedicated to Brazilian and international operations Maintain the strategy with adjustments in the implementation 26

27 perspectives Continue to invest in Argentina, Chile and Peru, focused on the achievement the break even Consolidate our presence in Latin America, opening operations in Venezuela and Colombia in 2007 Search for new markets, starting with new operations in the United States and Russia, in 2008 Triple Bottom Line and quality in relations Focus on the international operations, based on the following aspects: 27

28 This presentation contains forward-looking statements. Such statements are not statements of historical fact, and reflect the beliefs and expectations of the Matura'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 presentation 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.


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