march 05 th -07 th, 2007 ubs pactual eighth annual ceos conference
TRANSCRIPT
march 05th-07th, 2007
UBS Pactual Eighth Annual CEOs Conference
highlights2
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
highlights2006
3
CF&T market4
CF&T core market – Brazil
> Core Market1 – Net Revenues (R$ billion, nominal)
CAGR (2001-2006) = 16.5%
2001 2002 2003 2004 2005
5.3
6.3
7.2
8.7
10.1
+13.4%
(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.
2006
11.4
5
market share – Brazil
> Natura’s Market Share in the Core Market1 (%)
2001 2002 2003 2004 2005
14.3% 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.
2006
22.8%
6
4Q06 and FY06 results
7
consolidated gross revenues
> Consolidated Gross Revenues (R$ million)
CAGR (2001-2006) = 27.2%
1,168
1,411
1,910
2001 2002 2003 2004
2,540
3,244
2005
1,030
4Q05
1,201
4Q06
+16.6%
3,890
2006
+19.9%
8
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$1.2 billion, frustrating our expectation (+16.6% over 4Q05). Main drivers that contributed for this performance:
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consolidated EBITDA
> EBITDA (R$ million)
CAGR (2001-2006) = 36.9%
136
199
296
432
564
195178
2001* 2002 2003 2004 2005 4Q05 4Q06
-8.9%
(*) Natura Empreendimentos.
+16.0%
655
2006
10
consolidated EBITDA margin
20.1
22.2
24.4 24.7
26.8
20.8
2002 2003 2004 2005 4Q05 4Q06
> EBITDA Margin (%)
-6.0 pp
23.7
2006
-1.0 pp
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• 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$178 million (-8,9% compared to 4Q05), as a result of:
12
CAPEX
> CAPEX (R$ million)
83
2004
112
2005
194
2006
190
2007E
13
consolidated cash flow – pro forma
Net income
(+) Depreciation and amortization
(=) Internal cash generation
(-) Operating working capital1
(-) Other assets and liabilities2
(=) Operating cash generation
(-) Capex
(=) Free cash flow
R$ million 2006 2005 Change %
460.8
54.6
515.4
-73.1
-46.7
395.5
202.0
-193.6
396.9
44.0
440.9
-3.7
1.5
438.7
327.1
-111.6
16.1
24.0
16.9
-9.8
-38.3
(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
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channelinnovation
brand15
consolidated number of consultants
> Total Number of Consultants1 (thousands)
CAGR (2001-2006) = 15.5%
300321
375
433
520
2001 2002 2003 2004 2005
+18.6%
617
2006
(1) Consultants in Argentina, Brazil, Chile, Peru e Mexico.16
productivity
CAGR (2001-2006) = 8.0%
+1.9%
> Productivity in Brazil (R$ thousand per average active consultant)
8.59.0
10.5
11.512.3
3.6 3.5
2001 2002 2003 2004 2005 4Q05 4Q06
-1.8%
12.5
2006
17
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
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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%
20062005
73%
70%
2006
2nd in rank
Innovation
Quality 61%
52%
Preference 43%43% 19%
19
innovation
117
182
2003 2004 2005
213
2006
225
> Number of New Products – innovation + improvements
48.8
63.2
69.8
2003 2004 2005
> Total Innovation Index – innovation + improvements %
58.4
2006
20
internationalexpansion
21
> Financial Highlights – Argentina, Chile and Peru (US$ million)
(1) Position at the end of the 17th sales cycle period.
4Q06 4Q05 Change%
Units sold – items for resale
(in millions)
Net Revenues
Ebitda
Ebitda Margin
Gross Revenues
20052006 Change%
Total de Consultants1
4.0 2.2 83.3%
13.5 8.9 51.6%
17.6 11.6 52.0%
-3.4 -1.5 135.9%
-25.4% -16.3%
51.2 36.2 41.7%
11.6 7.0 65.0%
42.0 27.8 51.1%
54.9 36.2 51.8%
-6.8 -4.5 51.1%
-16.3% -16.3%
51.2 36.2 41.7%
highlights – operations under consolidation
22
> Financial Highlights – Mexico, Venezuela and France (US$ million)
4Q06 4Q05
Units sold – items for resale
(in millions)
Net Revenues
Ebitda
Gross Revenues
20052006
Total de Consultants1
0.23 0.05
1.7 0.6
2.0 0.7
-5.4 -3.3
5.0 1.4
0.58 0.06
4.4 1.1
5.1 1.2
-16.7 -10.0
5.0 1.4
(1) Position at the end of the 17th sales cycle period.
highlights – operations under implementation
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international expansion
> Total Net Expenses1 (R$ million)
2007E
48.0
31.8
39.6
2005 2006
(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
perspectives25
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
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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:
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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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