NON DEAL ROAD SHOW SRI. May 2011 Toronto Boston NYC Goldman Sachs

Transcription

1 NON DEAL ROAD SHOW SRI May 2011 Toronto Boston NYC Goldman Sachs

2 NATURA S ESSENCE 2

3 REASON FOR BEING Our Reason for Being is to create and sell products and services that promote well-being/ being-well WELL-BEING is the harmonious, pleasant relationship of a person with oneself, with one s body BEING-WELL is the empathetic, successful, and gratifying relationship of a person with others, with nature and with the whole 3

4 BELIEFS Life is a chain of relationships nothing in the universe exists alone everything is interdependent. It is our belief that the appreciation of the importance of relationships is the foundation of an enormous human revolution in the search for peace, solidarity and life in all of its manifestations. The continuous search for improvement promotes the development of individuals, organizations, and society. Commitment to the truth. The greater the diversity, the grater 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 and it sustainable development. 4

5 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 the construction of a better world, based on a better relationship with themselves, with others, with nature of which they are part, with the whole. 5

6 TIME LINE s 80s 90s 00s 1969: a small laboratory and two passions: cosmetics and relationship 1974: decision to use direct sales Creation of the Natura System Proposal to use natural ingredients in formulas Strong growth, based on regional expansion and the product portfolio Makeup and perfumery market Operations in Chile Cosmetic products with refill Reason for Existence and Beliefs Operations in Argentina and Peru Board of Administration Ekos Line (2000) Natura Space, Cajamar (2001) Initial Public Offering Bovespa (2004) Follow on (2009) Carbon Neutral Program Leadership in Brazil (2004) Program Crer para Ver (See to believe) Merger of companies that formed the Natura System Operations in Mexico and Colombia Revenue (R$ millions) Evolution of management model 6

7 VALUE PROPOSITION 7

8 VALUE PROPOSITION Attractive market with differentiated growth profile Corporate behavior Brand Essence Channel Products Delivery of Triple Bottom Line : Economic Strong cash flow generation Attractive growth and profitability Consistent dividend payments Social Wealth creation to consultants R$ 70 millions invested in CSR 1 Benefits extended to extractives communities Environmental Carbon neutral operations Utilization of refill packages Sustainable extraction Use of recycled and recyclabe materials 8 1 Corporate and Social Responsibility

9 BRAND PREFERENCE 1 CF&T Brand Preference in Brazil (%) International operation: We strengthened brand awareness in all countries Argentina and Peru: we are among the top three preferred brands 1 Source: Brand Essence / Ipsos 9

10 BRAND ATTRIBUTES Sustainable development Development Opportunity Take care of relationships Raise Awareness Commitment to truth Attributes are positive/negative ideas or associations of a brand by its stakeholders based on past experiences and expectations of future relations. Philosophic Attributes Linked to the our Essence Enjoyment Brazilian-ness Emotional Attributes Linked to human relations and affecting emotions 10 Naturalism Quality Innovation Biodiversity Functional Attributes Linked to the concrete offer of the brand in the market

11 PRODUCT INNOVATION Innovation index 1 Number of products launched % NR 2.6% NR 2.8% NR Products with funcional, emocional and philosofical benefits Open Innovation exceeded 50% of the projects Sustainable use of Brazilian biodiversity - Ekos, Chronos, Una Green Polyethylene from sugarcane GHG emissions controled by SKU 11 1 Percentage of products launched in the last 24 months in the company s revenue

12 12 OUR PRODUCTS

13 , ,034 1,221 OUR CHANNEL high productivity focus on training high satisfaction low turn over Channel 1Q11: 1,230 (+17,8%) Growth of CNs in IOs (thousands) Growth of CNs in Brazil (thousands) Total (thousands) % % % % % % Consultants are Natura s first consumers Driver sales through personal relationship Channel disseminate Natura s values with consultants acting as agents of social transformation

14 DIFFERENTIATED VALUE PROPOSAL BY CORPORATE BEHAVIOR Generating value for all steakholders by transforming social and environmental challeges into business opportunities and enlarging the well being well community Sustainable management model 14 Triplle Bottom Line Results

15 TRIPLE BOTTOM LINE RESULTS million of consultants; 7,037 Employees; Ebitda: R$1,257 millions (24.5%) Net Revenue: R$ 5.1 billion Investments in innovation: (2.8% on net revenue); Relative Greenhouse Gases reduction since 2006: - 21% Reduce of water consume at the units in 2010: -10% R$ 13 millions of Crer pra Ver products selling Crer Pra Ver penetratin: 9.9% Distribution of resources with our Consultants : R$ 2, Market Share: 24% in Brasil (+ 1.1 p.p.) Brand preference Natura: 49% Distribution of resources with supplier communities: R$ 8.44 million (57% up 2009); Bioqlicar Program: 3.7 (supplier community evaluation) Consultants Satisfaction : 90% Loyalty Rate with Consumers: 53% 15

16 OUR SUSTAINABILITY MANAGEMENT Strategic Planning PEN Stakeholder Engagement Materiality matrix 4. COMMUNICATE External and Internal Analysis 1. DEFINE AND PLAN Performance Book for the processes 2. MONITOR Socioenvironmental Budget (OSA) Incorporation into the PE/ PEP processes Communication of results (GRI) 3. EDUCATE AND DEVELOP Education for Sustainability Profit Sharing and Results (PLR) Individual Performance Evaluation (PGD) 16

17 SUSTAINABLE USE OF SOCIOBIODIVERSITY Keep focus on sustainable use of biodiversity, maximizing the Amazonic region s added value, stimulate knowledge networks, productive chain networks and entrepreneurship. We encourage crop production with ecological models, the creation of communitarian development funds, the setup of fair price value chains and the remuneration of traditional knowledge in Brazil and the exterior 17

18 SUPPLIER COMMUNITIES MAP US$ 5,48 million in 2010 in resourcers for the suppliers communities N Suppliers Associated traditional knowledge Under development Institucional support It means US$ 1,499 additional annual income for each family Distribution of benefits for access to genetic resources or associated COOPAVAN traditional knowledge in 2010: GRANDE SERTÃO US$ 930 thousands

19 GREENHOUSE GASES Our strategy: Continually reduce the emissions in all of Natura s business chain; progress in measuring and reporting emissions, with a vision stratified by processes and entities and insert the adaptation to climate changes into the Carbon Neutral program 19

20 CARBON NEUTRAL PROGRAM THREE PILARS 1. GHG Inventory 2. Reduction 3. Offseting Monitoring our GHG emissions in a lyfe cicle approach, considering all the value chain Our goal reduction: - 33% relative emissions until % absolute direct emissions Offsetting the amount of our emissions through innovative volunteer projects with social and environmental benefits 20

21 CARBON NEUTRAL 38% (72,095 ton.) Extraction and transportation of - raw materials - Packaging EMISSIONS % (17,120ton.) Industrial and administrative processes 17% (31,201 ton.) Internal process: - energy - vehicles - sources - effluents - International operations 20% (36,689 ton.) Use of products and packaging discharge 16% (30,946 ton.) Product sales (transportation and distribution) 21

22 LOOKING AHEAD 22

23 LOOKING AHEAD Brazil Expand market leadership through the strength of the channel, the brand and our presence in categories Regional activity Latin America Ambition to be among the top brands in the market Expand, innovate and strengthen the channel Increase knowledge of and preference for the brand More local action Corporate Behavior Management Model Organizational culture Leadership development Innovation Products and concepts Commercial models Digital technologies Ongoing investment in infrastructure: CAPEX IT (commercial and logistical process) Logistical model Sustainability Advance in the water footprint and solid waste Production capacity 23

24 RELEVANT MARKET WITH DIFFERENTIATED GROWTH Attractive market Size of CF&T market (in US$ billion) Countries 2010 CAGR % United States % Japan % Brazil % Mexico 9 7.5% Argentina, Chile, Colombia and Peru % Direct sales share in the CF&T Market Region Direct Sales (%) Latin America 27.9% Brazil 27.0% Argentina 24.8% Chile 18.1% Colombia 28.9% Mexico 32.2% Peru 44.2% Countries in which Natura operates % Eastern Europe 20.7% Asia Pacific 11.5% World % Source: Euromonitor 2010 The markets in which Natura operates represent 14.8% of the global CF&T market and have a growth rate of 2.3x that of the total market Australasia 9.1% North America 8.4% Western Europe 3.4% Africa / Middle East 2.5% Source: Euromonitor

25 BRAZIL Core market growth in real terms vs. GDP in Brazil GDP growth Core market growth in real terms % 2.5% % 7.0% % 12.2% % 9.6% % 10.1% % 8.3% % 10.8% % 10.4% % 7.9% CAGR % 8.8% 42,4% 30,2% 16,4% 11,1% Brazil- Social Income Classes Growth opportunities in Brazil ,0% 18,2% 15,1% 13,7% Class AB Class C Class D Class E Demand drivers in Brazil > R$ 4,808 R$ 1,115 up to R$ 4,880 R$ 804 up to R$ 1,115 < R$ 804 Increasing purchasing power of C and D income classes Greater participation of women in the labor market Cultural emphasis on personal and aesthetic treatments 36 million people will move up to Classes A, B and C (FGV) until million people left poverty since Source: IBGE, Central Bank, Abihpec and FGV

26 BRAZIL Growth opportunities in Brazil Market Share Total CF&T (Euromonitor) (Percentage) 14,4 Natura is the leader in Brazil Natura Market Share per Segment 12,6 10,5 7,9 7,3 6,3 4,7 9,8 9,7 6,8 6,5 6,2 5,0 14.4% 2010 CF: 23.1% 2,9 T: 8.1% Natura Unilever Avon Procter & Gamble O Boticário Colgate L'Oréal CF: Cosmetics and Fragrances T: Toiletries Source: Euromonitor

27 99.5 % 90.8% 89.1% 89.7 % 66.4% 58.4% 37.8 % 23.9 % 10.9% 11.1% 3.0% 6.3% 3% 25% 20.9% 21.5 % 21.5 % 25.7 % 18.0 % 10.8% % 54.8% BRAZIL Still place for growth Categories Penetration¹ Growth opportunities in Brazil Market Natura ¹ Number of households that purschase at least one product in the last 12 months Source: Kantar Panel Research

28 INTERNATIONAL OPERATIONS to be among the top brands Market Share Total CF&T (Euromonitor) (Percentage) 3,5% 1,0% 0,1% 0,7% Operations in Consolidation¹ Operations in Implementation² 28 ¹Argentina, Chile and Peru ²Mexico and Colombia Source: Euromonitor 2010

29 INTERNATIONAL OPERATIONS to be among the top brands Natura Ranking Evolution > º -> 17º 22º -> 22º 9º -> 8º 8º -> 8º 6º -> 6º Total CFT Market (USD) (global ranking) 3,381 (22º) 8,650 (11º) 2,059 (35º) 1,699 (37º) 3,426 (21º) P&G P&G Unilever P&G Unilever Main competitors Retail Unilever Colgate Unilever Colgate L Oréal P&G Unilever Colgate P&G L Oréal Main competitors Direct sales Avon Belcorp Unique Jafra Avon Fuller Avon Belcorp Oriflame Belcorp Unique Avon Avon Tsu Amodil CFT growth (%) CAGR 7% 8% 8% 10% 20% Source: Euromonitor

30 Regional Unit Channels Regional Unit Channels MANAGEMENT MODEL Foundations for next years Brazil Business Units Management by Category and Brands Int l Business Units Management by Category and Brands A B C D A B C D São Paulo Metro Argentina São Paulo Countryside Chile Mid West 1 Colombia North/Northeast France South Mexico Peru Consolidation of process management; Development of leaders; Strengthening of the organizational culture. 30

31 CULTURE DRIVERS Foundations for next years Commitment to truth Be authentic and ethical, committed to yourself and others. Defend your beliefs and act in accordance with them. Do things well Focus on doing everything with simplicity, but with beauty and quality, paying attention to detail. Be disciplined and honor your commitments. Take care of relationships Doing things together is better, open up to each other with generosity and empathy, creating an environment of trust with quality connections. Recognize that others are different from you, listen without judging, respect others opinions, combining differences to better the whole. Continuous improvement Keep improving, evolve in all dimensions: material, emotional, intellectual and spiritual. Keep seeking self-knowledge, admitting your own talents and limitations. Create an environment that promotes learning, continuous improvements and recognize high performance. Innovation Engage, lead and do what has never been done before. Take risks. Constantly question the old and be stimulated by seeking the new. Sustainable development Always deliver superior results and significant economic, social and environmental value. Manage the short term with the commitment to build the company s future. Pleasure and Joy Face daily challenges with optimism, lightness and good spirits. Celebrate achievements, nourish enthusiasm and energy that encourage us to evolve and keep doing more and better. Be realized by your work, which should have an affinity with your purpose in life, and find meaning in everything you do. 31

32 View INNOVATION PLATAFORM Foundations for next years Integrality Senses and experience designs Integrality Sciences Classical Sciences Action Sustainable technologies 32 Sense

33 INVESTMENT IN INFRASTRUCTURE Foundations for next years Investment in Distribution Centers (DCs): Brazil: New DCs in Uberlândia and Castanhal municipalities Doubled the capacity of the Canoas distribution center Two new Hubs in Brasil (Belém and Salvador) France International Operations: expansion in Chile and Peru modernization of picking lines in Argentina and Colombia. Mexico Colombia Peru Brazil Local production through partnerships: 2010 in Argentina and 2011 in Colombia and in Mexico; Increased investments in Information Technology. DC Production Chile Argentina 33

34 PRODUCT IMPACT SOLID WASTE Foundations for next years OUR STRATEGY From an environmental point of view, the most significant negative effects of our performance are in our productive chain and in the final disposal of our products and packages. We want to provide sustainable waste management throughout our supply chain: Reduce residue generation from the extraction to post-consumption stages Reuse and recycle residues to increase their perceived value Generate solutions using the dissemination of our network program Promote social development opportunities 34

35 WATER Foundations for next years OUR STRATEGY: For us to be able to promote the sustainable use of water resources, we need to develop knowledge on our impact, using the life cycle concept, contemplating from the productive chain to the disposal of product and considering consumption as well as pollution water footprint. We will be a reference in the management of socio-environmental impact relating to water. WATER FOOTPRINT CONCEPT 35

36 Roberto Pedote, CFO Marcelo Cardoso, VP Sustainability Helmut Bossert, IR Patrícia Anson, IR 36

37 37

38 Our Operations International Available Consultants (C12): 192 thousand Employees: 1,465 (860 SF) France Employees: 48 (20 SF) CNs: 3 thousand 15,7 Mexico Employees: 341 (250 SF) CNs: 41 thousand 8.6 Colombia Employees: 172 (110 SF ) CNs: 19 thousand 3.4 Peru Employees: 281 (174 SF) CNs: 46 thousand Brazil Employees: 4,821 (877 SF) CNs: thousand 38 Total CFT Market Source: Euromonitor 2010 Chile Employees: 294 (132 SF) CNs: 31 thousand Argentina Employees: 329 (174 SF) CNs: 53 thousand

39 Massive Masstige Prestige Democratic and aspirational brand 39 Source: Booz & Company research, 2009

40 Key Brands Main Competitors Children Care 1º 2º Johnson & Johnson Procter and Gamble Anti - Wrinkles Body Facial Make Up Avon Hypermarcas Avon NIVEA NIVEA O Boticário Men's grooming Procter and GambleUnilever Hair L Oreal Unilever Sunscreen Johnson & Johnson NIVEA Deodorant Unilever Avon Fragrances O Boticário Avon Oils Colgate Unilever 40 Soaps Unilever Bertin

41 CONSOLIDATION OF THE CNO MODEL IN BRAZIL CNO model in Brazil: first complete cycle of operations in 2010 Focus on training and welcome programs for new consultants Reduction in turnover - both total turnover and consultants who have been with the company for less than a year CN CN CN CNO CN GR CN Brazil (2010) CN CN O CN CNO CN CN 1 GR 13 CNOs 1 CNO 90 CNs 1 GR 1,111 CNs 41 1 GR: up to 15 CNOs 1 CNO : up to 150 CNs 1 GR: up to 2,250 CNs By the end of the 4 h cycle. GR Relationship Manager CNO Natura Super Consultant CN Natura s Consultant

42 Financial Results Consolidated Results (R$ 000) x09 CAGR 1Q10 1Q11 10x11 Net Revenue 3,576 4,242 5, % 19.8% 1,014 1, % Gross Margin 68.9% 69.5% 69.7% 69.3% 70.0% EBITDA 860 1,008% 1, % 20.9% % EBITDA Margin 24.1% 23.8% 24.5% 24.0% 23.0% Net Income % 19.8% % Net Margin 14.5% 16.1% 14.5% 14.0% 13.1% CAPEX % 51.9% % Leverage Dividends % 19.9% Pay-out ratio 96% 87% 95% Free Cash Flow % 21.6% Brazil x09 CAGR 1Q10 1Q11 10x11 Net Revenue 3,364 3,949 4, % 19.0% 942 1, % Gross Margin 69.3% 69.9% 70.4% 70.1% 71.0% EBITDA 860 1,086 1, % 24.6% % EBITDA Margin 25.6% 27.5% 28.0% 28.3% 23.7% International Operations Operations in Consolidation x09 CAGR 1Q10 1Q11 10x11 42 Net Revenue % 24.7% % EBITDA (1) 9 13 (3.5) 1.2 n/a Consultants (000) % 20.0% % Operations in Implementation Net Revenue % 49.5% % EBITDA (38) (42) (32) (6.4) (6.7) n/a Consultants (000) % 46.1% % Other International Investments (43) (44) (59) (14) (18)

43 Operating Data Consolidated Results x09 CAGR 1Q10 1Q11 10x11 Consultants (000) 850 1,034 1, % 19.9% 1,044 1, % CO 2 emissions (CO 2 emitted/kg of product % sold) CSR Investments Brazil Q10 1Q11 10x11 Brand Preference 47% 46% 49% Market Share 21.8% 22.9% 24.0% (ABIHPEC/SIPATESP)* CF Market Share 33.1% 33.7% 34.9% T Market Share 11.5% 12.9% 13.3% Core Market Growth 16,2% 14,4% 13,5% CF Growth 18.1% 15.8% 16.8% T Growth 14.5% 13.2% 10.4% Market Share (Euromonitor) % 14.4% Innovation Index 68.8% 67.6% 65.7% 67.1% 62.6% Launches Consultants (000) , , % CNO (000) ,364 11, % International Operations Operations in Consolidation Q10 1Q11 10x11 43 Consultants (000) % Operations in Implementation Consultants (000) % Other International Consultants (000) % 43