Natura returns to profit with Latin American Growth and looks to sell Avon International

Natura has reported a return to profitability for the second quarter of 2025, posting a net income of R$445 million (US$81.85 million) from its Latin American operations. When including Avon’s international operations, which were reclassified as an asset held for sale, Natura’s total net income for the quarter stood at R$195 million (US$35.86 million). 

The positive result marks a reversal from the R$859 million (US$157.96 million) net loss reported in the same period last year. It reflects ongoing performance in Natura’s Latin American markets, alongside efforts to streamline operations and integrate Natura and Avon, a process known as Wave 2, which is expected to conclude by the end of 2025. 

“We made significant progress in simplifying and restructuring our business, further reinforcing our leadership position in Latin America,” says João Paulo Ferreira, CEO of Natura. 

“After a solid first quarter, we delivered another quarter of strong results. Our key market, Brazil, saw revenue acceleration, and Natura outperformed the market, even with challenges related to Avon. Despite the slowdown in consumption, we are confident in our ability to maintain profitability growth for the full year.”

Performance overview

Natura’s Q2 net revenue amounted to R$5.7 billion (US$1.05 billion), reflecting a slight decrease of 1.7% compared to the previous year, driven by weaker-than-expected performance across certain areas. 

The company’s revenue performance fell short of analysts’ expectations, which had forecast a result of R$7.5 billion (US$1.38 billion). This discrepancy is partly due to the reclassification of Avon’s international operations and some associated changes in reporting. When excluding Avon International, the company’s recurring EBITDA for Q2 2025 stood at R$795.6 million (US$ 146.39 million), a 4.5% year-on-year increase.

Growth in Natura’s core business came primarily from its operations in Brazil, which saw an increase of 10.3% in revenue, and strong performance in Hispanic markets, which rose 17.8%. However, this was offset by a decline in Avon’s Brazilian operations, which posted a 12.9% decrease in revenue.

Natura unveils Vision 2050 with sustainability goals.Natura’s recurring EBITDA margin for Latin America reached 14.7%, marking a modest year-on-year increase of 10 basis points, supported by improved gross margins. The margin was slightly down by 100 basis points compared to Q1 of 2025 due to the integration costs associated with Wave 2 in Mexico and Argentina. These costs are expected to subside by year-end, allowing for margin expansion in the coming quarters.

Reclassification of Avon International

As part of its ongoing strategic restructuring, Natura has reclassified Avon International, which includes Avon’s operations outside Latin America, as an asset held for sale. This decision reflects the company’s exploration of strategic alternatives for Avon International, which generated approximately 20% of Natura’s total net revenue in Q1 but has been posting lower margins compared to the company’s Latin American operations.

The reclassification means Avon International, along with Avon businesses in the Dominican Republic and Central America, was excluded from the Q2 2025 earnings report. This shift provides a clearer view of Natura’s core operations in Latin America. The company continues to explore options, including a potential sale or spin-off of Avon’s non-Latin American operations.

Cash and outlook

Despite typical seasonal cash consumption, Natura generated R$408 million in cash from its Latin American operations during the first half of the year, demonstrating its strong cash generation capability. The company remains on track to deliver full-year profitability growth, underpinned by continued market strength in its key Latin American markets.

In addition to its financial success, Natura continues to advance its sustainability initiatives. The company received an A rating for Climate and Supplier Engagement from CDP, a global platform that evaluates companies’ transparency and actions on climate change. 

Natura also unveiled its Vision 2050, setting goals to become a fully regenerative business over the next 25 years.