Natura reports strong results, but growth slows

By Simon Pitman

- Last updated on GMT

Related tags Revenue Us

Brazil-based cosmetics giant Natura has reported double digit sales growth, but results show a downward trend.

For the third quarter ending in September the company said that sales were up 16 percent to BRL1.06bn ($610m), of which more than 92 percent of the revenue was attributable to the domestic market, while net profits rose 19.1 per cent to BRL190.2m.

International sales revenues, which are largely concentrated on its operations in France, grew by over 46 percent to reach BRL76.3m.

In the first nine months of the year sales increased from BRL2.44bn to BRL2.99bn, a rise of 22.5 percent, while net income rose from BRL379.4m to BRL497.3m.

Gains from sales force increase

The direct sales player said that gains had come off the back of a 23 percent increase in its sales staff, which had risen to 988,000 – approximately 839,000 of which are employed in Brazil.

Although the results demonstrate industry-leading growth, JPMorgan analyst Andrea Teixeira pointed out that the pace of growth was slowing for the company.

As a result JPMorgan cut the company’s rating to neutral based on the prospects of a slowdown in profits in the future.

Share flotation to fund international expansion

Back in July Natura announced a share offering aimed at raising in excess of $800m, which had both Brazilian and US investors clamoring for shares.

It has initiated the share offering to implement the next round of investment, which is likely to see the company expanding further in the domestic market as well as international markets.

In Latin America the company is already present in Argentina, Chile and Peru and is currently expanding into Mexico, Venezuela and Colombia, while the company also has a small retail presence in France and the US.

All of these markets are likely to see further investment in the future as revenues from international markets are still relatively small.

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