The group also registered double-digit growth in revenue and EBITDA, more than doubling cash generation in Q4
SAO PAULO, Feb. 21, 2019 /PRNewswire/ -- Natura & Co posted another quarter of strong results. Consolidated sales increased by 16.1% in Q4 on a reported basis, reaching R$4.3 billion, driven by strong performance in all three businesses. In full-year 2018, reported net revenues grew by 36% vs. the previous year to R$13.4 billion and adjusted net revenue (which includes The Body Shop for 12 months as if it had been part of Natura &Co for all of 2017) improved by 13.5%.
Reported net income surged 48.7% in the fourth quarter to R$381.7 million, driven by higher EBITDA and lower financial expenses. This strong result came despite hyperinflationary accounting effects in Argentina and The Body Shop's transformation costs. Underlying operating income grew by 2.9% in the fourth quarter, to R$542.4 million, and by 17.3% in the full-year on a pro-forma basis, to nearly R$1.3 billion. Free cash flow generation more than doubled to R$708.7 million in the fourth quarter, vs. R$296.2 million in Q4-17, contributing to significant deleveraging.
Roberto Marques, Natura &Co's Executive Chairman of the Board stated: "With double-digit growth in revenue, adjusted EBITDA and net income and strong free-cash flow generation, Natura &Co's performance in Q4 caps its first full year of existence with a very strong note. All three of our iconic brands contributed to this performance, with each one rolling out its specific strategy while benefiting from the scale, resources, sharing of best practices and strategic direction of the group."
Natura posted the strongest quarter in its history in terms of revenue, which was up 15.7% to R$2.7 billion in Q4 and up 9.9% in the full-year, boosted by strong Christmas campaigns in Brazil and Latin America. In Brazil, reported sales grew 12.9% in the fourth quarter, with continued gains in market share, outperforming the market in key categories. The ninth consecutive quarter of productivity gains by consultants also demonstrated the vigour of its Relationship Selling commercial model. In Latin America, reported revenue increased by 23.4% in the quarter and by 23.1% at constant currency. Mexico, Argentina and Colombia turned in very strong performances.
The Body Shop's transformation plan is well underway and showing encouraging results. Net revenue was up 11.2% in Brazilian Reais in Q4 and up 17.7% in the full year. At constant currency, sales were down 1.7% in Q4, impacted by the closure of underperforming stores, as part of the optimization of its store footprint, and the phasing of orders by franchisees, which boosted Q3 as they prepared for a successful Christmas campaign. In the full-year, sales rose 1.7% in constant currency. The brand continued to show progress in the implementation of its transformation plan, with adjusted EBITDA in the full-year increasing by almost 62% excluding the expected transformation costs.
Aesop delivered yet another quarter and full-year of remarkable growth, with reported revenue up by 43.9% in Q4 and an even stronger 50.6% in the full year, with very strong performance across all channels and geographies. Aesop continued opening signature stores, adding 18 in the last 12 months to reach 227 at year-end.
Natura &Co's EBITDA registered solid growth, reaching R$714 million in the fourth quarter, up by 13.7% on a reported basis. On an adjusted basis, it was up by 17.4% in the quarter and 23% in the full-year (excluding The Body Shop's transformation costs and acquisition expenses, hyperinflation effects in Argentina and other effects in Brazil).
Net debt to EBITDA ratio improved to 2.71 times at year-end, from 3.01 times in the same period of last year, boosted by the strong cash-flow generation. The company also continued to make a positive social and environmental impact. Natura's Sociobiodiversity Verification System, a partnership with UEBT that has been promoting fair trade with supplier communities, received an important award in the quarter: "Sustainable Development Goals - SDG Brazil", granted by the Brazilian Federal Government. The Body Shop advanced its Re-Wilding the World program, its commitment over the Christmas period protected over 11 million square meters of the Wye Valley forest in England and the Caucasus Wildlife Refuge, in Armenia. These bio-bridges help protect animals and their natural habitat and help endangered species to breed again. Meanwhile, Aesop launched a package recycling program in Hong Kong, where recycling levels are low.
About Natura &Co
Resulting from the combination of Natura, Aesop and The Body Shop, the corporate brand Natura &Co consolidates the creation of a global, multi-channel and multi-brand cosmetics group that is driven by purpose. The three companies that form the group are committed to generating positive economic, social and environmental impact. Founded in 1969, Natura is a Brazilian multinational in the cosmetics and personal care segment, leader in direct sales. Founded in 1976 in Brighton, England, by Anita Roddick, The Body Shop is a global beauty brand that seeks to make a positive difference in the world. The Australian beauty brand Aesop was established in 1987 with a quest to create a range of superlative products for skin, hair and the body.
