Natura Shares Collapse 27.5% After Unexpected Negative EBITDA in Q4 Report

Natura &Co reported a disastrous fourth quarter for 2024, causing its stock to plummet 27.5% on Friday. The Brazilian cosmetics giant revealed negative core EBITDA of R$139.6 million ($23.3 million) compared to positive R$466 million ($77.7 million) in the same period of 2023.

The company posted a net loss of R$438.5 million ($73.1 million) despite revenue growth of 16.1% in constant currency to R$7.7 billion ($1.28 billion). Recurring EBITDA reached R$703.3 million ($117.2 million) with a margin of 9.1%, down 70 basis points year-over-year.

Analysts expressed concern about the “polluted” results stemming from Avon International’s reconsolidation following its Chapter 11 bankruptcy process. The accounting complexities confused investors and obscured underlying performance trends.

Operating expenses ballooned unexpectedly. Latam G&A expenses surged to 12.2% of revenues, up 510 basis points year-over-year. IT investments that would typically be capitalized were instead booked as operational expenses, creating a R$108 million ($18 million) drag on quarterly margins.

Gross margins also disappointed, landing at 63.2% in Latin America, down 20 basis points from last year. The strong performance in the gift category, which structurally carries lower margins, combined with increased promotional activity squeezed profitability.

Natura Faces Investor Pressure Amid Restructuring Efforts

CEO Fábio Barbosa described 2024 as “another important year in the Group’s simplification strategy” that began in July 2022. The company completed the “Wave 2” integration in Brazil and concluded Avon’s Chapter 11 restructuring process in December.

Natura provided approximately R$450 million ($75 million) in support to Avon’s bankruptcy process while continuing investments in Latin America systems and integration. The company reduced net debt to R$2.4 billion ($400 million) from R$3.7 billion ($616.7 million) in Q3.

The disappointing results come during a critical transformation period. Natura divested Aesop and The Body Shop in previous quarters to streamline operations.

The severe market reaction shows investors losing patience with the slow progress toward sustainable profitability despite the company’s efforts to simplify its structure.