Natura&Co Secures Credit Ratings Amidst Governance Hurdles

S&P Global Ratings recently confirmed the “BB” global and “brAAA” national credit ratings for Natura&Co, with a stable outlook. This affirmation arrives even as management and governance face scrutiny.

Analysts Alexandre Galafazzi, Flávia Bedran, and Luciano Gremone contend that the bankruptcy proceedings of Avon Products will neither weaken Natura&Co nor escalate its debt responsibilities.

They observe a steady enhancement in operations through the merging of Natura and Avon. However, they expect cash flow pressures to persist this year and into 2025.

The company’s management and governance ratings have declined. This decline is due to increased legal risks linked to talcum powder products sold by Avon Products. The risk assessment agency has raised concerns over this issue.

The bankruptcy strategy for Avon Products is designed to shield against potential liabilities. Nonetheless, this approach might reduce Natura&Co’s capacity to manage business risks effectively.

Moreover, there is a possibility of growing long-term reputational risks. These could hinder Natura&Co’s ability to secure debt financing at favorable rates, thereby impacting sales and margins negatively.

Despite these potential setbacks, S&P maintains a stable outlook. They believe that the bankruptcy of Avon Products will neither disrupt Natura&Co’s operations nor amplify its debt duties.

This outlook highlights Natura&Co’s robust business framework, adept at navigating through existing challenges while sustaining its financial obligations.

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