Eng DeutscheConference 2004

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Information about Eng DeutscheConference 2004

Published on November 23, 2007

Author: Kliment

Source: authorstream.com

Slide1:  company overview Slide2:  our vision Through our business practices, the quality of our products and the relationships we establish, we seek to make Natura a brand ultimately recognized worldwide and identified with a community of people who are committed to constituting a better world, through a better relationship with themselves, with the others, with nature and as a whole. our principles:  our principles to create and sell products and and services that promote is the harmonious, pleasant relationship with oneself and one´s body is the concept of rewarding, empathetic relationships with the others, with nature and as a whole well-being being-well well-being/being-well natura’s profile:  natura’s profile Products Market Share Operations Sales Channel Creams, lotions, perfumes and fragrances, make-up and e personal care products 510 different items In 20031: 12% of the total Brazilian CF&T sector and 17% within the categories it operates more than 40% of cosmetic sales via direct sales in Brazil Largest cosmetics R&D center in Brazil State-of-the-Art facility in Cajamar 142 million units sold in 2003 (1S04: 84.3 million) Direct sales, through 367,000 consultants reaching over 5,000 municipalities in Brazil Around 22,000l consultants in Latin America Markets 97% of sales in Brazil and 3% in Latin America With approximately 3,000 employees, net revenues of R$1.3 billion and EBITDA of R$296 million in 2003. Note: 1. Based on Sipatesp (“São Paulo State Cosmetics Industry Association”) business strategy :  business strategy Natura’s business strategy is based on six main aspects: Slide6:  sales channel, innovation & brand Slide7:  Solid market positioning and strong brand recognition Market Positioning Brand Strength1 Source: TSB&B Note: 1 Survey requested by Natura in 2003, conducted with 2,200 people across different social classes in 6 large Brazilian cities Transparency Social Responsibility Preference for Natura’s Brand Recommends Natura Credibility Innovation Quality Criteria Mass Consumption Premium Market Reach Avon O Boticário Nivea 35% 29% 48% 43% 13% 11% 51% 54% 45% 37% 45% 54% 47% 61% 18% 12% 23% 63% 59% 70% 17% 24% 3% 41% 47% 43% 18% 60% brand and market positioning in Brazil ongoing innovation:  ongoing innovation Investments in innovation are important to renew our product portfolio. The return on such investments is made clear by the share of new products in the Company’s total revenue. Investments in Innovation (R$ MM) Number of launchings and Natura’s Innovation Index* 165 44 91 117 2001 2002 2003 1H03 1H04 17.1 19.6 35.5 28.8 27.2 2.6% 3.0% 2.9% 3.3% 2001 2002 2003 1H03 1H04 2.7% 64 our product lines:  our product lines Slide10:  Around 510 different items, including cosmetics, fragrances, hygiene and health products Main product lines Natura Ekos Mamãe & Bebê Make-up Chronos Fragrances products Slide11:  draw from the integration of Brazilian’s nature to each Brazilian human being’s own nature use of active ingredients obtained from Brazil’s biodiversity 61 items (bath, moisturizers and fragrances - keeping with the concept of sustainability) natura ekos Slide12:  mamãe & bebê Designed to meet the special needs of pregnant women and their babies 17 items Slide13:  natura chronos Skin treatment options for the face designed for women over 30 affirms the beauty of women at every stage of their lives Aligns skin treatment technology with the rejection of stereotypes about beauty 24 items Slide14:  perfume do Brasil Unique fragrances combining the wealth of the Brazilian forest and the tradition of its communities natura channel:  natura channel Slide16:  389,000 independent sales representatives* 680 sales promoter 31 sales manager 6 regional managers Growth opportunities Being part of the community Search for success relationship with our independent sales representatives * Available independent sales representatives in Brazil and Latin America, in June/04. Slide17:  who is who? Commercial Director Regional Manager Regional Manager Sales Manager Sales Manager Sales Promoter Sales Promoter Independent Sales Independent Sales Employees Independent Sales Representatives 6 regional managers 31 sales managers 680 sales promoter 367,000 independent sales rep. sales channel in Brazil size & productivity growth:  sales channel in Brazil size & productivity growth The brand equity combined to the relationship kept with Natura Consultants develop the sales channel, both in size and productivity. Growth in the Number of Natura Available Consultants in Brazil (thousand) Productivity Growth (R$ thousand per active consultant) CAGR 01-03 11% +16% CAGR 01-03 10% +10,1% 287 307 355 316 367 2001 2002 2003 1H03 1H04 8.6 9.0 10.4 4.8 5.3 2001 2002 2003 1H03 1H04 Slide19:  social responsibility Slide20:  “For Natura, Corporate Responsibility is a management skill based on an ethical and transparent relationship towards all parties involved in the business as a way to create solutions for building a sustainable world. It believes the development of this skill is part of a continuous process, which involves the whole company, as well as, the society.” Extract from the text Corporate Responsibility Strategic Options our belief Slide21:  human resources Natura seeks to create ideal conditions to attract and retain creative and talented employees, standing among the best companies to work for in Brazil Employees Profile (2003) Organizational Climate 1 1st Source: HayGroup, 2003 Note: 1 Independent research requested by Natura 58 70 76 57 2001 2002 2003 Market in 2003 Men 38% Women 62% Top 100 Companies to Work For in Brazil Exame Magazine - 2000 and 2002 Best Company for Women to Work in Brazil Exame Magazine - 2003 Top 10 Companies to Work For in Brazil Exame Magazine - 2003 Slide22:  Some examples: Development of relationships with communities that supply Brazilian biodiversity assets  Encouragement to local sustainable development Quality when communicating with consumers  Positioning against beauty stereotypes “Crer para Ver” Program  Mobilization of Consultants our experience Slide23:  Iratapuru - State of Amapá Certified by the Forest Stewardship Council for cropping Brazil Nut, after performing a three-year jointly job with local communities. our experience Slide24:  our experience Boa Vista: 26 families Formalization of the community association Training in organic culture Campo Limpo: 16 families Culture diversification Use of income provided by “priprioca” for remodeling houses Cotijuba: 8 families Formalization of the community association (“Movimento de Mulheres” – Women Motion) Income resulting from images used to purchase the Motion headquarters Entorno de Belém – State of Pará our experience:  High standard communication process our experience our experience:  Natura Consultants voluntarily sell products whose proceeds are allocated to projects aiming to improve the public education (in an association with Abrinq Foundation) Results since its implementation, in 1995: 147 projects supported 3,600 public schools in 21 states involved 900 thousand children participating R$ 15 million raised 2004: Launching of the campaign “Crer para Ver EJA” “Crer para Ver” Program our experience social responsibility :  social responsibility The more incorporated actions are to business strategy the more relevant they get Greater integration with related parties Positive impact on the competitive environment Broader condition for business growth Slide28:  financial performance overview consistent growth:  consistent growth Consistent revenue growth, as a result of a solid market positioning, brand strength and optimized distribution system Gross Revenues (R$ MM, nominal) Note: 1 Data refers to Natura Empreendimentos 429 587 688 1,016 1,168 1,411 833 806 1,910 1995 1996 1997 1998 1999 2000 2001 2002 2003 Nominal CAGR 95-03: 21% Real CAGR 95-03: 12% 1 1 operational performance:  110 116 142 65 83 2001 2002 2003 1H03 1H04 813 993 1,329 562 758 2001 2002 2003 1H03 1H04 operational performance Sales volume (million units) Net revenues (R$ MM, nominal) CAGR 01-03: 14% CAGR 01-03: 28% 1 +35% +28% Note: 1. Pro forma Sales volume has exhibited strong growth, driving net revenues cost and expenses:  37% 34% 31% 30% 14% 13% 36% 35% 34% 33% 32% 30% 16% 15% 14% 2001 2002 2003 1H03 1H04 COGS Sales Expenses General and Administrative Expenses cost and expenses Costs and Expenses Breakdown as a % of Revenues 85% 82% 79% 77% 82% Note: 1. Pro forma 1 The new plant has led to a significant dilution of fixed costs, enhanced by an efficient expense control by management EBITDA:  184 136 199 296 110 2001 2002 2003 1H03 1H04 EBITDA 1 CAGR 01-03: 48% +67% EBITDA (R$MM, nominal) EBITDA Margins (%) 24% 17% 20% 22% 20% 2001 2002 2003 1H03 1H04 1 Note: 1. Pro forma Increasing EBITDA and EBITDA margins due to the consolidation of market position and significant productivity gains indebtedness:  indebtedness After BNDESPAR converted debentures amounting to R$ 34.4 million and cash generation in the period, Natura ended the semester with net cash of R$ 84.6 million. Net Debt /(Cash) Evolution (R$ MM) Indebtedness Breakdown R$104 MM 2.8-year average maturity 1.8-year average maturity (85) 22 (19) 119 205 2001 2002 2003 1Q04 2Q04 BNDES Finep IFC 65% 35% Slide34:  international operations LATAM:  LATAM 3,583 independent sales representative 7,001 independent sales representative Replication of the commercial model used in Brazil Peru Chile 11,459 independent sales representative Argentina Bolivia Commercial presence international presence:  11.9 9.4 15.8 6.3 9.9 -7.7 -3.4 -2.8 -1.4 -1.5 2001 2002 2003 1H03 1H04 Gross Revenues Operating Income international presence Natura has been achieving strong growth in Latin America, a market with total size of around US$10.7 billion in 2002 Sales Volume - Argentina, Chile and Peru (million of units) Gross Revenue vs. Operating Income (US$MM) Replicable business model in other Latin American countries CAGR 01-03: 48% +62% CAGR 01-03: 15% +57% 1,060 1,445 2,318 932 1,514 2001 2002 2003 1H03 1H04 ekos international project :  ekos international project Main goal is to test the Brazilian biodiversity concept and brand expansion abroad The natural products market has a promising growth profile Ekos International Personal Care, Natural Market Value (US$ billion) Initial focus on Ekos product line Brazilian biodiversity Opening of the first store in Paris expected by early 2005 Expected investments of US$16 million in 3 years Source: Datamonitor, “Natural Beauty Revolution” CAGR 01-06E - Europe: 17% CAGR 01-06E - Global: 20% 1.5 3.4 2.9 7.5 4.4 10.9 2001 2006E Europe Others Slide38:  manufacturing & logistics the order cycle:  the order cycle TELEMARKETING PICKING PRODUCT PROCESS BILLING SHIPPING DELIVERY TO SALES REPRESENTATIVE Full capacity = 42,000 boxes/day Municipalities covered = more than 5,000 ~35% ~65% cajamar facility:  cajamar facility Vertical Automatic Warehouse Picking Factory Offices Training rooms Club logistics:  logistics More than 5,000 municipalities covered 7 shipping companies representing 87% of the deliveries 20,000 to 30,000 orders per day 98% of orders are shipped within 24 hours suppliers:  suppliers approximately 95% of our expenses for raw materials are from Brazilian suppliers and only 5% are imported Raw materials % of total 2003 Number of suppliers Plastic packaging 24% 29 Fragrances 17% 8 Glass packaging 12% 9 Spray tops 11% 7 Packaging labels and boxes 8% 13 Others 28% Total 100% 128 194 CAPEX:  CAPEX Capital expenditures in fixed assets reached R$ 22.7 million in the first half of 2004. Most of it was concentrated on the construction of the new Vertical Storehouse. CAPEX - R$ MM 2004 Estimated CAPEX 38.8 25.2 23.9 22.7 2001* 2002 2003 1H04 Maintenance Expansion Process Improvements 14% 65% 21% * Natura Empreendimentos in 2001 R$ 75 MM 15% 61% 24% Slide44:  Capacity ( million of units) Current 170 140 Early 2005 200 300 Mid 2005 220 300 expansion of capacity production 150 150 290 Manufacturing Picking Storage By mid 2005, we estimate an investment of R$300 million (at current prices) in order to reach 450 million units in three stages of the process 2003 : production of 136 million of units Capacity Utilization (million of units) Manufacturing Storage Picking 2003 80% 101% 95% Slide45:  financial summary EBITDA margins of 24.3% in 1H04 Net indebtedness close to zero (post-dividends) Low Capex - state-of-the-art facility allows 200% growth Strong dividend distribution policy - by-laws: 30% pay-out - 45% is the minimum pay-out approved by the Board Slide46:  corporate governance corporate governance:  corporate governance Commitment to the highest corporate governance standards, reaffirmed with the Novo Mercado listing Beliefs and Values External Auditors 1989 1991 1999 Audit and Risk Management Committee 2001 Management Reports Human Resources Committee 2003 “Best Annual Report Issued by a Private Company” (ABRASCA)1 2004 1998 Board of Directors Novo Mercado Listing 100% tag along rights One class of shares with voting rights Note: 1. Brazilian Listed Companies Association operating companies structure:  99.99% operating companies structure NATURA COSMÉTICOS S/A Natura Inovação e Tecnologia de Produtos Ltda. Indústria e Comércio de Cosméticos Natura Ltda. Natura Cosméticos Soc. Anônima Peru Natura Cosméticos Soc. Anônima Argentina Natura Cosméticos Soc. Anônima Chile Natura Logística e Serviços Ltda. 99.99% 99.76% 99.93% 99.99% 99.99% Shareholders Slide49:  shareholder structure Shareholder Number of shares Percentage Controllers 62,637,886 73.9% Float 22,112,876 26.1% Total shares* 84,750,762 100% * Not considering 687,849 treasury shares. dividend policy:  dividend policy Dividend Policy Minimum dividend pay-out : 45% of annual net income Frequency: semi-annual Interest on Capital Maximize tax efficient use of interest on capital In 1H04, Natura distributed the amount of R$ 86.8 million in dividends and interest on capital (70% pay-out) Strong free cash generation allows for an aggressive dividend policy Slide51:  This presentation contains forward-looking statements. Such statements are not statements of historical fact, and reflect the beliefs and expectations of the Natura's management. The words "anticipates", “wishes”, “expects”, "estimates", “intends", "forecasts", "plans", "predicts", "projects", "targets" and similar words are intended to identify these statements, which necessarily involve known and unknown risks and uncertainties. Known risks and uncertainties include, but are not limited to, the impact of competitive products and pricing, market acceptance of products, product transitions by the Company and its competitors, regulatory approval, currency fluctuations, production and supply difficulties, changes in product sales mix, and other risks. This presentation also includes pro-forma information prepared by the Company for information and reference purposes only, which has not been audited. Forward-looking statements speak only as of the date they are made, and the Company does not undertake any obligation to update them in light of new information or future developments.

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