Natura & S A : 1Q 2024 Earnings Release

Q1-24

Natura and Avon Integration in Latam Continuing to Drive Stronger

Profitability

Strong performance of Natura Brand in Brazil combined with solid margin results from the Wave 2-implemented countries led to YoY profitability evolution and more than offset Avon International margin contraction amid sales deleverage

			Q1-24
BRL million	Consolidated	Natura &Co Latam	Avon International
	YoY Ch. %		YoY Ch. %		YoY Ch. %
Net revenue	6,105.3	(5.7)	4,704.6	(3.3)	1,396.7	(13.1)
Constant Currency		1.1%		3.1%		-4.7%
Gross profit	3,978.2	(4.3)	3,100.6	(0.7)	876.9	(15.3)
Gross Margin	65.2%	90 bps	65.9%	170 bps	62.8%	-160 bps
Reported EBITDA	547.4	(9.1)	730.6	14.6	(111.2)	(374.8)
Reported EBITDA margin	9.0%	-30 bps	15.5%	240 bps	-8.0%	-1050 bps
Adjusted EBITDA	682.8	4.1	666.5	5.4	74.6	(23.9)
Adjusted EBITDA margin	11.2%	110 bps	14.2%	120 bps	5.3%	-80 bps
Net income (loss)	(934.9)	43.3	-	-	-	-

01 Consolidated Net Revenue of BRL 6.1 billion, up 1.1% vs Q1-23 in constant currency (CC) (-3.9% ex- Argentina and The Body Shop - "TBS" - revenues) and down -5.7% in Brazilian Reais. The items impacting revenue are mainly explained by the following:

• Natura &Co Latam: Q1-24 revenues up 3.1% year on year (YoY) in CC (-2.7%ex-Argentina) led by a solid performance from Natura Brazil (+11.3% YoY) and partially offset by an 11.3% YoY decline from Avon Brazil1. A higher indirect tax burden of ~BRL 50 million, impacted Brazilian consolidated net revenues growth in the quarter by 2p.p.. Avon Brazil also showed improving top-line trends throughout the quarter. Hispanic markets ex-Argentina posted a broadly stable performance from Natura and a steep decline from Avon (-24.5% YoY) amid Wave 2 roll-out
• Avon International: Q1-24 revenues down 4.7% YoY in CC. Excluding TBS revenues2, top-line decreased -7.2% YoY in CC, with Beauty down 4.2% and steeper decline from Home & Style. Productivity improved YoY, but this was more than offset by reduced representative activity from fewer available reps and the continuation of weaker promotional execution as noted in Q4-23

02 Adjusted EBITDA of BRL 683 million in Q1-24 with an 11.2% margin, up by 110 basis points (bps) YoY, representing another quarter of solid profitability expansion. The margin improvement was mainly driven by:

• Natura &Co Latam: 120 bps YoY margin expansion reflecting 170 bps YoY gross margin and Wave 2 SG&A efficiencies, partially offset by investments related to marketing, particularly for the Natura brand, and to improving service level
• Avon International: 80 bps YoY margin contraction mostly explained by sales deleverage that more than offset the improvement in selling expenses as a percentage of net revenues compared to Q1-23 amid market simplification (from four to two lead regions)

03 Q1-24Net loss of BRL 935 million compared to a net loss of BRL 652 million in the same period in 2023. Higher adjusted EBITDA and lower financial expenses were more than offset by a write-off of TBS earn-out receivables of BRL 485 million and an impairment/write-off of BRL 139 million from Avon International (also mainly explained by TBS receivables) as well as by higher tax expenses given the mix of profitable and unprofitable countries

04 Q1-24 Net Debt (excluding leasing) was BRL 275 million (compared with a net cash of BRL 1.7 billion in Q4-23)mainly driven by annual seasonality, which resulted in a cash consumption quarter of BRL -1.0billion (showing an important YoY improvement) combined with cash tax payment related to discontinued operations

1. Avon CFT Performance, Excluding Home & Style
2. Avon International continues to produce products for TBS, following its sale. For more details please see Avon's International section

Fábio Barbosa

Group CEO of Natura &Co, stated

"We are encouraged that the first quarter of the year showed positive results with a consolidated margin expansion of 110 bps vs previous year, driven by solid results from Natura &Co Latam, benefiting from the Natura and Avon integration in the region ("Wave 2"), coupled with richer country and brand mix. This more than offset the margin contraction at Avon International amid sales deleveraging. From a cash conversion perspective, seasonal cash consumption also improved on a YoY basis to BRL -1.0 billion (excluding one-off disc. Op. tax payments), compared to pro-forma (excluding TBS) of BRL -1.4 billion in the same period last year or BRL -1.8 billion reported in Q1-23.

The ongoing roll-out of Wave 2 is a pivotal step in our transformational process, and although we have experienced expected and unexpected challenges in its implementation, we continue to see sustainable improvements in key metrics such as productivity, cross selling, and better portfolio mix, resulting in gross margin improvement in all countries where Wave 2 was implemented. In Brazil, Avon still experienced headwinds impacting the top-line, but with an improving trend month over month, and we expect Avon's top-line to stabilize in the second half of the year. We also saw significant margin expansion in Peru and Colombia as Wave 2 results start to impact the P&L in full while investments in channel and other one- offs start to fade away. As expected, our integration initiative is driving improved savings in both G&A and selling expenses, although the latter is being offset by higher marketing investments and other initiatives focused on improving service levels. The solid start to the year gives us confidence that the initiatives we are implementing are beginning to deliver the expected results and we remain extremely confident with the potential of the integration of both brands in Latam.

Avon International had another challenging quarter with top-line down, impacted by a steep Fashion and Home decline and a softer impact of CFT categories. The management team is working on simplifying the market, focusing on key countries, and enhancing our portfolio with superior promotional execution. We believe these steps are crucial to stabilize revenues and keep us on track to improve profitability.

We are also continuing to evolve on the studies of a potential separation of Avon, and we will keep the market informed as soon as we conclude such studies.

Finally, and most important, our hearts and minds are with our consultants, teammates/employees, suppliers, and all stakeholders in Rio Grande do Sul in light of the recent natural disasters the region has experienced in the last couple of weeks. Since the first emergency reports, we established a calamity committee (as we did during the Pandemic), to map not only the accidents of the tragedy in our network, but also to connect as quickly as possible with emergency support institutions for those affected throughout the entire State.

The initiatives taken, includes: (i) made our social center available for social and psychological assistance, in addition to free telemedicine assistance to meet the most urgent needs of our consultants' networks; (ii) postponed payments for impacted consultants and franchisees; and (iii) gave financial and other donations support. In this challenging moment, we convey a message of solidarity and hope: together we can overcome this natural disaster.

01 Results analysis

The Group segmentation is composed of:

• Natura &Co Latam, which includes all the brands in Latin America: Natura, Avon and the distribution of The Body Shop; and
• Avon International, which includes all global markets, excluding Latin America

In addition, the results and analysis for the periods under comparison include the effects of the fair market value assessment arising from the business combination with Avon as per the Purchase Price Allocation - PPA.

											Profit and Loss by Business
			Consolidated	a				Holding	b					c	Avon International
BRL million							Natura &Co Latam
Q1-24	d	Q1-23	d		Ch. %	Q1-24	d	Q1-23	d	Ch. %	Q1-24	d	Q1-23	d	Ch. %	Q1-24	d	Q1-23	d	Ch. %
Gross revenue		8,039.0	8,367.6		(3.9)	4.0		1.3		217.4	6,371.9	6,445.3	(1.1)	1,663.0	1,921.0	(13.4)
Net revenue		6,105.3	6,471.5		(5.7)	4.0		1.2		227.4	4,704.6	4,863.7	(3.3)	1,396.7	1,606.6	(13.1)
COGS		(2,127.1)	(2,313.2)		(8.0)	(3.3)		(0.2)		2,045.2	(1,604.0)	(1,741.8)	(7.9)	(519.8)	(571.2)	(9.0)
Gross profit		3,978.2	4,158.3		(4.3)	0.7		1.1		(31.7)	3,100.6	3,121.9	(0.7)	876.9		1,035.4	(15.3)
Selling, marketing and logistics expenses	(2,640.5)	(2,759.3)		(4.3)	-		(0.5)		-	(2,009.9)	(2,004.0)	0.3	(630.6)	(754.8)	(16.5)
Administrative, R&D, IT and projects expenses	(987.8)	(1,091.9)		(9.5)	(3.9)		(4.6)		(15.4)	(647.5)	(715.1)	(9.5)	(336.4)	(372.2)	(9.6)
Corporate expenses		(55.3)	(70.1)		(21.2)	(55.3)	(70.1)	(21.2)	-		-		-	-		-		-
Other operating income / (expenses), net	(50.4)	34.1			(247.7)	(13.5)	(0.5)		2,537.7	103.1		34.0		203.3	(139.9)	0.6		-
Transformation / Integration / Group restructuring costs	(89.0)	(84.9)		4.9	(0.2)		(1.3)		(84.6)	(42.1)	(26.1)	61.4	(46.7)	(57.5)	(18.8)
Depreciation		392.1		416.0			(5.8)	-		-		-	226.5		226.9		(0.2)	165.6		189.1		(12.4)
EBITDA		547.4		602.2			(9.1)	(72.0)	(75.8)	(5.0)	730.6		637.6		14.6	(111.2)	40.5		(374.8)
Depreciation		(392.1)	(416.0)		(5.8)
Financial income / (expenses), net	(361.2)	(460.1)		(21.5)
Earnings before taxes		(206.0)	(273.9)		(24.8)
Income tax and social contribution	(237.1)	(122.2)		94.0
Discontinued operations	e	(492.1)	(256.0)		92.3
Consolidated net (loss) income	(935.2)	(652.1)		43.4
Non-controlling interest		0.3		(0.3)			(213.3)
Net income (loss) attributable to controlling sharehold	(934.9)	(652.4)		43.3
Gross margin		65.2%	64.3%		90 bps	-		-		-	65.9%	64.2%	170 bps	62.8%	64.4%	-160 bps
Selling, marketing and logistics as % net revenue	(43.3)%	(42.6)%		-70 bps	-		-		-	(42.7)%	(41.2)%	-150 bps	(45.2)%	(47.0)%	180 bps
Admin., R&D, IT and projects exp. as % net revenue	(16.2)%	(16.9)%		70 bps	-		-		-	(13.8)%	(14.7)%	90 bps	(24.1)%	(23.2)%	-90 bps
EBITDA margin		9.0%		9.3%			-30 bps	-		-		-	15.5%	13.1%	240 bps	(8.0)%	2.5%		-1050 bps
Net margin		(15.3)%	(10.1)%		-520 bps	-		-		-	-		-		-	-		-		-
a
Consolidated results include Holding, Natura &Co Latam and Avon International
b
Holding results include Natura &Co International (Luxembourg) and TBS Shanghai

1. Natura &Co Latam: includes Natura, Avon, TBS Brazil and Hispanic Latam and &Co Pay, as well as the Natura subsidiaries in the U.S., France and the Netherlands.
2. Includes PPA - Purchase Price Allocation effects
3. Related to business separation at Avon North America

Consolidated net revenue

• Q1-24consolidated net revenue was BRL 6,105 million, up 1.1% YoY in CC (-3.9%ex-Argentina and TBS) and down 5.7% in BRL, reflecting solid performance at the Natura brand partially offset by the expected reduction at Avon Latam (both Beauty and Home & Style) and high-single-digit decline at Avon International

Distribution channel breakdown

Digital sales, which include online sales and social selling, showed some deceleration in the quarter. Natura reported a 2 percentage point (p.p.) decrease to 4% of total sales, offset by the solid retail channel performance, amid omnichannel investments and strategic fundamentals buildup. By contrast, at Avon, penetration was slightly higher at 5%.

Use of digital tools: The penetration of digital tools in the consultant base reached 79.7% in Q1-24 for Natura &Co Latam. Given the change in methodology with the consolidation of a single beauty app, there is no YoY comparable base. Furthermore, at Avon International, penetration of the Avon On app (active representatives who logged in at least once in the last three campaigns) reached 36.5% in Q1-24,+4.2 p.p. vs the previous year.

Gross margin

• Consolidated gross margin was 65.2% in Q1-24, up 90 bps vs. Q1-23 mostly driven by the strong +170 bps gross margin expansion from Latam which benefited from a richer product and countries mix
• Avon International gross margin contracted by 160 bps YoY, mainly impacted by TBS. Excluding the TBS consolidation effect, the margin improved YoY as price increases and favorable product mix more than offset FX headwinds and cost pressures

Q1-24 Gross Margin

BRL million		Consolidated			Holding		Natura &Co Latam	Avon International
Q1-24	Q1-23	Ch. %	Q1-24Q1-23	Ch. %	Q1-24	Q1-23	Ch. %	Q1-24	Q1-23	Ch. %
Net revenue	6,105.3	6,471.5	(5.7)	4.0	1.2	227.4	4,704.6	4,863.7	(3.3)	1,396.7	1,606.6	(13.1)
COGS	(2,127.1)	(2,313.2)	(8.0)	(3.3)	(0.2)	2,045.2	(1,604.0)	(1,741.8)	(7.9)	(519.8)	(571.2)	(9.0)
Gross profit	3,978.2	4,158.3	(4.3)	0.7	1.1	(31.7)	3,100.6	3,121.9	(0.7)	876.9	1,035.4	(15.3)
Gross margin	65.2%	64.3%	90 bps	-	-	-	65.9%	64.2%	170 bps	62.8%	64.4%	-160 bps

Operating expenses

• Consolidated Selling, Marketing & Logistics expenses in Q1-24 were 43.3% of net revenue (+70 bps vs. Q1-23), while consolidated Administrative, R&D, IT and Project expenses declined 70 bps YoY to 16.2% of net revenue. SG&A expenses (both lines above combined) as a percent of net revenue was flat in Q1- 24 compared to same period last year mainly driven by Wave 2 efficiencies and Avon International transformational savings more than offset by Natura &Co Latam investments and Avon International sales deleverage effect
• Corporate expenses in Q1-24 were BRL 55 million, down 21.2% YoY as the group continues its effort to streamline the holding company structure
• Other operating income/expenses in Q1-24 were an expense of BRL 50 million, compared to an income of BRL 34 million in Q1-23. Natura &Co Latam reported income of BRL 103 million related to tax credits in the quarter which was offset by a BRL 140 million expense at Avon International mostly driven by The Body Shop accounts receivables write-off of BRL 92 million
  Transformation/Integration/Group restructuring costs in Q1-24were BRL 89 million, broadly flat YoY, reflecting slightly higher investments in Latam offset by lower transformational investments from Avon International

Q1-24 Operating Expenses

BRL million	Consolidated			Holding		Natura &Co Latam	Avon International
Q1-24	Q1-23	Ch. %	Q1-24	Q1-23	Ch. %	Q1-24	Q1-23	Ch. %	Q1-24	Q1-23	Ch. %
Selling, marketing and logistics expenses	(2,640.5)	(2,759.3)	(4.3)	0.0	(0.5)	-	(2,009.9)	(2,004.0)	0.3	(630.6)	(754.8)	(16.5)
Administrative, R&D, IT and project expenses	(987.8)	(1,091.9)	(9.5)	(3.9)	(4.6)	(15.4)	(647.5)	(715.1)	(9.5)	(336.4)	(372.2)	(9.6)
Corporate expenses	(55.3)	(70.1)	(21.2)	(55.3)	(70.1)	(21.2)	-	-	-	-	-	-
Other operating income / (expenses), net	(50.4)	34.1	(247.7)	(13.5)	(0.5)	2,537.7	103.1	34.0	203.3	(139.9)	0.6	(23,421.4)
Transformation / integration / group reestructuring costs	(89.0)	(84.9)	4.9	(0.2)	(1.3)	(84.6)	(42.1)	(26.1)	61.4	(46.7)	(57.5)	(18.8)
Operating expenses	(3,823.0)	(3,972.1)	(3.8)	(72.9)	(77.0)	(5.3)	(2,596.4)	(2,711.2)	(4.2)	(1,153.7)	(1,183.9)	(2.6)
Selling, marketing and logistics expenses (% NR)	(43.3)%	(42.6)%	-70 bps	-	-	-	(42.7)%	(41.2)%	-150 bps	(45.2)%	(47.0)%	180 bps
Administrative, R&D, IT and project expenses (% NR)	(16.2)%	(16.9)%	70 bps	-	-	-	(13.8)%	(14.7)%	90 bps	(24.1)%	(23.2)%	-90 bps
Corporate expenses (% NR)	(0.9)%	(1.1)%	20 bps	-	-	-	-	-	-	-	-	-
Other operating income / (expenses), net (% NR)	(0.8)%	0.5%	-130 bps	-	-	-	2.2%	0.7%	150 bps	(10.0)%	0.0%	-1000 bps
Transformation/integration/group reestructuring costs (% NR)	(1.5)%	(1.3)%	-20 bps	-	-	-	(0.9)%	(0.5)%	-40 bps	(3.3)%	(3.6)%	30 bps
Operating expenses (% NR)	(62.6)%	(61.4)%	-120 bps	-	-	-	(55.2)%	(55.7)%	50 bps	(82.6)%	(73.7)%	-890 bps

Consolidated EBITDA

Q1-24 Adjusted EBITDA was BRL 683 million, a slight improvement from BRL 656 million in Q1-23, with an adjusted EBITDA margin of 11.2% (+110 bps YoY). Q1-24 margin reflected:

• Solid margin expansion of +120 bps YoY at Latam, mainly driven by Wave 2 initiative and better countries

mix

• Further reduction of corporate expenses, which accounted for 0.9% of net sales during the quarter, improving by 20 bps YoY
• Margin contraction of -80 bps YoY from Avon International amid sales deleverage

Q1-24: Adjusted EBITDA

BRL million			Consolidated			Holding		Natura &Co Latam	Avon International
	Q1-24	Q1-23	Ch. %	Q1-24	Q1-23	Ch. %	Q1-24	Q1-23	Ch. %	Q1-24	Q1-23	Ch. %
Consolidated EBITDA		547.4	602.2	(9.1)	(72.0)	(75.8)	(5.0)	730.6	637.6	14.6	(111.2)	40.5	(374.8)
Transformation/Integration/Group reestructuring costs	89.0	85.0	4.7	0.2	1.4	(85.7)	42.1	26.1	61.4	46.7	57.5	(18.8)
Impairment and Goodwill		46.7	-	-	-	-	-	-	-	-	46.7	-	-
Net non-recurring other (income) / expenses	1	(0.3)	(31.1)	(98.9)	13.5	-	-	(106.3)	(31.1)	-	92.4	-	-
Adjusted EBITDA		682.8	656.0	4.1	(58.3)	(74.5)	(21.8)	666.5	632.5	5.4	74.6	98.0	(23.9)
Adjusted EBITDA margin %		11.2%	10.1%	110 bps	-	-	-	14.2%	13.0%	120 bps	5.3%	6.1%	-80 bps

Net non-recurring other (income)/expenses: related to tax credits from Natura &Co Latam, TBS receivables write-off from Avon International and expenses related to strategic projects from the Holding company

Financial income and expenses

		BRL million	Q1-24	Q1-23	Ch. %
1.	Financing, short-term investments and derivatives gains (losses)	64.1	(280.4)	(122.9)
1.1	Financial expenses	(110.9)	(241.6)	(54.1)
1.2	Financial income	156.1	190.4	(18.0)
1.3	Foreign exchange variations from financing activities, net	28.4	116.6	(75.6)
1.4	Gain (losses) on foreign exchange derivatives from financing activities, net	(8.8)	(127.4)	(93.1)
1.5	Gain (losses) on interest rate derivatives and other operating derivatives, net	(0.7)	(218.4)	(99.7)
2.	Judicial contingencies	(14.9)	(15.9)	(6.3)
3.	Other financial income and (expenses)	(410.3)	(163.9)	150.3
3.1	Lease expenses	(43.3)	(32.8)	32.0
3.2	Other	(71.3)	(77.3)	(7.8)
3.3	Other gains (losses) from exchange rate variation	(197.9)	(12.6)	26.5
3.4	Hyperinflation gains (losses)	(97.8)	(41.2)	73.1
Financial income and expenses, net	(361.1)	(460.2)	(21.5)

The table above details the main changes in financial income and expenses.

Total net financial expenses were BRL -361 million in Q1-24, compared to BRL -460 million in Q1-23, following the liability management plan implemented in Q3-23 and benefitting from the proceeds from the sale of Aesop and subsequent debt repayment, which resulted in financing and short-term investments being an income versus an expense in Q1-23. By contrast, the other financial income and expenses was mostly impacted by the Argentinian peso devaluation and hyperinflation accounting.

The main drivers this quarter were:

• Item 1. Financing, short-term investments and derivatives gains (losses) of BRL +64 million compared to BRL -280million in Q1-23,reflecting the stronger balance sheet position with quarter end net debt position of BRL 275 million, amid normal seasonal cash consumption
• Item 3.2. Other which this quarter was BRL -71 million (vs. BRL -77 million in same period last year) mostly driven by BRL -11 million bank fees from strategic projects and BRL -21 million (BRL -17 million YoY) related to offshore cash transactions, reflecting Aesop proceeds that were received in USD
• Item 3.3. Other gains (losses) from exchange rate variation of BRL -198million, impacted by BRL -137million of losses related to transferring cash out from Argentina
• Item 3.4. Hyperinflation gains (losses) of BRL -98 million mostly related to Argentina macro scenario

Underlying net income (UNI) and net income

• Q1-24reported net loss was BRL -935 million, compared to a net loss of BRL -652 million in Q1-23, impacted by discontinued operations, higher taxes from country mix and FX losses and hyperinflation accounting impacts
• Q1-24Underlying Net Income, which is net income excluding transformation costs, restructuring costs, discontinued operations and PPA effects, was BRL -116 million (vs. a loss of BRL -373 million in Q1-23 or BRL -260 million excluding TBS and Aesop) as higher adjusted EBITDA and slightly lower net financial expenses more than offset higher tax expenses
• Excluding the one-off BRL -137 million of losses related to transferring cash out from Argentina, Underlying Net Income would be a profit of BRL 21 million in Q1-24

Free cash flow and cash position
	R$ million	Q1-24	Q1-23	Ch. %
	Net income (loss)	(935.2)	(652.4)	43.4
	Depreciation and amortization	392.1	416.0	(5.8)
	Non-cash adjustments to net income	1,069.3	863.9	23.8
	Discountinued Operations Results	492.1	256.0	92.3
	Adjusted net income	1,018.3	883.5	15.3
	Decrease / (increase) in working capital	(1,455.9)	(1,520.3)	(4.2)
	Inventories	(677.6)	(502.3)	34.9
	Accounts receivable	(385.1)	(235.4)	63.6
	Accounts payable	(7.9)	(485.1)	(98.4)
	Other assets and liabilities	(385.4)	(297.5)	29.5
	Income tax and social contribution	(141.1)	(124.6)	13.2
	Interest on debt and derivative settlement	(202.6)	(290.6)	(30.3)
	Lease payments	(157.2)	(91.2)	72.3
	Other operating activities	(21.3)	(4.2)	413.3
	Cash from continuing operations	(959.9)	(1,147.5)	(16.3)
	Capex	(119.9)	(218.5)	(45.1)
	Sale of assets	0.0	1.4	-
	Exchange rate variation on cash balance	69.5	(14.1)	(593.6)
	Free cash flow - continuing operations	(1,010.3)	(1,378.7)	(26.7)
	Other financing and investing activities	2,328.6	181.6	1,182.3
	Operating activities - discontinued operations	(878.8)	(523.5)	67.9
	Financing activities - discontinued operations	0.0	(167.6)	-
	Capex - discontinued operations	0.0	(83.1)	-
	Cash balance variations	439.5	(1,971.2)	(122.3)

In Q1-24, free cash flow from continuing operations was BRL -1,010 million improving BRL +368 million on a pro

forma YoY basis or BRL +803 million compared to Q1-23 reported cash outflow of BRL -1,813 million. The improvement was due to a combination of higher adjusted net income, slightly better working capital dynamic and lower capex, which was driven by phasing of investments.

Working capital improved YoY amid the seasonal cash consumption and was driven by:

• Improved accounts payable from higher purchases in Q1-24 compared to same period last year explained by higher inventory build-up and phasing of higher cash outflow in Q4-23 that benefited this quarter

That more than offset:

• Accounts receivable, that used BRL 385 million in Q1-24 compared to BRL 235 million in Q1-23, primarily due to higher sales in Natura Brazil linked to longer receivable terms. Additionally, an increase in cash consumption by BRL -176 million from inventory build-up for Q2-24 intended to support growing sales further impacted this line
• The Body Shop effect from the reclassification to a third party, combined with business' entrance into administration, impacted overall working capital by BRL -86 million

Indebtedness ratios at both Natura &Co Holding and Natura Cosméticos

The graph below shows the indebtedness trajectory on a quarterly basis since Q1-23.

R$ million	Natura Cosméticos S.A.	Natura &Co Holding S.A.
Q1-24	Q1-23	Q1-24	Q1-23
Short-Term	80.0	131.9	128.1	289.2
Long-Term	2,354.6	7,365.7	6,059.1	12,721.8
Gross Debt a	2,434.6	7,497.7	6,187.1	13,011.0
Foreign currency and/or Interest hedging (Swaps and/or NDFs)b	(56.8)	419.7	(55.8)	445.2
Total Gross Debt	2,377.9	7,917.5	6,131.3	13,456.2
(-) Cash, Cash Equivalents and Short-Term Investmentc	(4,657.2)	(2,705.6)	(5,856.0)	(4,048.1)
(=) Net Debt	(2,279.3)	5,211.9	275.3	9,408.2
Indebtedness ratio excluding IFRS 16 effects
Net Debt/EBITDA	-0.24x	2.23x	0.19x	7.54x
Total Debt/EBITDA	0.26x	3.39x	4.18x	10.79x
Indebtedness ratio including IFRS 16 effects
Net Debt/EBITDA	-0.23x	1.65x	0.13x	3.96x
Total Debt/EBITDA	0.25x	2.51x	3.00x	5.66x

1. Gross debt excludes PPA impacts of R$22 million in Q1-24 and R$244 million in Q1-23, and exclude lease agreements
2. Exchange rate and interest rate hedging instruments- Including mark-to-market effects SWAP(CRI) as well as liabilities
3. Short-TermInvestments excludes non current balances

02 Natura &Co LATAM

• Brazilian revenue growth trend accelerated in Q1-24, despite the tough comp base for the Natura brand and lower price increase on a YoY basis. This performance was leveraged by a successful Natura Fragrance sales campaign launched during the quarter, which also led to a richer mix. Hispanic markets continue to show softer performance from Wave 2 adjustments, although with some acceleration from Natura in key regions such as Mexico and Peru. Profitability improvement was noteworthy with the fifth consecutive quarter of YoY expansion even with higher investments and indirect tax burden in Brazil

Wave 2 Status

• Brazil update - the available consultants are down on a YoY basis, as expected and mentioned last quarter, but remained flat from a QoQ perspective, despite the strong seasonality of the fourth quarter. Activity continues solid, boosted by cross-selling despite maintaining two minimum order split between Avon and Natura. Those KPIs translated into accelerating revenue trends with Natura growing +11.3% and Avon losing -11.3%, even considering the higher indirect tax burden of ~BRL 50 million, which impacted Brazilian net revenue growth by 2p.p.3. Avon also showed improving top-line trends throughout the quarter
• During Q1-24, delivery service KPIs were back to pre-Wave 2 levels, even in March when volumes pick-up on the back of Mother's day preparation. The coordination of delivery time frames for Natura and Avon was also initiated. As a result, both brands now have similar average delivery times for most of the Brazilian regions. Noteworthy is the high correlation between better service level, consultant and consumer satisfaction, and productivity level
• Sales leadership were also more stable and no significant changes were made during the quarter. Inventory shortage continues to improve on a QoQ basis but remains challenging. However, from key categories perspective, those SKUs showed inventories levels back to normal and as a result, enabled healthy performance from Natura
• Hispanic Latam update - Similar to Brazil, although in different maturity levels, Peru and Colombia distribution channels are still impacted on a YoY basis but showing recovering trends from a QoQ perspective. Productivity continues to show impressive YoY growth, partially offsetting the decreasing, but recovering, activity
• Despite all, expected and unexpected challenges faced during Wave 2 roll-out in the last year, Euromonitor data still showed a solid market share performance from Natura &Co Latam, led by the Natura brand.
  Strong innovation pipeline should continue to boost the brand's performance

Channel Performance in Latam

		Net revenue change (%)	Operational KPIs change(%)
		Q1-24 vs. Q1-23		Q1-24 vs. Q1-23	a
Natura &Co Latam	CFT Natura	CFT Avon	Home & Style		a
	Beauty Consultant
	Δ% CC	Δ% CC	Δ% CC	Δ%
Brazil	11.3%	-11.3%	-42.1%	-21.8%
Hispanic	22.3%	-11.8%	-26.1%	-19.1%
Total	14.4%	-11.6%	-31.3%	-20.4%
a
Considers the Average Available Beauty Consultants in the quarter

• Available consultants in Brazil declined 21.8% YoY to 1.6 million in Q1-24, mainly due to the exit of the least productive consultants, consistent with trends from last couple of quarters. As mentioned in the last earnings release, the consultant availability waiver implemented post-Wave 2 roll-out drove the steeper decline this quarter compared to Q4-23

3 Including BRL 50 million in Brazilian net revenues, YoY growth would be 5.9% YoY instead of 3.9% YoY

• The Hispanic Latam region saw a 19.1% decrease in consultants YoY, but down 5.8% on a QoQ basis, still impacted by the Wave 2 preparation and implementation but pointing to the recovery trend mentioned in the "Wave 2" section. The decrease continues to be led by termination among the least productive consultants, as mentioned during the last couple of quarters
• As a result, the Latam region reported a 20.4% consolidated decrease in beauty consultants YoY, reflecting the Company's ongoing strategy to prioritize productivity evolution over number of consultants expansion

Natura Brand in Latam

• Natura Brazil reported an 11.3% YoY increase in Q1-24 revenues, attesting strong momentum despite the tough comp base (in Q1-23 the brand had grown +24.9% in the region) and the lower YoY price increases. The performance includes a successful Fragrance sales campaign, called "Perfumada", which also drove richer mix
• Q1-24retail sales in Brazil showed robust growth, fueled by solid same-store sales and a still strong pace of store openings. The brand expanded to 115 own stores (+19 compared to Q1-23) and 781 franchised stores (+113 compared to Q1-23), underscoring its potential for future growth
• Q1-24digital sales, encompassing social selling, was up by 8.8% YoY as the brand is setting the base for its omnichannel strategy implementing fundamental changes in its ecommerce engine and commercial rules
• Natura Hispanic Latam reported a 22.3% Q1-24 YoY revenue increase in CC. Excluding Argentina, revenues in Hispanic markets remained broadly stable YoY in CC. Mexico, Chile and Peru top-lines showed some evolution compared to Q4-23 growth performance even with the commercial model adjustments in Mexico and the roll-out of Wave 2 in the other countries

Avon Brand in Latam (Beauty Category Only)

• Avon Brazil revenue declined 11.3% YoY in Q1-24 within the Beauty category. Channel decline continues to impact top-line performance, partially offset by improving productivity. Some planned SKUs reduction also drove the YoY revenue decrease but led to YoY margin expansion amid a richer mix. In addition, a slight increase in marketing investments and some product innovation (e.g. the Power Stay line) translated into some progression in Avon's brand equity in the region
• Avon Hispanic Latam revenue decreased 11.8% YoY and 24.1% YoY when excluding Argentina, particularly impacted by the regions where Wave 2 was rolled out. Although showing improving operational KPIs and leading to important YoY profitability expansion, top-line still posted soft performance from the planned consultants and SKUs reduction

Home & Style in Latam

• Home & Style performance mirrored last quarter trends, recording a 31.3% revenue decrease in CC from Q1-23. This decline was due to the 26.1% and 42.1% declines in the Hispanic market and in Brazil, respectively, both directly related to the planned portfolio optimization strategy and commercial incentives reduction