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Natura and Avon Integration in Latam Continuing to Drive Healthier Profitability

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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’s margin contraction amid sales deleverage

SÃO PAULO, May 14, 2024 /PRNewswire/ — Natura &Co’s (B3: NTCO3) first quarter 2024 financial results (Q1-24), released today, showed increased profitability driven by solid results from Natura &Co Latam, which is benefiting from the integration of Natura and Avon in the region (referred to as ‘Wave 2’), coupled with richer country and brand mix. This more than offset the margin contraction at Avon International amid sales deleveraging. Natura &Co’s consolidated net revenue reached BRL 6.1 billion in Q1-24, up 1.1% vs Q1-23 in constant currency (CC) and down 5.7% year-on-year (YoY) in Brazilian Reais (BRL).

At Natura &Co Latam, Q1-24 revenues grew 3.1% YoY in CC. Natura Brazil was again the highlight, reporting an 11.3% YoY increase in Q1-24 revenues, attesting strong momentum despite the tough comparative base from Q1-23 when the brand had achieved a 25% YoY growth rate in the region. This performance includes retail sales which showed robust growth in the country, fueled by solid same-store sales and a still strong pace of store openings. The brand opened 132 stores in the last twelve months (13 own and 113 franchised), reaching a total network of 896 stores (115 own and 781 franchised). The results were also boosted by the successful launch of a fragrance sales campaign called “Perfumada”, which contributed to a richer product mix.

This strong result in Natura Brazil was offset by Avon Latam, which is still delivering soft top-line, with revenues down 11.3% in Brazil and 11.8% in Hispanic Latam, as a result of the impacts in the regions where Wave 2 was already implemented, including a smaller number of representatives in the base. Worth noting that Avon Brazil already showed improving top-line trends throughout the quarter.

Avon International had a slow start in Q1 in terms of revenue, down by 4.7% YoY in CC. Despite a decrease in revenue, primarily attributed to challenges in the direct selling channel, Avon showed resilience in other areas. Efforts to strengthen Gross Margin and streamline operations led to only a slight decrease in Adjusted EBITDA margin of -60 bps YoY (ex TBS) despite sales deleverage. The company is also actively exploring opportunities from other distribution channels, including retailers. Avon is already being sold in the UK via Superdrug, in Italy via Naima stores and in Turkey via representative’s retail franchise stores.

Improved consolidated profitability is principally attributed to the expansion of gross margin that reached 65.2% in Q1-24, up 90 bps vs. Q1-23 driven by the strong gross margin expansion from Latam (+170 bps). Adjusted EBITDA reached BRL 683 million, and adjusted EBITDA margin expanded 110 bps YoY.

Q1-24 reported 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. The Underlying 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). Excluding the one-off of BRL 137 million of losses related to transferring cash out from Argentina, Underlying Net Income would be a profit of BRL 21 million in the quarter.

Fabio Barbosa, Group CEO of Natura &Co, commented: “We are encouraged that the first quarter of the year showed positive recurring 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, 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 discontinued operations tax payments), compared to a 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 are extremely confident with the potential of the integration of both brands in Latam.

Avon International had a slow start of the year, following a solid Q4 2023 profitability performance. The new management team took office in January and 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 study a possible separation of Avon and Natura, as we announced in February, in line with our goal of simplifying our corporate structure and giving more autonomy to the business units. We will inform the market as soon as we have news on this subject.

Lastly, but certainly not least, our hearts go out to all those affected by the devastating floods in the Rio Grande do Sul region of Brazil. We are closely monitoring the situation and extending our support to our vast network of nearly 100,000 people in the area, including Beauty Consultants, colleagues and partners. Through telemedicine and our Social Center, we are providing critical medical, social and psychological support. In addition, Natura &Co Latam will replenish lost inventory, forgive debts, defer payments for affected consultants and franchisees, and has designated two spaces as donation hubs for several companies to facilitate logistics. All these initiatives already exceed the amount of BRL 10 million.

With the aim of engaging our network to continue supporting those most affected, we have launched a matching funds initiative to help consultants most affected by the floods to rebuild their homes. For every real donated, Natura commits to matching it with another real. We expect to reach one million reais by May 30th.”

The full earning report and financial statements can be accessed at https://ri.naturaeco.com/en/.

About Natura &Co

Natura &Co is a global purpose-driven group uniting Natura and Avon brands. We connect more than 200 million clients worldwide, engaging them through 7 million dedicated Consultants and Representatives, 900 stores and franchises, and 22,000 employees. 

We believe in promoting real positive economic, social, and environmental impact. We believe that the world does not need another big company. The world needs symbols of change capable of blazing new trails and inspiring others to follow. We believe in the power of cooperation, co-creation, and collaboration for a better way of living and doing business. 

We are Natura &Co. 

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Unlock an Exclusive Olympic Experience: Celebrating Live4Well’s Sold-Out Genesis NFT

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HONG KONG, May 25, 2024 /PRNewswire/ — The buzz surrounding Live4Well’s successful Genesis NFT membership launch on May 23 has captivated both traditional and web3 communities. Combining the power of AI technology and decentralized physical infrastructure (DePin) concept, Live4Well has infused new life into the NFT market. The overwhelming response to their first NFT sales, showcases the project’s immense potential. Renowned web3 community leaders from Azuki, Bored Ape, Pudgy Penguins, WELL3, etc have joined forces with Live4Well, propelling the Genesis NFT membership collection to its resounding success.

Live4Well aims to transform the wellness industry by creating a reward-based infrastructure that connects global fitness data, enhances their AI database, and drives the development of sports and wellness. Backed by a multi-billion family office, which recently invested $20 million in Live4Well, the project has gained support in both web3 and traditional spaces. The team believes that every drop of sweat and effort toward better health should be rewarded, fostering motivation and integrating exercise into daily lives for enhanced well-being.

Live4Well’s announcement of an Olympic-themed raffle for Genesis NFT holders reflects their commitment to connecting wellness between Web2 and Web3 platforms. This testament to Live4Well’s demand and innovative vision solidifies their position as a promising leader in the industry. Their integration of the Olympic signifies their determination to inspire a global audience, leveraging blockchain technology to create an immersive ecosystem that revolutionizes how individuals engage with fitness on a daily basis for better health. Live4Well’s dedication to bridging the gap between traditional practices and the digital landscape sets them apart as pioneers in promoting well-being on a global scale.

What is Genesis NFT membership?

The Genesis NFT unlocks a multitude of benefits for holders, including the opportunity to cash out their sportive income and access a range of exclusive physical products and services. In addition to future airdrops and angel round whitelist privileges, Genesis holders will receive VIP tailor-made product packs from an innovative German sportswear company, elevating their exercise performance to new heights. With over 400 million sweat points farmed by their users, they are eager to redeem through the Genesis NFT membership. These enticing incentives explain why there was a widespread eagerness to participate in this thrilling event.

Unlike typical projects that raise funds before launching products or services, Live4Well has already released its AI-powered app, amassing over 250,000 users as a community base actively engaging in daily exercise. This early success has fostered a promising community within the wellness industry, as users trust Live4Well’s roadmap and collaborative ventures. The growing traction from both ordinary individuals and web3 enthusiasts has intensified the demand for redeeming and cashing out sweat points, the project’s exercise-based rewards. Obtaining the Genesis NFT membership is now seen as an essential step for accessing the highest tier of benefits and cashing out sportive income.

(PRNewsfoto/Live4Well)

What’s next for Live4Well?

Following the Genesis sales, Live4Well’s team will shift their focus to the upcoming token generation event (TGE) and a series of farming events. They also have exciting plans for partnerships and other collaborations in the global wellness and fitness industries. If you missed the initial launch, be sure to stay updated on Live4Well’s journey and join this extraordinary revolution.

(PRNewsfoto/Live4Well)

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CGTN: Eyeing Chinese modernization, China doubles efforts to further deepen reform on all fronts

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BEIJING, May 25, 2024 /PRNewswire/ — Built after China’s reform and opening up, Rizhao Port in east China’s Shandong Province is a vital global hub for the transshipment of energy and bulk raw materials.

Through recent technological innovation, the port has been upgraded into a modern port, serving as a key node for the New Eurasian Land Bridge and an important hub for the Belt and Road Initiative.

Rizhao Port, together with Qingdao Port, Yantai Port and Bohai Bay Port, formed Shandong Port Group Co., Ltd. five years ago. Last year, the total cargo throughput of the four ports exceeded 1.7 billion tonnes, ranking first in the world.

As part of his first leg of an inspection tour in Shandong Province from Wednesday to Friday, Xi Jinping, general secretary of the Communist Party of China (CPC) Central Committee, visited the port, recognizing its achievements and urging the province to build a high-level platform for major international exchanges and cooperation.

“Reform is the driving force for development,” Xi emphasized on Thursday while chairing a symposium in Shandong’s capital of Jinan, attended by representatives from businesses and academia.

To deepen reform further on all fronts, efforts should be focused on the overarching goals of improving and developing the socialist system with Chinese characteristics and modernizing China’s governance system and capacity, he stressed.

Deepening reform centered on Chinese modernization

Xi’s trip to Shandong is the first local inspection he has made since the CPC Central Committee Political Bureau held a meeting on April 30, which decided that the third plenary session of the 20th CPC Central Committee will be held in Beijing in July, and the session will primarily examine issues related to further comprehensively deepening reform and advancing Chinese modernization.

Over the years, China’s reform of the economic system has been continuously improved, and the reform of its political and cultural systems has been steadily advanced and innovated.

Meanwhile, the reform of the ecological civilization system has been accelerated, and the reform of national defense and the military has achieved historic breakthroughs.

Comprehensively deepening reform has placed the construction of the national governance system and governance capabilities in a more prominent position. China has convened about 40 meetings of the Central Leading Group for Comprehensively Deepening Reform and 30 meetings of the Central Commission for Comprehensively Deepening Reform to improve the top-level design of reform.

From implementing the Foreign Investment Law and building pilot free trade zones to hosting a slew of major expos and accelerating the construction of Hainan Free Trade Port, China unswervingly deepens reforms and expands high-level opening up, injecting positive energy into global development and bringing tangible benefits to people worldwide.

At Thursday’s symposium, Xi said China should take resolute steps to remove the ideological and institutional barriers hindering the advancement of Chinese modernization and double down on its efforts to resolve deep-seated institutional challenges and structural issues.

Economic system reform should start with meeting realistic needs and tackling the most urgent matters, and it should advance theoretical and institutional innovation in the process of solving practical problems, he added.

A better life for the people

Xi has been stressing that reform should focus on what the people care about and expect the most. The aim, he has said, is to give the people a stronger sense of fulfillment.

Focusing on resolving the most practical problems that are of the greatest and most direct concerns to the people, China has continued to advance major reforms and system construction in the field of people’s livelihoods to allow the results of reform to benefit all people equally and promote their comprehensive development.

The Civil Code, anticipated for decades, finally came to life and was adopted in 2020, highlighting the respect and protection of individual freedom, dignity, interests and rights.

Since the 18th CPC National Congress, the country has built a total of more than 59 million units of various types of affordable and shantytown-renovated housing, helping settle over 140 million people into new homes.

“The Chinese people’s aspiration for a better life is the goal we have been striving for, and the ultimate purpose of advancing reform and promoting development is to improve the livelihood of the people,” Xi said.

Stressing the need to plan and advance reform based on the overall, fundamental and long-term interests of the people, Xi urged efforts to identify the key areas of reform and achieve breakthroughs based on the pressing concerns and aspirations of the general public, including employment, income growth, education, healthcare, housing, government services, childcare, elderly care, personal safety and property security.

https://news.cgtn.com/news/2024-05-24/Eyeing-Chinese-modernization-China-doubles-efforts-to-deepen-reform-1tRFe7yRTUY/p.html

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PagBank records its highest recurring net income in Q124, reaching 522 million BRL – an increase of +33% in the annual comparison

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TPV reached 112 billion BRL (+27% YoY), more than twice the industry’s growth and 31 billion BRL in deposits, reinforcing the balance sheet for expansion of receivables anticipation and credit concession.

SÃO PAULO, May 24, 2024 /PRNewswire/ — PagBank (NYSE: PAGS), a complete digital bank in financial services and payments solution and one of the largest digital banks in Brazil, announces its results for the first quarter of 2024 (Q124). The main highlights of the period include a record recurring net profit  of 522 million BRL (+33% YoY), while the net accounting profit reached 483 million BRL (+31 YoY%).

Alexandre Magnani, CEO of PagBank, points out the continuity of the good results presented in the last quarters, highlighting the expressive gain of market share in payments (acquirings), balancing growth with profitability, while the Company establishes itself among the largest financial institutions in Brazil in number of clients:

“We are more than 31 million customers and our execution has been consistent. We have consolidated our value proposition for micro, small, and medium-sized enterprises, facilitating the financial life of individuals and businesses. At the same time, we have captured opportunities for client-consumers who do not have a relationship with payment machines through payroll loans, our broad investment platform, and the offer of a complete bank,” says the CEO of PagBank.

In acquirings, the TPV registered was 112 billion BRL (+27% YoY), growing in all segments (MSMBs and Large Companies, E-commerce, and Cross-border businesses1). In digital banking, PagBank reached 66 billion BRL in Cash-In (+48% YoY), a metric that represents the financial volume received from other financial institutions in PagBank accounts, excluding acquisition, especially Pix, business account products, and salary portability.

The substantial volumes of TPV and Cash-in led deposits to record numbers of nearly 31 billion BRL (+64% YoY and +11%QoQ) despite the less favorable seasonality of the period, given that in the first months of the year, customers have more significant disbursements to honor the payment of taxes, such as IPTU and IPVA, and school yearly supplies, among other expenses.“We stand out for offering instant settlement for our customers and carrying out easy operations via Pix, leveraging our TPV and Cash-In volume in PagBank accounts. This, added to the fact that we have a banking license since 2019, means that we have the agility of a fintech and low funding costs like a traditional bank,” says Magnani. 

According to Artur Schunck, CFO of PagBank, operational growth does not harm the Company’s capital allocation. On the contrary, the acceleration of revenue growth and discipline in costs and expenses were the main levers of the record result. “The financial margins of the consolidated business were high. Our profit grew more than 30% compared to the Q1 2023, even with additional disbursements linked to the new cycle of growth and diversification of the operation, including geographical expansion and marketing actions in the period”, says Schunck.

The credit portfolio resumed growth and reached 2.7 billion (+8% QoQ) at the end of March, focusing on low-risk products such as consigned credit, the anticipation of the year withdrawal of FGTS (Severance Pay Fund), and credit cards with a limit attached to PagBank’s CDBs (a type of fixed-income investment). Schunck believes that despite short-term macroeconomic uncertainties regarding interest and inflation behavior, the worst is in the past, and he is confident in the credit strategy:

“We crossed the pandemic, the significant high-interest rate period, and one of the worst credit cycles in Brazil and still we have built a robust balance sheet and diversified our credit portfolio in terms of customers, products, and risks. Now, we are opening up opportunities to accelerate the concession and gradually expand the offer of credit products from the next few months,” says the CFO of PagBank. 

Other Highlights

Net revenue in the quarter was 4.3 billion BRL (+15% YoY), driven by the strong growth of the acquirings, led by MSMBs (micro, small and medium-sized businesses) and the advance in large accounts, with emphasis on online, cross-border, and automation, as well as the growth of higher margins in financial services. The number of clients reached 31.4 million, reinforcing PagBank’s position as one of the largest digital banks in the country.

In the period, PagBank was recognized as the best bank in Brazil and awarded the RA1000 seal of quality in service, both granted by the Reclame Aqui ranking and as one of the 50 most valuable brands in the country, according to a survey conducted by Kantar BrandZ.

Among the launches of the quarter, main highlights were PagBankPartnerships, a relationship and integration program with software companies and commercial automation; Seguro Empresarial (Business Insurance) offering coverage against fires, electrical damage, theft, burglary, and natural disasters, among others; and Tap to Pay Online, a new and exclusive technology in Latin America that allows the customer to run online transactions by bringing credit or debit card closer to the mobile phone on e-commerce platforms. In addition, PagBank has started to offer 1% cashback on all purchases made with the digital bank credit card and new investment options, such as the CBD, with a 130% CDI rate-variation yield.

“This current moment reminds us very much of our phase between 2018 and 2019, in which we grew in a fast and profitable way, and launched several products. We are very optimistic about the coming months and years of the Company”, says the CEO of PagBank. 

Rio Grande do Sul

PagBank has closely monitored the potential impacts of the ongoing climate tragedy in the state of Rio Grande do Sul and the developments in its operations. The Company’s TPV exposure in the state is similar to the state’s share in national GDP – around 5%. The Company says t is early to share some numbers since consumption in the affected regions have decreased due to the temporary closure of the business, while moving people to neighboring cities and states can increase consumption in unaffected areas.

“At this time, our focus is on supporting flood victims, especially our professionals working in the state of Rio Grande do Sul, through donations from PagBank and its professionals, in cash and goods, as well as offering special support to our affected customer,” says Magnani. 

Check out the financial results of PagBank in Q124 here.

About PagBank
PagBank promotes innovative solutions in financial services and means of payment, automating the purchase, sale, and transfer process to leverage individuals’ and enterprises’ businesses simply and securely. A company of the UOL Group – leader of the Brazilian Internet – PagBank acts as an issuer and acquirer, offering digital accounts and providing complete solutions for online and face-to-face payments (by mobile devices and POS devices). 

PagBank also has a wide variety of means of payment, such as credit and prepaid cards, bank transfers, payments by billet, and balance in the account, among others. PagBank (PagSeguro Internet Payment Institution S.A) is regulated by the Central Bank of Brazil as an electronic money-issuing payment institution, issuer of post-paid instruments and acquirer, having partnerships with the leading credit card issuers. Its parent company, PagSeguro Digital, is listed in the U.S. (NYSE: PAGS) and regulated by the Securities and Exchange Commission (SEC). The distribution of investment funds is carried out by BancoSeguro S.A., authorized by the Central Bank of Brazil, the Securities and Exchange Commission, and affiliated with ANBIMA. 

Visit the PagBank Press Room

1 GCECs: The Brazilian acronym for large companies (annual revenues above 12 million BRL), e-commerce and cross-border businesses.

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