Key Takeaways:
Brazilian cosmetics company Natura came back to profit in Q2 of 2025, reporting a BRL 445 million ($82.67 million) net income from its core Latin American business. When including its Avon operations outside the region—now classified as “held for sale”—net income totaled BRL 195 million ($36.2 million).
Natura has spent the past two years unwinding some of its sprawling global footprint, most notably through the sale of The Body Shop in 2023—refocusing on its core Latin America markets, where it commands a dominant share of the DTC channel.
Profitability moved forward as a result of Natura’s ongoing simplification strategy. “Following a solid Q1-25, we delivered another quarter of healthy results. Revenue accelerated in our main market, Brazil, with the Natura brand outperforming the market despite the ongoing challenges still faced by the Avon brand,” said CEO João Paulo Ferreira in a company press release. “Looking ahead, even amid slowing consumption, we remain absolutely confident in our ability to deliver annual profitability growth.”
Revenue Trends and Operational Highlights
Net revenue reached BRL 5.7 billion ($1.58 billion) in Q2, a 5.5% increase in constant currency compared to the prior year. Stripping out Argentina, which is experiencing high inflation and currency volatility, growth was 2%.
The Natura brand outpaced the broader beauty market in Brazil, supported by new product launches and target marketing campaigns. However, Avon continues to trail, particularly in more mature urban markets, though management pointed to “wave two” integration gains in certain geographies.
Profit and Cash Flow Improvements
Operational efficiency gains helped lift the recurring EBITDA margin in Latin America to 14.7%, up 10 basis points from Q2 2024. Gross margin expanded by 80 business points year over year, aided by improved product mix and surgeries from ongoing Avon integration.
Cash generation was another bright spot with BRL 408 million ($75.76 million) in free cash flow from Latin American operations recorded in the first half of 2025, an atypical achievement given the company’s seasonal sales patterns, which typically consume cash in the first half.
Avon International Sale in Motion
A significant development in Q2 was the reclassification of Avon International and Avon Central America as “assets held for sale” on the balance sheet. This move signals management's expectation that the divestiture will close within the next 12 months.
Despite no buyer being publicly disclosed, a sale could unlock Capra for reinvestment in Natura’s higher-margin Latin American portfolio, while reducing operational complexity.
A Regionally Focused Beauty Powerhouse
Focusing on a region where Natura already leads the market share aligns with broader industry trends, where beauty companies are narrowing geographic reach to concentrate resources on high-growth, brand-dominant markets.
As Q2 showed positive results, Ferreira’s emphasis on "absolute confidence” in profitability growth reflects a shift in tone from cautious optimism to strategic assertiveness. The challenge ahead will be sustaining momentum in Brazil while revitalizing Avon’s performance enough to ensure a smoother separation from its international arm.
