Natura Swings Back to Profit, Looks to Sell Avon International

Brazilian cosmetics maker Natura on Monday posted a second quarter net profit swung back into the black, in an earnings report that excluded Avon International, a major business arm that Natura is looking to sell off.

Net profit for the three months through the end of June landed at 195 million reais ($35.8 million), reversing the 859 million real net loss it logged from the same period last year.

Natura said in its earnings report it had decided to reclassify its Avon International unit, which aggregates its Avon businesses outside Latin America, as an asset “held for sale”.

Natura has been “weighing alternatives” for Avon International, which generated about 20 percent of Natura’s total net revenue in the first quarter and had been posting lower margins than the group’s Latin American operations.

Due to the reclassification, the unit was not included in the second-quarter earnings report. Avon businesses in the Dominican Republic and Central America were also reclassified under this label, Natura said.

Excluding the reclassified business, Natura’s core earnings - as measured by recurring earnings before interest, taxes, depreciation and amortization (EBITDA) - stood at 795.6 million reais in the second quarter, up 4.5 percent year-on-year.

Revenues nevertheless dipped 1.7 percent to 5.7 billion reais, below the 7.5 billion reais predicted by analysts polled by LSEG. It was not immediately clear if the numbers were comparable, due to the reclassification.

By Andre Romani; Editor: Sarah Morland

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