Natura Net Income Exceeds Forecasts as Profit Margins Grew

Natura Cosmeticos SA (NATU3) (NATU3)’s fourth- quarter earnings exceeded analysts’ forecasts as Latin America’s largest cosmetics company’s higher profit margins compensated for sales that grew at a slower pace.

Net income rose 33 percent to 290.7 million reais ($168.2 million) from 219.3 million reais a year earlier, the Cajamar, Brazil-based company said yesterday in a statement sent to the website of Brazil’s securities regulator. The result was above the 255.3 million reais average estimate of 12 analysts compiled by Bloomberg.

Margins on earnings before interest, taxes, depreciation and amortization -- a measure of profitability -- rose 7 percentage points from the same period last year to 30 percent, according to the statement.

Natura sales grew at a slower pace as the company faced logistics delays and discretionary consumer spending slowed, Raymond James analyst Daniela Bretthauer wrote in a report to clients dated Feb. 6.

A lack of new products “contributed to the softer sales performance in Brazil,” wrote Bretthauer. She has a “market perform” recommendation to the stock.

Sales rose 7.3 percent to 1.67 billion reais. This was the third consecutive quarter with single-digit growth. The number of direct sellers grew 16 percent in 2011, to 1.42 million.

Natura (NATU3) rose 1.4 percent to 41 reais yesterday in São Paulo trading. The stock is up 13 percent since the beginning of the year, compared to a 15 percent jump in the Bovespa (IBOV) benchmark index.

Editor: Jonathan Roeder

To contact the reporter on this story: Fabiola Moura in São Paulo at

To contact the editor responsible for this story: Telma Marotto at

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