Natura &Co Holding S.A. (NYSE:NTCO) Q2 2023 Earnings Conference Call August 15, 2023 8:00 AM ET
Company Participants
Fabio Barbosa - Chief Executive Officer
Guilherme Castellan - Chief Financial Officer
Joao Paulo Ferreira - Chief Executive Officer of Natura &Co Latin America
Conference Call Participants
Danniela Eiger - XP Investments
Irma Sgarz - Goldman Sachs
Ruben Couto - Santander
Thiago Macruz - Itau BBA
Joseph Giordano - JPMorgan
Robert Ford - Bank of America
Joao Soares - Citibank
Operator
Good morning, and welcome to Natura &Co's Second Quarter 2023 Earnings.
On this call today are Fabio Barbosa, CEO of Natura &Co; and Guilherme Castellan, CFO of Natura &Co. Joao Paulo Ferreira, CEO of Natura &Co Latin America, will join for the Q&A session. The presentation they will be referring to during this call is available on Natura &Co Investor Relations website.
I will now hand over to Fabio Barbosa.
Fabio Barbosa
Good morning or good afternoon to all of you, and thank you for joining us today. Very happy to be with you again.
Natura &Co continues to deliver on its roadmap in the second quarter with a performance that was broadly in line with first quarter. We posted another quarter of top-line growth at constant currency with sales up 1.9%, and we also posted a significant improvement in adjusted EBITDA margin of 230 points. This was mainly driven by a solid 430 basis point expansion in gross margin, benefiting from mix effects, partially offset by investment and inflation.
Net income continues to be impacted by high financial expense, which will be addressed upon closing of the sale of Aesop. We expect closing to occur in third quarter 2023. The proceeds from the sale of Aesop will strengthen and deleverage Natura &Co's balance sheet, freeing up resources and sharpen our focus on our strategic priorities with discipline.
We continue to see good momentum of the Natura brand in Latin America. Avon International fundamental continue to improve as it further adjusted its commercial model while the Body Shop faced persistent top-line challenge.
We remain strongly focused on cash conversion. And this quarter, we saw further improvement in operating working capital dynamics, partially offsetting seasonal cash consumption in the quarter. We will continue to drive our cash conversion improvement, notably among other things, through the working capital and net CapEx optimization. We are confident in our ability to capture further opportunities on this front, although we may see volatility from quarter-to-quarter.