Natura &Co Holding S.A. (NYSE:NTCO) Q4 2022 Earnings Conference Call March 14, 2023 9:00 AM ET
Company Participants
Fábio Barbosa - Chief Executive Officer
Guilherme Castellan - Chief Financial Officer
João Paulo Ferreira - Chief Executive Officer of Natura &Co Latin America
Conference Call Participants
João Soares - Citi
Danniela Eiger - XP Investimentos
Thiago Macruz - Itaú Unibanco
Robert Ford - Bank of America
Joseph Giordano - JP Morgan
Eric Huang - Santander
Andrew Ruben - Morgan Stanley
Operator
Welcome to Natura &Co's Fourth Quarter and Full Year 2022 Earnings Call. On this call today are Fábio Barbosa, CEO of Natura &Co; and Guilherme Castellan, CFO of Natura &Co. João 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 the Natura &Co Investor Relations website.
I will now hand the call over to Fábio Barbosa.
Fábio Barbosa
Thank you. Good morning or good afternoon to all of you and thank you for joining us today. I'm very happy to be with you again. Guil will comment on the results shortly, so I will provide a more qualitative commentary.
As you know, 2022 was a difficult year and we continued to operate in fourth quarter in a challenging environment, marked by high global inflation that is affecting discretionary spending and changing consumer behavior, as well as rising energy costs, foreign exchange volatility and of course the geopolitical fallout resulting from the war in Ukraine.
In this environment, we decided in mid-2022 to reassess the group's growth model in the short-term and shift the focus from sales growth to profit margins and cash conversion. As part of this shift, we took a hard look at cost structure and the role of the Holding company with significant savings already achieved and we're also reevaluating our global footprint to concentrate on profitable markets.
In full year 2022, we posted stable revenue at constant currencies while adjusted EBITDA margin decreased 160 points. In the fourth quarter sales growth improved at constant currency. And we delivered further progress in cash conversion, in line with our priority. We have some reasons for succession, notably continued strong momentum at Natura brand, especially in Brazil, and also a continued good performance at Aesop.
We also saw a solid performance by Avon in the beauty category in Latin America. This bodes well for the second wave of integration of our business in the region that is getting underway, aiming at harmonizing the distribution and sale systems and optimizing the product portfolio. At TBS, we continue working on costs and optimizing footprint of stores and geographies. At Avon International, we are focusing on countries with high growth potential by revisiting business model at several other countries, at the same time, reducing the cost structure.