Brazilian cosmetics group Natura reported a 92.1% decline in recurring second-quarter net profit as weaker consumer demand in its home market and higher financial expenses overshadowed improvements in operating profitability. The results underline the challenge facing one of Latin America’s largest beauty companies as it attempts to complete a prolonged operational and corporate restructuring.
Profit falls to R$35 million
Natura recorded recurring net profit of R$35 million, equivalent to approximately $6.9 million, for the three months ending in June. This compared with roughly R$445 million in the same period of 2025.
The company attributed much of the reduction to increased net financial expenses, including currency movements and the impact of derivatives. Natura’s shares ended Monday’s trading session in São Paulo approximately 3% lower ahead of the full earnings announcement.
Consolidated quarterly revenue was estimated at between R$5.1 billion and R$5.2 billion, representing a year-on-year decline of around 9% to 10%.
Brazil remains the central challenge
Sales in Brazil were weaker than expected as high borrowing costs, subdued economic activity and pressure on household purchasing power affected the beauty and personal-care market.
Natura also faced internal operational problems involving its supply chain, sales network and digital channels. The group relies heavily on independent beauty consultants, making consultant recruitment, activity and productivity important factors in its performance.
Lower consultant numbers and reduced selling activity had already affected Natura during the first quarter, when the company reported net revenue of R$4.7 billion and a net loss of R$445 million.
Brazil remains Natura’s largest and most important market. Weak domestic performance therefore offset continued growth across several Spanish-speaking Latin American countries.
Operating margin shows improvement
Despite the steep fall in net profit, Natura reported signs that its underlying cost structure was beginning to recover. Consolidated earnings before interest, tax, depreciation and amortisation reached R$620 million in the second quarter.
The corresponding EBITDA margin was 12%, rising to 13.2% when excluding a temporary tax mismatch. This represented an improvement of approximately 4.7 percentage points compared with the first quarter.
Brazil produced an operating margin of 16.4%, although results were affected by a temporary tax issue in São Paulo and higher selling expenses. The margin in Spanish-speaking markets rose to 7.6%, an improvement of 2.2 percentage points from the previous year.
The figures suggest that cost controls and lower restructuring expenses are supporting profitability even as revenue remains under pressure.
Avon integration continues to shape performance
Natura has spent several years simplifying its corporate structure following the acquisition of Avon. The company has disposed of Avon International and its Russian business while concentrating its remaining operations on Latin America.
The integration of the Natura and Avon brands in Mexico and Argentina has involved considerable changes to sales teams, product portfolios and distribution systems. Although much of the formal restructuring is now complete, operational disruption has continued to affect performance.
The company is responding by adjusting its supply chain, strengthening digital sales channels and expanding its network of physical franchise stores.
Recovery depends on domestic demand
Natura’s improving EBITDA margin provides evidence that management’s efficiency measures are producing results. However, the sharp decline in net profit demonstrates that operating improvements have not yet translated into a stable bottom line.
A sustained recovery will depend heavily on consumer demand in Brazil, improved productivity among beauty consultants and the company’s ability to expand without recreating the complexity that followed the Avon acquisition.
For investors, the second-quarter figures present a mixed picture: a more efficient regional business, but one still exposed to weak sales, financial volatility and the difficult economic conditions affecting Latin America’s largest consumer market.
Newshub Editorial in Latin America – 11 August 2026
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