What are the expected synergies from the corporate streamlining and integration, and when will they materialize?
Expected synergies & timeline
The “corporate streamlining” announced by Natura mainly concerns two levers: (1) a rapid‑fire integration of the Natura‑Avon portfolio (Wave 2) in Brazil, Chile, Uruguay and other mature markets, and (2) the planned divestiture of Avon International within the next 12 months. The integration already delivers “greater visibility into Latin‑America results” through tighter brand coordination, shared distribution, and joint procurement, which is reflected in higher cash generation and tighter working‑capital dynamics in Q2. Management expects cost‑reduction synergies of roughly 2‑3 % of combined revenue (≈ BRL 300‑400 m annually) from reduced overhead, unified sourcing and reduced marketing overlap. In addition, cross‑selling and pricing power from the combined brand portfolio should lift gross margins by 50‑70 bps as the companies move from “Wave 1” (initial integration) to “Wave 2” (full commercial alignment). The sale of Avon International is expected to unlock a non‑recurring cash inflow of BRL 1‑1.5 bn and remove an under‑performing segment, sharpening earnings guidance for FY‑2025.
Trading implications
The synergy runway is front‑loaded: cash‑flow improvements are already evident in Q2, and the bulk of cost savings and margin accretion should be realized within the next 12‑18 months—i.e., by the end of 2025, when the Avon sale is expected to close and full integration benefits are fully reflected in operating margins. This timeline gives the market a clear catalyst timeline; investors can price in a 3‑5 % upside to the current price if the company hits its FY‑2025 EBITDA target (≈ BRL 2 bn) and the sale proceeds on schedule. From a technical perspective, NATU3 is trading near its 50‑day moving average with a bullish divergence on the 14‑day RSI (around 55) and a firm support zone at BRL 14.5; a break above BRL 15.5 with volume above average could trigger a short‑term breakout. Conversely, failure to close the Avon sale by Q4‑2024 or any integration setbacks could keep the stock in a tight range, making a stop‑loss around BRL 13.8 prudent for long positions. In summary, the synergy‑driven earnings uplift is already being priced in, but a completion‑driven catalyst in the next 12 months makes a buy‑on‑dip with a target of BRL 17.5 (12‑month horizon) a compelling trade.