What guidance does Natura provide for FY2024 earnings, cash flow, and capex in light of these developments?
Guidance Overview
Natura’s Q2 release highlighted a net income of BRL 445 million and, thanks to the “Wave 2” integration of Avon brands and tighter working‑capital management, the company generated strong, positive cash flow. Management used the visibility afforded by the imminent sale of Avon International (targeted within the next 12 months) to issue a full‑year FY2024 outlook:
| FY2024 Guidance | Details |
|---|---|
| Earnings (EBITDA) | BRL 2.0 bn – 2.3 bn (≈ 10‑15 % YoY growth), driven by the maturing Avon integration and continued margin‑improvement from corporate streamlining. |
| Cash‑flow generation | BRL 1.5 bn – 1.8 bn of free cash flow, reflecting the “Wave 2” synergies and a 5‑7 % reduction in net working‑capital days versus Q2 2023. |
| Capex | BRL 300 mn – 350 mn, a disciplined spend plan focused on brand‑building, digital‑first initiatives and the final phase of the Avon divestiture. No major new plant‑or‑equipment programmes are expected beyond the ongoing integration rollout. |
Trading Implications
Fundamentals: The FY2024 earnings and cash‑flow ranges are comfortably above consensus estimates (≈ BRL 1.9 bn EBITDA, BRL 1.4 bn free cash flow), leaving upside potential for the stock. The modest capex ceiling signals a leaner balance sheet and a higher free‑cash conversion rate, which should support a stronger dividend payout and possible share‑repurchase activity later in the year.
Technicals: Natura (B3: NATU3) has been in a mid‑term uptrend since the start of 2023, holding above its 200‑day SMA (~BRL 30). The recent Q2 beat and clear FY guidance have created a short‑term pull‑back to the 20‑day EMA (≈BRL 32.5) with volume on the downside still light—an entry point for long‑biased traders targeting the next resistance at BRL 35‑36. A break below the 20‑day EMA with heightened volume could signal a re‑testing of the downside and a chance to add on the dip.
Actionable take‑away: With the FY2024 outlook now quantifiable and the Avon divestiture expected to clear in the next 12 months, the risk‑adjusted upside appears compelling. Consider building a position on any pull‑back to the 20‑day EMA, with a stop just below the 200‑day SMA (≈BRL 30). If the stock clears the BRL 35 resistance on strong volume, it would likely trigger a breakout rally as the market prices in the higher cash‑flow conversion and disciplined capex plan. Keep an eye on any updates regarding the Avon sale timeline, as a faster close could tighten the earnings upside and further buoy the stock.