In another move to clean up its portfolio, Natura (NATU3) informed on Monday that it has reached an agreement with the PDC Group to sell its Avon operations in Guatemala, Nicaragua, Panama, Honduras, El Salvador and the Dominican Republic.
Natura will still provide finished goods and be the brand’s licensor in those markets under the arrangement.
The deal was closed for a nominal consideration of US$1.00, as well as the payment of US$22 million in receivables that Avon Guatemala owes to Natura’s Mexican subsidiary.
The receivables need to be paid once the transaction is closed, which means Natura will benefit from an immediate financial relief, besides the strategic simplification.
Market reacts with volatility
The market’s immediate reaction to the announcement was turbulent. NATU3 shares rose 2.17% to R$8.94 at 11:27 a.m. (Brasília time) on Monday, after initially falling.
According to local media outlet InfoMoney, investors appeared to assess the deal’s small size against the larger ramifications for Natura’s restructuring efforts.
Analysts highlight strategic benefits
Analysts at Bradesco BBI characterised the news as positive and highlighted two main points. First point is that the sale shows that Natura is in the process of finalising non-core assets.
This included all six of the 41 countries/offices targeted for closure in one transaction.
The second consideration was made on terms that were better than we expected.
According to Bradesco, part of these assets is a negative intangible (around US$22 million, some R$117 mi), which gives a positive pro forma of 0.05x on net debt, given taxes.
As Natura is, in fact, getting Avon CARD receivables back, the sale sidesteps the leverage deterioration often associated with cash flow negative business; divestitures.
Overall, Natura’s assets destined for sale may negatively impact net debt by as much as R$1 billion after the closing of Avon International’s sale.
This is simply not the case with this deal, which is a more positive contributor by alleviating debt pressure and getting the company closer to its strategic objective.
“We now await the completion of the sale or closure of the remaining 35 Avon International operations or countries,” Bradesco noted in the note.
The bank noted that, while short-term volatility in outcomes is anticipated, the long-term outlook remains positive.
Bradesco confirmed its outperform recommendation, contingent on Natura’s consolidated performance and cash flow matching those of Natura Cosméticos, which it described as necessary for a structural reappraisal.
JPMorgan sees modest progress
JPMorgan described the decision as a slight positive, noting that it indicates progress in Avon’s separation and demonstrates Natura’s commitment to streamlining its business strategy.
By focusing on its Latin American core, the corporation may improve operational efficiency and strategic clarity.
However, the bank emphasised that Avon CARD was the least problematic of the Avon verticals designated as “held for sale” since the second quarter of 2025.
As a result, the sale does not address the larger cash burn issues related to Avon International’s operations.
“Although it is a small initial step, the sale of Avon CARD will likely be welcomed by investors, as it signals continued execution of the long-term plan to focus on Latin America,” the banking giant said.
Nonetheless, with Natura shares selling at 9 times adjusted P/E for 2026, the bank maintained a neutral rating.
Continuing search for solutions
Ativa also stated that Natura is still looking for alternatives for Avon International, which is designated as an asset held for sale.
Even as it stresses financial discipline, the company’s gradual unwinding of overseas businesses demonstrates the complexities of breaking free from Avon’s global influence.
Focus shifts to remaining operations
The sale to PDC Group, while minor in monetary terms, has strategic significance in demonstrating Natura’s resolve to reduce its portfolio.
While the disposal does not fully address Avon International’s issues, it demonstrates consistent progress toward narrowing its focus to lucrative markets.
With 35 Avon businesses still seeking resolution, investors and analysts will keenly monitor Natura’s next movements.
For the time being, the symbolic US$1 sale emphasises that value is found in moving toward a leaner, more focused business model rather than in the earnings.
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