(Bloomberg) – Natura & Co Holding shares fell to 2004 since the start of trading in 2004, after Brazilian beauty companies released profit margin results, which was affected by softness in the Argentina business, which created uncertainty on the upcoming dividend.
Recurring EBITDA margin in the fourth quarter was 9.1%, down from the previous year and below analyst expectations. Analysts also pointed out that inflation in Argentina is subject to quarterly results.
The stock fell 29% in Friday’s trading in St. Paul.
“When I look at shareholder returns, it’s more about our margin expansion,” Chief Financial Officer Guilherme Castellan said on a call with analysts on Friday. “This doesn’t stop us from potentially paying dividend yields, but this will be based on EBITDA expansion.”
Tiago Cunha, portfolio manager at Ace Capital, said the failure to provide more detailed guidance is also of concern.
“The lack of more quantitative guidance from the company raises the question of whether this effect is really temporary or whether we have a trend we have observed in the coming quarters,” he said.
Citigroup analyst Joao Pedro Soares pointed out that due to Avon’s Chapter 11 process, the impact of BRL is 450 million. He wrote in the notes that the potential setbacks of Avon Integration are a key risk that can prevent the company from achieving its target price.
Castland said in a Friday press conference after analyst calls that Natura needs to restore market confidence in the company.
“We need to return to expand profit margins and demonstrate the company’s ability to generate cash,” he said.
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