a n n u a l r e p o rt
n at u r a 2009
Table of Contents
OUR ESSENCE
3 Reason for being
3 Vision
3 Beliefs
HOW WE GOT HERE
4
OUR mOmENT
WHAT WE AIm FOR
WHO WE WORK WITH
WHAT FOOTPRINT WE LEAVE
5 message From the Chairmen
6 message From the Executive Committee
7 Profile
8 Awards and Recognitions
13 Natura Value Chain
14 Governance
19 Prospects
20 Collective construction
22 High-priority sustainability topics
25 Development of our commitments
28 Natura management System
29 Innovation
32 Quality of relationships
37 Employees
49 Consultants and NCAs
54 Consumers
58 Suppliers
60 Supplier communities
64 Surrounding communities
67 Shareholders
69 Government
74 Creation of social value
81 Creation of environmental value
94 Creation of economic value
FINANCIAL STATEmENTS 97
DNV REPORT 134
ABOUT THE REPORT 136
GLOBAL COmPACT PRINCIPLES 137
GRI INDEX 138
EDITORIAL TEAm 142
naturaannualreport
2
OUR
ESSENCE
REASON FOR BEING
Our Reason for Being is to create
and sell products and services
that promote well-being/being well.
Well-being
is the harmonious, pleasant relationship
of a person with oneself,
with one’s body.
Being well
is the empathetic, successful,
and gratifying relationship of a person
with others, with nature
and with the whole.
VISION
Because of its corporate behavior, the
quality of the relationships it establishes,
and the quality of its products and
services, Natura will be an international
brand, identified with the community
of people who are committed to
building a better world, based on better
relationships among themselves, with
others, with nature of which they are
part, with the whole. .
BELIEFS
Life is a chain of relationships. Nothing in the
universe exists alone.
Everything is interdependent.
We believe that valuing relationships is the
foundation of an enormous human revolution
in the search for peace, solidarity, and life in all
of its manifestations.
Continuously striving for improvement
develops individuals, organizations, and society.
Commitment to the truth is the route to
perfecting the quality of relationships. The
greater the diversity, the greater the wealth and
vitality of the whole system.
The search for beauty, which is the genuine
aspiration of every human being, must be free
of preconceived ideas and manipulation.
The company, a living organism, is a dynamic
set of relationships. Its value and longevity
are connected to its ability to contribute to
the evolution of society and its sustainable
development.
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3
HOW WE
GOT HERE
1969 Luis Seabra founds Natura in São Paulo. The company has
included plant ingredients in the composition of its pro-
ducts from the very beginning.
1970 The first Natura store opens on Oscar Freire street, in
the city of São Paulo; Seabra himself works behind the
counter.
1973 Natura’s plant is inaugurated in São Paulo. At the time,
seven employees produced approximately 600 units per
month of hair, face, and body treatment products.
1974 Natura decides to invest in customized consulting and
starts to operate using the direct selling system.
1979 Natura enters the men’s cosmetics market with the launch
of the Sr. N line.
The Natura System is established with the participation of
many companies.
1981 Natura pioneers in the creation of a toll-free customer
service.
1982 Natura starts operations in Chile, the first initiative of the
company abroad.
1984 In a pioneer initiative, the refill product alternative was
launched.
The Erva Doce line is born, one of Natura’s major
successes.
1986 The Chronos line, an anti-aging facial cream, that brings
together the major technological evolutions in cosme-
tics, arrives on the market.
1988 Natura begins to sell its products in Bolivia.
1989 In the 1980s, Natura grows 35-fold, and merges with four
companies of the Natura System and emerges as the lar-
gest Brazilian cosmetics company.
1990 Natura publishes its Reason for Being (commitment with
well-being/being well) and its Beliefs: the importance of re-
lationships, commitment to truth, ongoing improvement,
stimulation to diversity and appreciation of beauty without
stereotypes, and the company as a promoter of social de-
velopment.
1992 The Natura Escola (Natura School) Project is created: the
company’s first social project, developed in association
with the matilde maria Cremm State School in Itapecerica
da Serra, state of São Paulo.
Natura arrives in Argentina and Peru.
1993 Launch of the Mamãe & Bebê line, which helps strengthen the
bond between parents and children.
1995 The Crer Para Ver (Believing is Seeing) Program is created
to help improve public education in Brazil.
1996 The first campaign using the Truly Beautiful Woman con-
cept is created for the Chronos line, expressing the idea that
a woman’s beauty does not depend on her age.
1998 By means of environmental impact analyses of all of its
processes, Natura begins to systematically monitor and
manage the environmental impacts of its activities.
Natura’s Board of Directors is created.
2000 Launch of the Natura Ekos line, which sustainably uses in-
gredients from Brazilian biodiversity.
Natura begins the Program for the Certification of Ingre-
dients.
2001 The Natura Plant in Cajamar (state of São Paulo) is inau-
gurated. It encompasses factories, warehouses, logistics, and
administrative activities in a building that complies with the
most advanced environmental requirements.
2003 The Natura Tododia line is created to turn the routine of
body care into a special ritual.
2004 Natura goes public on the São Paulo Stock Exchange
(Bovespa).
The company obtains the NBR ISO14001 environmental
certification.
2005 The Natura House in Paris, France, is inaugurated.
Operations start in mexico.
Natura obtains the NBR ISO9001 certification from the
Brazilian Association of Technical Standards.
The company begins to produce soaps using ingredients
from plants.
The Moviment Natura (Natura movement) is launched.
2006 The first Natura House in Brazil is opened, in Campinas,
state of São Paulo.
Animal testing ends in all of the company’s research
practices.
The first agreement for the sharing of benefits from access
to traditional knowledge is signed.
2007 The Carbon Neutral Program is launched. Natura undertakes
to reduce its greenhouse gas emissions by 33% within five
years and fully offset the emissions that cannot be avoided.
The first Natura plant outside São Paulo is opened with
the inauguration of the Benevides Industrial Plant in the
state of Pará.
Natura starts operations in Colombia.
All Natura’s products start to present an environmental table.
2008 Natura begins to implement the Natura management
System, a model of organization based on management by
process, catering to Business Units and Regional Units.
In order to streamline the relationship with our consultants
(sales representatives), Natura expanded the Natura Con-
sultant Adviser (NCA) model in Brazil.
2009 After 40 years in business, Natura reaches the historical
milestone of 1 million consultants.
Natura Conecta (Natura Connects) is launched: a virtual
community that brings our stakeholders closer to Natura.
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4
OUR
mOmENT
mESSAGE FROm THE CHAIRmEN
40 YEARS
SOWING
OPPORTUNITIES
Joys and hopes amidst the precarious balance of the world.
That was how we lived 2009. The impressive results Na-
tura produced renewed our energies and encouraged us
in facing the known but complex challenges posed to the
global society.
In a year characterized by the global economic crisis and the frustrating impasse in negotiating
an agreement on global climate change, we celebrated our 40 years of existence with some
important achievements, and the enthusiasm of more than 1 million consultants helped drive
our market share and increased the number of customers served. We fulfilled the commit-
ments assumed two years ago by remodeling Natura’s management and starting a new growth
cycle. As a result, we created more value for shareholders and for the long chain of people and
institutions connected to our business model. We had important, positive social impacts and,
among other environmental advances, we continued to reduce our relative carbon emissions.
Our strategy enjoyed the trust of shareholders and investors, a fact demonstrated in the se-
condary offering of shares, which increased Natura’s liquidity and its value.
We look at the future of our business over the next 10 years with confidence. The third largest
cosmetic market in the world, Brazil signals that it is entering a virtuous cycle of prosperity.
Our strong identification with its soul and development cheers us; we will continue with our
efforts to build a beautiful business and a fairer society that is more ethically committed to
future generations.
We also believe that if we improve our ability for dialogue with the cultural diversity that makes
up Latin America, which is so receptive to our products, values, and business opportunities, we
will be able to maintain high growth rates, in addition to contributing to the creation of socio-
environmental value. In more geographically and culturally distant regions, we will continue to
carefully evaluate new opportunities.
Our civilization is experiencing a crisis that requires major transformations. The challenges
related to climate, energy, water, food, health, security, and conservation of biodiversity and
cultural diversity cannot be avoided. We want Brazil to be one of the leading countries in the
development of an agenda of macro-changes, fully committed to the need for urgent progress
in climate negotiations at the end of 2010 in mexico.
We are convinced that we have an important role to play: the Natura brand, more so than our
business, is helping to build this new era, offering us the opportunity to innovate, to constantly
reinvent our work. Thus we will fulfill our vocation to strive to create economic, social, and
environmental value.
The respect and value of our brand are based on the quality of the relationships we have
with each and every one of our stakeholders. We recognize the need, and we reaffirm here
our commitment, to invest in the excellence of our services, in particular for our consultants.
Our Reason for Being, to promote Well-Being Well, whose essence is serving with excellence,
listening to yourself, others, and the world, is and will always be our great inspiration in our
persistent search for better and stronger relationships with our many stakeholders: the most
legitimate means of increasing the recognition of our brand.
This is how it has been since 1969, when a white rose delivered to each of our first customers
symbolized our pleasure to serve and our desire to contribute to the search for peace.
Pedro Luiz Barreiros Passos
Guilherme Peirão Leal
Antonio Luiz da Cunha Seabra
Co-Chairmen of the Board
of Directors
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5
mESSAGE FROm THE
EXECUTIVE COmmITTEE
mATURITY
BRINGS RESULTS
We have many reasons to celebrate 2009. The initiati-
ves of the past two years continue to bring the expec-
ted results in the short term, and they build the basis
of our company’s future development.
We reached the historical milestone of 1 million consultants. The strength of our operations
brought impressive progress in all the main economic, social, and environmental indicators.
Net revenues totaled R$ 4.2 billion, 18.6% higher than in 2008; EBITDA totaled R$ 1.0
billion, and our EBITDA margin was 23.8%. Net income totaled R$ 684 million, 32.1% higher
than in the previous year. We also increased the distribution of wealth to our stakehol-
ders and were more efficient in our environmental management, reducing by 5.2% relative
greenhouse gas emissions and offsetting the emissions of our chain by supporting socio-
environmental projects.
This performance is the result of an intense maturing process, reflected in a new company
management model based on three fundamental pillars - management by process, training
of leaders, and strengthening of our organizational culture – all indispensable requirements if
we are to perpetrate our corporate behavior in a constantly changing business environment.
In Brazil, we established an executive group and introduced the Business Units and the Re-
gional Units. With this we brought Natura closer to the local needs of consultants and end
users by localizing marketing and driving performance. As a result, in 2009 our net revenues
grew 18.6%, and we gained market share in the domestic market.
We are taking this management model to all areas of the company. Our international ope-
rations continue to grow and are establishing themselves in markets with great potential. In
2009, net revenues in local currency increased by 42.1%; we had around 160,000 consul-
tants and more than 1,000 employees in our operations in Argentina, Chile, Peru, Colombia,
mexico, and France. This is a scale that allows us to seek leadership positions and accelerate
our expansion strategy.
In Latin America, we want to be an important player who is committed to regional sus-
tainable development. To this end, we will adapt marketing, portfolio, logistics, and various
channels, such as sales communication, to meet the needs of each country.
We continued to invest in improving the quality of relationships with many of our stakehol-
ders in 2009, making progress on the sensitive issues of these relationships. As a result, we
improved the organizational climate in our operations with an increase from 72% to 74%
in favorable responses. In the case of suppliers, the increase was even higher: from 74% to
82%. We maintained the climate among our consultants at the same high rate of 90% of
favorable responses.
We have to recognize, however, that the provision of services to our consultants is not
yet of the high quality we seek in all our relations. This is a priority issue for Natura, as the
excellence in services is an intrinsic part of our value proposal. We have already adopted
short, medium, and long-term measures to give our company the competitive edge in servi-
ce provision. These measures did not result in significant improvements in 2009, but we are
confident that there will be perceptible improvements in 2010.
In the sphere of relationships with our customers, we increased our penetration even fur-
ther, reaching 3.5 million new homes, which were added to the more than 20 million homes
where the Natura brand is already present. We would like to thank our customers for their
trust, and we renew our commitment to offer high quality products that are innovative and
fairly priced.
Despite the better results for these indicators, the improvement in the quality of rela-
tionships should always be high on our agenda. This requires a collective effort to approach
and engage in continuous dialogue with all stakeholders.
We are aware of and enthusiastic about the fact that there is still a lot to improve in Natura’s
management model, which should allow for the development of people, the strengthening
of our culture and the continuing search for innovation. We believe that Natura is the result
naturaannualreport
6
of the unified efforts of many people who play different roles, but who have a common ob-
jective. We want to highlight the contribution of the Natura Consultant Advisers, who took
over a new and important role in the relationship between Natura consultants and our sales
team, and we want to thank, in particular, our employees for their support and hard work
in participating in the company’s management transformation project. This engagement will
allow us to respond to future challenges and to our own desire to actively participate in
this scenario of changes, always driven by the Beliefs that brought us here and that guide us
toward the future.
Alessandro Carlucci
CEO
João Paulo Ferreira
Senior Vice President of Supply Chain
José Vicente Marino
Senior Vice President of Sales and marketing
Marcelo Cardoso
Senior Vice President of Organizational
Development and Sustainability
Maurício Bellora
Senior Vice President of International Operations
Roberto Pedote
Senior Vice President of Finances, and Legal Affairs,
Telma Sinicio
Senior Vice President of Innovation
PROFILE
Over 40 years, we have built a cosmetics, fragrances, and personal hygiene company that is re-
cognized by a different value proposal: from a direct selling model, which generates income and
creates opportunities for more than 1 million consultants, our sales representatives, we deliver
to our customers products that promote well-being well, awaken the senses and awareness, and
establish new connections between individuals and their own selves, with others and with the
world. To this end, we try to keep our corporate behavior focused on the creation of sustainable
value, by developing quality relationships with society, and we have a commitment to the balance
among the economic, social, and environmental impacts of our businesses.
Our head office is in Cajamar, state of São Paulo, and we have commercial offices in five re-
gions of Brazil and in the following countries: France, Argentina, Chile, Colombia, Peru, and me-
xico. We have local distributors in Bolivia, Guatemala, Honduras, and El Salvador. In December
2009, direct employees in all of our operations totaled 6,260 professionals.
We have plants in Cajamar, state of São Paulo, and Benevides, state of Pará, where since 2006
we have been developing oils obtained from native trees and noodles (plant mass for soaps).
Our distribution centers are in Itapecerica da Serra (São Paulo), matias Barbosa (minas Ge-
rais), Jaboatão dos Guararapes (Pernambuco), Canoas (Rio Grande do Sul), and Simões Filho
(Bahia), the latter inaugurated in 2009. We have research and technology centers in our plants
in Cajamar and Benevides. Since 2006, the Advanced Technology Center in Paris, France, has
been bringing us closer to one of the most innovative and demanding cosmetics markets in the
world. To encourage the trial of our products and promote the training of our consultants, we
have six Natura Houses in Brazil, five of which were inaugurated in 2009, and another 10 are
distributed throughout our international operations: three in mexico, one in Argentina, three
in Colombia, two in Chile, and one in Peru.
We have been a listed company since 2004, with around 40% of our shares available on the
New market of the São Paulo Stock Exchange (Bm&FBovespa). Due to our commitment to
sustainability, in 2009 we appeared for the fourth consecutive year on the Corporate Sustai-
nable Index (ISE) of Bovespa (learn more on page 54)
naturaannualreport
7
mAIN HIGHLIGHTS OF THE YEAR
Economic
• Natura’s net revenues totaled R$ 4.2 billion, a growth of 18.6% in relation to
2008, increasing in both foreign operations and in Brazil.
• Natura’s market share in Brazil grew from 21.4% in 2008 to 22.5% in 2009,
according to the Brazilian Association of Cosmetic, Toiletry and Fragrance
Industry (Sipatesp/Abihpec).
• EBITDA amounted to R$ 1.0 billion, and the EBITDA margin was 23.8% in
2009, exceeding our forecast for a minimum rate of 23% for 2008, 2009,
and 2010.
• Net income totaled R$ 683.9 million, a growth of 32.1% from 2008.
• Foreign operations increased 42.8% in weighted local currency, and our
activities in Argentina, Chile, and Peru reached a proforma EBITDA of
R$ 8.9 million.
• We paid dividends amounting to R$ 552 million in 2009 on a cash basis, 30%
higher than in 2008.
• At the end of 2009, our cash balance amounted to R$ 500 million and our
net indebtedness corresponded to 0.2 times EBITDA for the year.
• The level of our services to our consultants was below our expectations. We
did not evolve as much as we wanted in the quality of the delivery of our
products, either with respect to timeframes or availability.
Social
• We exceeded the milestone of 1 million consultants, increasing their number
by 20.5% in Brazil and 33% in foreign operations.
• We launched the Trilhas (Trails) Project, within the Crer Para Ver (Believing
is Seeing) Program, in 210 Brazilian municipalities, reaching approximately
200,000 students from public schools (learn more on page 61).
• We implemented the Crer Para Ver (Believing is Seeing) Program – our
contribution to improving the quality of public education – in all Latin
American operations.
• We had 9.9% more employees in all operations. In Brazil, the turnover rate
fell to 7.5% in 2009 from 12.4% in 2008.
• We increased favorable responses with respect to organizational climate
among employees (to 74% from 72%) and suppliers (to 82% from 74%).
Environmental
• In 2009, we reduced our volume of relative greenhouse gas (GHG) emissions
by 5.2% by means of the Carbon Neutral Program.
• We recorded our highest rate in the use of renewable raw materials in our
product formulas: 79.2%, in comparison with 77.5% in 2008.
• We reduced the consumption of energy per unit billed by 19% but increased
the consumption of water per unit billed by 8.7%.
• We launched the Ekos Safra Açaí (Açaí Berry Harvest) line, which disseminates
awareness of cycles of nature.
• The share of product refills in billed items in Brazil was 18.4%, below the
target of 19%.
naturaannualreport
8
AWARDS AND RECOGNITIONS RECEIVED
BY NATURA IN 2009
COmUNICATION
RECoGnITIon
oRGAnIzATIon CATEGoRy AwARDED
ABERJE
Communication
Award
Aberje (Brazilian
Association
of Corporate
Communication)
FINANCES
Best Governmental Relations case study on the topic
Professionalism and Transparency in Relationships.
PLACE
1º
RECoGnITIon
oRGAnIzATIon CATEGoRy AwARDED
PLACE
Agência Estado
Distinguished
CompaniesAgência
Agência Estado
media group
Natura came 1st in all categories: General Ranking of the 10 Best
Companies Listed at Bovespa, Sustainability Category and New
markets Index.
Biggest and Best
Exame magazine
Best of Dinheiro
IstoÉ magazine
Natura was named the best company in the Consumer Goods category;
Natura was voted the Company of the Year in the Biggest and Best
Ranking.
Best company in the Pharmaceutical, Hygiene and Cleaning industry
Conjuntura
Econômica
Magazine: XVIII
FGV Corporate
Excellence Award
ABRASCA Award
Capital Aberto
Ranking
IR Magazine
Awards
Valor 1000
Brazil’s Intangibles
Awards (PIB)
INSTITUTIONAL
RECoGnITIon
Getúlio Vargas
Foundation and
Conjuntura
Econômica
magazine
Abrasca (Brazilian
Association of
Listed Companies)
Capital Aberto
magazine in
partnership with
Stern Stewart
IBRE – Brazilian
Institute of
Economics and FGV
– Getúlio Vargas
Foundation
Valor Econômico
newspaper
The Brander and
modern Consumer
magazine
Natura was voted the Best Company of the Year in the
Perfumery Category.
Natura was named the Industry’s Highlight in the “Retail and
Wholesale” segment.
Natura ranked 1st in the “Best Companies for Shareholders 2009”
award in the category of companies with a market value between
R$ 5 and R$ 15 billion.
Winner in the Best Socio-Environmental Sustainability Category.
Best Company in the Hygiene and Cosmetics Industry
Intangibles Award: We obtained the award in Sustainability Assets
and in the Non-durable Consumer Goods.
oRGAnIzATIon CATEGoRy AwARDED
most Admired –
Carta Capital
Carta Capital
magazine
most Admired Company in Brazil
most Admired Companies in the Hygiene, Cosmetics and
Perfumery Industry.
most Admired Companies in Key Factors: Commitment to HR,
Respect for Consumers, Ethics, The most Committed to Sustainable
Development and Social Responsibility.
1º
1º
1º
1º
1º
1º
1º
1º
1º
PLACE
1º
1º
1º
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INSTITUTIONAL
RECoGnITIon
oRGAnIzATIon CATEGoRy AwARDED
PLACE
Forum of Corporate
Leaders 2009
Líderes magazine
The Co-Chairman of the Board of Directors Guilherme Leal was
recognized as one of the leaders in the Cosmetics, Hygiene and
Cleaning Industry.
INFO
CORPORATE The
CIOs of the Year
IBGC Corporate
Governance Award
Época Negócios
100 most
Prestigious
Companies in Brazil
Brazil Entrepreneur
Award 2009
III France-Brazil
Foreign Trade
Award
FINEP Award
Info Exame
magazine
The IT Executive Officer, marcos Pelaez won as the executive
of the year in the Consumer Goods category.
Instituto Brasileiro
de Governança
Corporativa
(Brazilian Institute
of Corporate
Governance)
Época Negócios
magazine
Editora Brasil
Notícias e
Comunicação
Empresarial LTDA.
France Brazil
Chamber of
Commerce
Finep (Financial
Sponsor of Studies
and Projects)
We won in the “Evolution in Corporate Governance” category.
The most Prestigious Cosmetics Brand in Brazil.
Natura won in the “marketing 10” and “Excellence in Service
Provision” Category.
Natura won in the Villegaignon category (large company), for its
distinguished involvement in Brazil-France commercial relationships.
We won in the Large Company category.
1º
1º
1º
1º
1º
1º
1º
Intellectual Property
and Innovation
Award
Prospectiva
Negócios
Internacionais e
Políticas Públicas
Natura is among the ten most innovative Brazilian companies.
The “Intellectual Property and Innovation study: An Analysis of the
main Brazilian Companies and Universities” was conducted by the
Prospectiva consulting firm, which is specialized in international
affairs and public policies.
INTERNET
RECoGnITIon
oRGAnIzATIon CATEGoRy AwARDED
Top of mind
Internet Award
UOL media
website
We were recognized as the most remembered brand by
consumers on the Internet in the Beauty Products category.
among
the 10
companies
that
innovate the
most
PLACE
1º
BRAND
RECoGnITIon
oRGAnIzATIon CATEGoRy AwARDED
PLACE
Brands for
Decision makers
The most Valuable
Brands in Brazil
Jornal do Comércio
newspaper Porto
Alegre
IstoÉ Dinheiro
magazine
Recognized as the most remembered and preferred brand in the state
of Rio Grande do Sul in the Personal Hygiene and Beauty industry.
Natura ranked 5th among the most Valuable Brands.
Amanhã magazine
Top of mind Porto
Alegre
Amanhã magazine
Natura was awarded in two categories: Perfume and Company
Concerned with the Environment (ahead of Petrobras).
1º
5º
1º
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10
BRAND
RECoGnITIon
oRGAnIzATIon CATEGoRy AwARDED
The Strongest
Brands
DCI - Diário
do Comércio e
Indústria Award
marketing
Company of the
Year 2009
Reliable Brands
Renato Castelo
Branco Homage
IstoÉ Dinheiro and
BrandZ millward
Brown
DCI - Diário do
Comércio e
Indústria newspaper
Natura ranked 10th among the 12,800 Brazilians interviewed
and their most admired brands.
Natura won the award in the Hygiene and Beauty category.
marketing magazine
Natura was named by marketing magazine as the marketing
Company of the Year 2009 in the Cosmetics segment.
Seleções magazine
in partnership with
market research
company Ibope
ESPm Social
Named the most socially responsible company and Best Brand
in the “skin creams” category. Additionally, the CEO, Alessandro
Carlucci was named the “most reliable executive among Brazilians”.
Natura and Taterka agency won with the 2009 Natura Ekos –
Triphasic Oils campaign.
Top of mind 2008
minas Gerais
mercado Comum
magazine
Natura and Taterka agency won with the 2009 Natura Ekos –
Triphasic Oils campaign.
PLACE
10º
1º
1º
1º
1º
1º
HUmAN RESOURCES
RECoGnITIon
oRGAnIzATIon CATEGoRy AwARDED
PLACE
50 most Admired
HRs in Brazil 2008
Gestão e RH
publishing company
Homage to Claudia Falcão, Human Resources Director, as one
of the 10 most prestigious HRs in Brazil.
among the
ten best
HR Professional of
the Year Award
Editora Abril
publishing company
marcelo Cardoso was named the professional of the year 2009
in the Hygiene and Cleaning Industry.
Top Companies for
Leaders
Hewitt Associates
and Época
Negócios
Natura is the best company in Latin America (1st), Natura is the
11th among the best companies in the world in Leadership –
global ranking.
Company of
the Dreams of
Youngsters
SUSTAINABILITY
RECoGnITIon
The 100 Best in
Corporate Civic
Awareness 2008
Exame Sustainability
Guide
DmRH Group and
Cia de Talentos
Awarded in the ranking of the 10 most favorite companies
of Brazilian youngsters.
oRGAnIzATIon CATEGoRy AwARDED
Gestão & RH
publishing company
Awarded among the best companies in the Environmental
Responsibility category.
Exame magazine
Among the 20 most distinguished companies in Brazil.
Eco Amcham
Eco Amcham
We won in the Sustainable Business model module with
the case study “Engagement of Stakeholders in Biodiversity”.
1º
1º
6º
PLACE
among the
ten best
among the
twenty
best
1º
naturaannualreport
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SUSTAINABILITY
RECoGnITIon
oRGAnIzATIon CATEGoRy AwARDED
SAm/SPG
Leadership Award
SAm Sustainability
mr. Luiz Seabra, Co-chairman of the Board of Directors of Natura
was named one of the world leaders in sustainable business
management.
PLACE
1º
Época Climate
Change
Época magazine
Natura distinguished itself as one of the Leading Companies in
Climate Policies of the 2009 Época Climate Change Award.
among the
twenty best
Socially Responsible
Company Badge
mexican Center
for Philanthropy
(Cemefi) and
Alliance for Social
and Corporate
Responsibility in
mexico (Aliarse)
Natura mexico was recognized for its socially responsible
management as part of the company’s culture and business strategy.
certificate
PRODUCT AND PACKAGING mARKETING
RECoGnITIon
oRGAnIzATIon CATEGoRy AwARDED
PLACE
ABRE Design
Atualidade
Cosmética
ABRE (Brazilian
Association of
Packaging)
Atualidade
Cosmética
magazine
New Beauty Award
Nova magazine
We won in the Graphic Design, Product Family and marketing
with the massaróca Naturé Line.
Line/Product for Children: massaróca Naturé
American Perfumery for Women: Humor 5
Aparício Basilio da Silva Award – Best National Perfume Creation for
Women: Humor 5
Aparício Basilio da Silva Award - Best National Perfume Creation for
men: Natura Homem Nitro,
Company of the Year 2009 and Professional of the Year – Alessandro
Carlucci.
Natura won in the Best Cleaning Product category with the Natura
Chronos Cleaning Gel Soap;
The best company in the shower category with the Açaí berry
Triphasic Oil;
The best company in the The Classics of Nova category with
Diversa Lápis Kajal;
Perfumery, Natura Águas de Banho.
1º
1º
1º
naturaannualreport
12
NATURA VALUE CHAIN
Natura’s main performance indicators in 2009
related to the stages of our value chain are:
1. Extraction and transportation of raw materials
and packaging (direct and indirect suppliers)
R$ 2.7 billion distributed to suppliers
82% of suppliers were satisfied
31 certified ingredients
105,570 mt of GHG emissions related to the
extraction and transportation of raw materials
and packaging
23,606 mt of GHG emissions per direct supplier
(process and transportation to Natura)
1
2. Industrial and internal processes
R$ 643 million invested in innovation
R$ 111.8 million investidos em inovação
0.52 liter of water consummed per unit billed
447.3 kjoules of energy consummed per unit billed
31.5 grams de resíduos gerados por unidade faturada
14,767 metric tons of GHG emission in
internal processes
4. Use of products and disposal of packaging
18.4% of refills on items billed
69.5 mPt/kg is the environmental impact of packa-
ging per number of products¹
57,873 tons emissions related to the final disposal
of products and packaging
1. The indicator also includes effects on the extraction
and transformation of packaging.
3. Sale of products (transportation and distribution)
R$ 2.3 billion distributed to consultants
1 million consultants in all operations
88% of satisfied consultants
103 new products launched
43,980 tons of GHG emissions related to transpor-
tation of products to consultants and consumers
CRoSS-SECTIonAL
InDICAToRS
R$ 1.5 billion paid to the government
R$ 551.9 million distributed to shareholders
R$ 683.9 million in net income
R$ 4.2 billion in net revenues
R$ 1.0 billion in EBITDA
23.8% the EBITDA margin
R$ 59.9 million invested in corporate responsibility
naturaannualreport
13
324
GOVERNANCE
In 2009, corporate governance at Natura greatly changed. It had begun to take shape in the
1990s but became more consistent in 2004, when the company went public and listed its shares
on the New market of the São Paulo Stock Exchange (Bm&FBovespa).
The Board of Directors, the highest administrative authority at Natura, consists of three founding
partners and four external members, two of which are independent. The board members were
chosen according to their qualifications, knowledge of sustainability, the complementary nature
of their executive experiences, and lack of conflicts of interest. Part of the Board members’ re-
muneration is fixed and paid monthly, and another part is variable, linked to economic, financial,
social, and environmental goals, and paid annually.
In 2009, we raised the bar, the result of progress in the operation of the Board and in the streng-
thening of its four supporting committees: Strategy; Corporate Governance; Organization and
People; and Audit, Risk management, and Finance.
The Organizational and People Committee, which was formerly composed of Natura insiders,
was reinforced by Fátima Raimondi, chairman of Ericsson Brazil, a company recognized for its tra-
dition of good people management. Her membership was approved and made official in 2009,
and Raimondi started to effectively participate in February 2010.
meanwhile, the Audit, Risk management, and Finance Committee, which is responsible for the
analysis of scenarios related to accounting, fiscal, tax, corporate, and new investment issues, star-
ted to count on a second independent member: Gilberto mifano, vice president of the Brazilian
Institute of Corporate Governance (IBGC), former chairman of the Bovespa’s Board of Direc-
tors, and known for being a professional with wide experience in corporate governance. Celso
Giacometti, who until 2008 was the only external member of the Audit Committee, was repla-
ced by Taiki Hirashima, former consultant of the World Bank and an expert in accountancy.
In 2009, the Strategy Committee became even more active, and its members met 13 times, de-
dicating twice as much time to the analysis of topics of interest to the Board of Directors.
The progress in corporate governance provided Natura with a IBGC award in 2009, in the Evo-
lution category. Our model is also recognized internationally. The company has been a member
of the Company Circle of Latin American Corporate Governance, an association made up of a
group of Latin American corporations, chosen by the International Financial Corporation (IFC)
of the World Bank based on their governance practices. In 2009, this group launched a guide
containing successful case studies of member companies.
EVALUATION OF SENIOR mANAGEmENT
In the first half of 2009, we conducted a structured self-evaluation process with our board mem-
bers and members of the Committees. This was the third evaluation since the creation of the
Board 11 years ago. The first was in 2006, and the second, in 2007.
The process was carried out in the ambit of the Governance Committee, which conducted
a series of individual interviews. The main notes and conclusions were compiled into a single
document, which was subsequently presented to the Board itself. Among the progress arising
from the self-evaluation are the reinforcements of new external participants in the People and
Organizational Development and Audit, Risk management and Financial committees.
EXECUTIVE GOVERNANCE
The Executive Committee (Comex) established itself as the main executive authority of
Natura and manages corporate affairs related to decisions on the Brazilian market and
foreign operations. It is made up of the CEO, Alessandro Carlucci, and the Senior Vice
Presidents of Natura.
In 2009, João Paulo Ferreira joined Comex as Senior Vice President of Supply Chain, as
did Telma Sinicio, as Senior Vice President of Innovation, the first woman to hold a senior
vice president position in Natura. This decision-making authority is supported by six com-
mittees that act as divisions of Comex and represent the executive authority in initiatives
related to brand management, ethics, commercial innovation, sustainability, products, and
processes.
They all repor t to the CEO and meet monthly – except for the Product Committee,
which meets on a weekly basis, and the Ethics Committee, which meets every six months
or whenever necessary.
naturaannualreport
14
Board of Directors
Pedro Luiz Barreiros Passos - Co-chairman
of the Board of Directors in office
Antonio Luiz da Cunha Seabra - Co-chairman
of the Board of Directors
Edson Vaz Musa - member of the Board
Guilherme Peirão Leal - Co-chairman of the Board
of Directors
José Guimarães Monforte - member of the Board and
Chairman of the Audit, Risk management, and Finance
Committee
Julio Moura neto - member of the Board
and Chairman of the Strategy Committee
Luiz Ernesto Gemignani - member of the Board and
Chairman of the Organization and People Committee
Natura’s Executive Board in 2009
Natura Executive Comittee
Alessandro Carlucci - CEO
João Paulo Ferreira - Senior Vice President
of Supply Chain
José Vicente Marino - Senior Vice President
of Sales and marketing
Marcelo Cardoso - Senior Vice President of
Organizational, Development and Sustainability
Maurício Bellora - Senior Vice President
of Internationalization
Roberto Pedote - Senior Vice President
of Financial and Legal Affairs
Telma Sinicio - Senior Vice President of Innovation
André Urani – Superintendent of Natura Institute
Alessandra da Costa - Human Resources Vice President – Brazil
Angel Medeiros – Logistics Innovation Vice President
Armando Marchesan neto – Customer Services Vice President
Arnô Araújo – Commercial Vice President - Natura mexico
Cecília Riviello – General Vice President mexico
Daniel Gonzaga – Research Vice President
Denise Alves – Culture and Organizational Climate Vice President
Denise Figueiredo – Business Unit Vice President - Platform C
Erasmo Toledo – Commercial management Vice President
Flávio Contini – International Finance and Legal Affairs Vice President
Flávio Pesiguelo – Organizational Development and Sustainability Vice President
Gilberto Xandó – Business Unit Vice President - Platform D
Guto Pedreira – Business Unit Vice President - Platform A
Heriovaldo Silva – Commercial management Vice President - Latam
Jorge Rosolino – Finance Vice President - Brazil
José Renato da Silveira – Shared Services Central Vice President
Lucilene Prado – Legal Vice President
Luis Bueno – Brasil Central Regional Vice President
Minoru Suga – South Regional Vice President
Marcello Rodrigues – Product Availability Vice President
Marcos Pelaez – Information Technology Vice President
Marcos Vaz – Sustainability Vice President
Moacir Salzstein – Corporate Governance Vice President
Mônica Gregori – Business Unit Vice President - Platform B
nestor Felpi – International Order Cycle Vice President
Pedro Villares – Latin America Business Vice President
Renato Abramovich - North Northeast Regional Vice President
Ricardo Faucon – Supplies Vice President
Rodolfo Guttilla – Corporate Affairs and Government Relations Vice President
Romina Broda – General Vice President – Argentina
Rogério Cher – Corporate Human Resources Vice President
Tatiana Pignatari – Business Unit Vice President – Latam
Victor Fernandes – Product Development Vice President
naturaannualreport
15
Strategy Committee
It is made up of three Board members, Pedro Luiz Barreiros Passos, Julio moura Neto and
Edson Vaz musa, in addition to the CEO, Alessandro Carlucci. They analyze the strategic issues,
preparing guidelines and recommendations for the Board. Among the main actions of the
Committee in 2009, we note the increase in the duration of the monthly meetings, which star-
ted to take all day long and not half a day anymore. The Committee monitors the 16 strategic
projects that are currently in progress and discusses Natura’s long-term strategies.
Corporate Governance Committee
Among its functions is the discussion of improvements and progress in the governance pro-
cess and business operation. made up of four Board members: Pedro Luiz Barreiros Passos,
Guilherme Peirão Leal, José Guimarães monforte and Júlio moura Neto, in addition to moacir
Salzstein, Corporate Governance Director. They meet on a quarterly basis and, in 2009, they
met four times. In 2009, the Committee was responsible for the self-evaluation process of the
Board of Directors and its support committees.
Organization and People Committee
It is made up of three Board members: Pedro Luiz Barreiros Passos, Edson Vaz musa and Luiz
Ernesto Gemignani; an external member (as from 2010), Fátima Raimondi; the CEO, Alessan-
dro Carlucci; and the Senior Vice President of Organizational Development and Sustainability,
marcelo Cardoso. They meet monthly, however, in 2009, 10 meetings were held. Among the
topics addressed by the committee are issues related to compensation, leadership projects,
succession, and training and topics of interest to the Human Resources area
Audit, Risk management and Finance Committee
It is composed of the Board member José Guimarães monforte; two external members,
Gilberto mifano and Taiki Hirashima; the Senior Vice President of Financial and Legal Affairs,
Roberto Pedote; the Corporate Governance Vice President, moacir Salzstein; and the Risk
management and Internal Auditor manager, mercedes Stinco. The group meets on a monthly
basis and, in 2009, it met 12 times. The Committee is responsible for supporting the Board
in its analysis of financial matters, risks, and the relationship with external auditors. The news
for this Committee in 2009 was the addition of an external member, the replacement of a
member and the inclusion of the Corporate Governance Vice President.
Sustainability Committee
To ensure that sustainability permeates Natura’s entire governance model, the Sustainability
Committee serves as a preparatory forum for the decisions of the Executive Committee and
also contributes to the analysis of the Board. The coordination of the Sustainability Committee,
which meets monthly, is in charge of the Sustainability Office, which monitors the inclusion of
and the balance between the social, environmental and economic variables in the action plans
conducted by the many projects and departments of the company. It is composed by the
Board members Guilherme Peirão Leal and Pedro Luiz Barreiros Passos; the CEO, Alessandro
Carlucci; the Senior Vice Presidents of Organizational Development and Sustainability, marcelo
Cardoso, of Supply Chain, João Paulo Ferreira, and of Innovation, Telma Sinicio; and by the Vice
Presidents of Corporate Affairs and Government Relations, Rodolfo Guttilla, Sustainability,
marcos Vaz, and Legal Affairs, Lucilene Prado.
Process Committee
At the end of 2009, the Process Committee was created to provide executive support for the
implementation of the management system by processes at the company. It is made up of the
CEO, Alessandro Carlucci; the Senior Vice President of Organizational Development and Sus-
tainability, marcelo Cardoso; the Customer Service Vice President, Armando marchesan; the
Platform C Business Unit Vice President, Denise Figueiredo; the Brazil Central Regional Vice
President, Luis Bueno; the Information Technology Vice President, marcos Pelaez; the Corpo-
rate Human Resources Vice President, Rogério Cher; and the management System manager,
Daniel Levy. This committee meets on a monthly basis.
naturaannualreport
16
Brand Committee
The Brand Committee meets once a month to address topics related to Natura’s brand and
sub-brands. The main discussions are focused on the architecture of the brand, the adequacy
of the sub-brands to Natura’s value proposal and beliefs and on issues such as the language
and evolution of the brand. This committee is composed of the CEO, Alessandro Carlucci; the
Senior Vice President of Sales and marketing, José Vicente marino; the Senior Vice President
of Organizational Development and Sustainability, marcelo Cardoso; the Corporate Affairs and
Government Relations vice president, Rodolfo Guttilla; and the brand managers, Ana Luiza Alves
and Karen Cavalcanti.
Quality of Relationships Committee
This Committee monitors the relationship plans established for each of our stakeholders and
the evolution of these relationships. This Committee meets every two months. It is made up of
the Senior Vice President of Organizational Development and Sustainability, marcelo Cardoso;
the Sustainability Director, marcos Vaz; the Ombudswoman, Estelita Thiele; and those respon-
sible for communicating with the stakeholders: supplier communities, suppliers, shareholders,
consultants and NCAs, surrounding communities, employees, government and consumers.
RISK mANAGEmENT
Natura uses the analysis of two risk groups: strategic, which takes into consideration sce-
narios that may affect the company’s continuity, and operational, which focuses on internal
processes that are regularly checked by managers and their respective teams. In both cases,
the evaluation of risks includes economic, social, and environmental aspects.
In 2009, we implemented Control Self-Evaluation in Natura’s entire chain of processes. The
main operational risks and the controls of all processes were identified, totaling approxima-
tely 100. The self-evaluation involved the application of approximately 180 questionnaires
and mobilized around 170 managers. The most important risks were forwarded to our 2010
Natura Strategic Planning. In the processes where we identify high risks, we develop action
plans to mitigate them.
As part of a movement for the continuous improvement of the whole management model,
in 2009 we started to develop a more comprehensive contingency plan for Natura, based
on the actions necessary to mitigate strategic risks.
INTERNAL AUDIT
Natura’s Internal Audit department is made up of 20 employees who report only to the
Audit, Risk management and Finance Committee. The fact that this group does not report
to any other area of the company helps to guarantee the impartiality of its work. Natura
internal audits use a set of tests and procedures in the many processes of the company to
evaluate the internal controls environment, and they also look into possibilities of fraud. In
2009, we audited nearly twice as many processes than in 2008: 13 audit exams compared
to seven.
In 2009, the Internal Audit department received 24 cases involving all operations, reported
by different channels, especially the Natura Ombudsman’s Office. Twelve cases of irregula-
rities were proved; those that were cases of misconduct resulted is six employee dismissals
and one warning. The survey does not include cases involving third parties. All cases helped
us improve our control mechanisms.
COmPENSATION OF KEY mANAGEmENT PERSONNEL
Our organizational evolution, which has been taking place since 2008, involved the adoption of a
management model based on processes, which are at the service of more independent business
and regional units, imposing on Natura a revision of its compensation structure so as to increase
the variable component by means of adjustments in Profit Sharing.
For a group of executives, which includes the company’s chief executive officer, senior vice presi-
dents, officers and senior managers, we have consistently tied the gains with not only the short-
term results generated but also, and primarily, with the commitment to our long-term project.
This practice was adopted by means of the Share Purchase or Subscription Option Program,
with an aim to stimulate the necessary entrepreneurship and engagement of executives, as well
as the assumption of risks.
naturaannualreport
17
The design of the Share Purchase Option Program aims to ensure the sense of ownership and
involvement, strengthening the relationship between compensation and gains and the creation of
the company’s value, in addition to healthy growth with the balanced distribution of results when
allowed by the business profitability.
The Share Purchase or Subscription Option Program has provided, since 2009, that the granting
of the option to purchase or subscribe shares is associated with the executive’s decision to invest
at least 50% of the amount received as profit sharing in the acquisition of Natura’s shares. The
shares can only be exercised after a vesting period of three years for 50% of the shares, and of
four years for 100% of the shares. In both cases, there is an eight-year validity, and the shares
are not available for sale until the end of the third year. Until 2008, the vesting period had been
three years, the plan expired after six years and it did not require the purchase and holding of
the shares. As it is now, long-term commitment is stimulated, and executives have more time to
exercise their options.
In 2008, we had a ceiling established by the Board of Directors of 0.6% a year and 3% of Natura’s
total shares. The model established in 2009, which is more aggressive, provides for an annual
limit of 0.75%, totaling a maximum of 4% of Natura’s shares. In December 2009, the volume of
options held by executives represented around 1.29% of the company’s shares compared to
1.1% in December 2008.
The Program’s history is as follows: since 2002, we have granted 19,551,076 options and 22% of
these options were cancelled due to executives leaving.
nUMBER oF oPTIonS
Plan
Granted
Exercised
Mature
Balance
Non-Mature
Balance
Cancelled
22002
2003
2004
2005
2006
2007
2008
2009
2010
Total
3,533,610
3,969,220
1,901,460
1,120,760
1,153,756
1,305,508
1,800,010
2,735,657
2,031,095
19,551,076
2,712,645
3,359,160
1,544,986
421,329
45,096
0
0
0
0
8,083,216
0
0
61,077
230,025
577,623
361,559
0
0
0
1,230,284
23%
0
15%
0
16%
0
42%
0
46%
0
45%
361,559
39%
1,089,064
10%
2,465,384
2,031,095
0%
5,947,102 4,290,475 22%
820,965
610,060
295,397
469,406
531,037
582,391
710,946
270,273
0
APPRECIATIon oF THE PLAnS
Valores em Milhares de R$
Potential
Restated Real Desont
Amount of Obtained in
the Plan
the Year
Discount
Obtained Discount of the Non-Mature Status of
the Plan
Potential Discount of the
in the Year* Mature Balance
Balance
Plan
2002
2003
2004
2005
R$ 6.60
R$ 3.70
R$ 9.09
R$ 19.51
42,412.4
66,917.3
24,543.9
3,189.2
50,320.5
76,807.9
26,627.5
3,300.2
0.0
0.0
1,590.9
3,594.8
2006
R$ 29.08
223,7
227,3
3.502,5
2007
R$ 27.50
2008
R$ 21.35
2009
R$ 23.29
2010
R$ 34.17
0,0
0,0
0,0
0,0
0,0
0,0
0,0
0,0
2.763,5
2,763.5
0,0
0,0
0,0
15,017.0
29,297.1
2,049.0
0.0
0.0
0.0
0.0
0,0
Expired
Expired
Expired
100%
Mature
100%
Mature
50%
Mature
non-
Mature
non-
Mature
non-
Mature
50%
MATURE
100%
MATURE
EFFECTIVE-
nESS
04/10/2005
04/10/2006
04/10/2007
03/16/2008
03/29/2009
04/25/2010
04/22/2011
04/22/2012
03/19/2013
04/10/2006
04/10/2007
04/10/2008
03/16/2009
03/29/2010
04/25/2011
04/22/2012
04/22/2013
03/19/2014
04/10/2008
04/10/2009
04/10/2010
03/16/2011
03/29/2012
04/25/2013
04/22/2014
04/22/2017
03/19/2018
Total
137,286.5
157,283.4
11,451.8
49,126.6
(*) Accumulated amounts, adjusted based on the Broad Consumer Price Index (IPCA) until March 2010. On March 19, 2010,
NATU3 was quoted at R$ 35.14. Natura shares on March 15, 2010 – 430,324,496.
naturaannualreport
18
VARIABLE COmPENSATION
The Board of Directors also established that the total annual Profit Sharing, which is the basis of the
long-term compensation program, is limited to 10% of net income. With these limits, Natura has a
consistent and well-controlled system that avoids the recent distortions in executive compensation
seen in other countries.
The variable component, whether a short-term compensation or long-term gains, represents a
larger portion for senior executives compared to the other employees because we believe in the
joint creation of value. In addition to the well-defined limits, all variable compensation is tied to
the effective attainment of targets and the surpassing of minimum growth expectations annually
established by management.
The criteria that determine the scope of variable compensation take into account performance
indicators that cover the three sustainability dimensions. In 2009, the following indicators were
taken into consideration:
• Economic - consolidated EBITDA, Brazilian and foreign operations;
• Social - organizational climate survey among employees from Brazilian and foreign operations,
satisfaction survey with consultants, and the Non-Service Rate (NSR), which represents the
percentage of products unavailable for sale upon the placement of orders by our consultants,
which is also measured for both Brazilian and foreign operations;
• Environmental – carbon emissions.
See below the compensation amounts of the main groups of professionals:
2009
Avarage
Number of
Employees
Total
Salary
(in millions)1
Total
Variable
(in millions)2
8
4
Board
Executive Committee
Senior Management
and officers
Middle Management
Administrative
Sales force
operational
Total 2009
74
283
903
981
2.239
4,492
5.06
2.38
19.77
32.86
44.63
43.76
37.09
185.56
1.33
6.35
20.17
20.50
5.59
46.25
5.59
105.79
2008
Avarage
Number of
Employees
Total
Salary
(in millions)
Total
Variable
(in millions)
7
6
Board
Executive Committee
Senior Management
and officers
Middle Management
Administrative
Sales force
operational
Total 2008
81
302
971
1,097
2,132
4,597
2.64
5.45
24.31
39.85
53.54
43.81
37.89
207.50
1.33
7.29
21.22
22.57
8.67
40.06
8.63
109.77
2010 Stock
Options Palan
(in mumber
of options)3
338,030
345,626
1,347,440
0
0
0
0
2,031,095
2009 Stock
Options Palan
(in mumber
of options)
0
694,726
2,040,931
0
0
0
0
2,735,657
naturaannualreport
19
2007
Avarage
Number of
Employees
Total
Salary
(in millions)
Total
Variable
(in millions)
6
5
Board
Executive Committee
Senior Management
and officers
Middle Management
Administrative
Sales force
operational
Total 2007
85
316
1,009
1,149
2,094
4,664
2.28
3.70
23.58
39.52
54.14
40.79
35.84
199.85
0.00
2.58
13.52
13.12
3.38
30.98
4.11
67.70
2006
Avarage
Number of
Employees
Total
Salary
(in millions)
Total
Variable
(in millions)
5
6
Board
Executive Committee
Senior Management
and officers
Middle Management
Administrative
Sales force
operational
Total 2006
72
270
920
1,008
1,760
4,042
2.56
4.55
19.21
32.97
48.33
35.11
29.96
172.70
0.00
2.51
10.15
12.20
4.21
25.97
5.16
60.21
2008 Stock
Options Palan
(in mumber
of options)
0
454,573
1,273,504
71,933
0
0
0
1,800,010
2007Stock
Options Palan
(in mumber
of options)
0
290,568
961,534
53,406
0
0
0
1,305,508
(1) Total Salary: Includes annual average base salary over 12 months (without charges) and Overtime (with Remunerated
Weekly Rest – DSR) in millions.
(2) Total Variable: Total Salary plus Bonuses, Profit Sharing and Sales Bonuses (with DSR).
(3) The number of options refers to the plan of the current year.
Note: The profit sharing refers to the year it was earned, and is paid in the subsequent year.
CAPITAL mARKETS
In 2009, a secondary public offering of shares took place, increasing to 39.5% from 26.2% the
portion of total capital of Natura available for trading on the market at the price of R$ 26.50
per share. The offering raised approximately R$ 1.5 billion. As a consequence, new shareholders
could join our shareholder base (see page 54). In line with the best governance practices, which
recommend the reduction of restrictions for the purchase of shares, Natura decided to soften
the poison pill clauses adopted in 2004 when the company went public. These clauses are rules
that protect the company against hostile takeovers. At the time, the rules were quite justifiable.
Now, however, Natura has achieved sufficient size and maturity in its relationship with the capital
markets to allow us to soften such restrictions.
Natura’s previous rule determined that a shareholder or group of shareholders holding 15% of
the shares must make an offer to buy the shares of all the other investors for a purchase price
that included a premium of 50%. After the change, this percentage went from 15% to 25% and
the premium requirement was removed. Despite the maintenance of this clause, it was deter-
mined that any offer can only be formalized based on a decision of shareholders at an Annual
Shareholders’ meeting.
The governance was responsible for the flow of processes, at first, within the Audit Committee
and later, within the Board, which convened an Extraordinary meeting that was held on August
5, 2009. The entire process was supported by the legal affairs department.
This flexibility resulted in a change in our By-laws and was interpreted as a pioneering attitude of
Natura in the capital markets. Currently, more than 60 companies listed on the Bm&F Bovespa
have poison pill clauses. It was Natura itself that decided to amend the clause. There was no
emergency, obligation or pressure by the shareholders or any other stakeholder for this decision.
However, we believe that this was the ideal moment for making it more flexible due to the gre-
ater maturity achieved by Natura’s corporate governance
naturaannualreport
20
WHAT WE
AIm FOR
PROSPECTS
We believe that the 21st century agenda will be guided by a low-carbon economy, conscious
use of natural resources, and the development of quality relationships. The companies that are
aligned with the precepts of sustainable development and are attentive to the opportunities
imposed by the sustainability crisis will continue to be competitive in the face of this new
scenario.
Natura strives to lead in this environment of changes, and 2009 represented another impor-
tant moment in its progress. We successfully predicted the effects of the international crisis:
lower exposure of the Brazilian economy; resilience of the personal hygiene, fragrances, and
cosmetics sector; strength of the Natura brand; and the competitive advantage of the direct
sales business model.
The impressive results for 2009 and the recent changes in our management encourage us to
look to the future with optimism. Year after year, we have achieved growth higher than our
sector’s average, which proves the acceptance of our value proposal in the markets where we
operate, all with great potential for expansion.
The economic expansion expected for Brazil over the coming years, with the consequent
improvements in income distribution and increase in women’s participation in the economy,
points to an acceleration in the growth of the Brazilian cosmetics, fragrances, and personal hy-
giene market. In Latin America, we have reached a size that allows us to start a new expansion
phase, always committed to sustainable regional development.
In order to improve the quality of our services, allow for future growth, and continue to increa-
se production gains, we are increasing our investments in industrial training and logistics, as well
as in information technology, integrating the many sites and operations.
mARKET CONTEXT
The target market in Brazil grew in nominal value by 15.2% in 2009, according to partial figu-
res from the Brazilian Association of the Cosmetic, Toiletry abd Fragrance Industry (Sipatesp/
Abihpec). The direct sales segment also kept its growth pace in Brazil and handled R$ 21.85
billion in 2009, an 18.4% increase over the previous year.
At the end of 2009, the Brazilian Direct Selling Association (Abved) accounted for 2.37 million
active resellers, which represented an increase of 17% in this sales channel over 2008. Accor-
ding to the Euromonitor agency, Brazil became the largest direct sales market in the world
for cosmetic, fragrance, and personal hygiene products, ahead of countries such as the United
States and Japan.
Natura’s market share in the target market in Brazil continued to grow in 2009, moving from
21.4% in 2008 to 22.5% in 2009., Although we do not yet have consolidated data, we can
affirm that we also gained market share in the other Latin American countries.
SUSTAINABILITY mANAGEmENT
Natura is recognized in Brazil and the world for its unceasing efforts to infuse sustainability into
the company’s day-to-day business. Our main challenge, however, is to improve the combined
management of the economic, social, and environmental aspects throughout the processes of
the company.
naturaannualreport
21
Sustainability is a cornerstone of Natura’s Strategic Planning approved by the Board of Direc-
tors. We have also included socio-environmental indicators in our strategic targets. We want
to be innovative regarding social and environmental demands in the present and in the future
in all countries in which we operate, and we are attentive to the risks and opportunities that
involve climate change, social inequality, and scarcity of natural resources.
Every two years, we reflect on the most important aspects of the business in these regards,
including impacts on our stakeholders (more information on page 112). The Sustainability
Committee reports on these aspects to senior management, which discusses the risks and
opportunities related to them. The sustainability management process includes the sustainable
use of biodiversity and the quality of relationships, which covers all our efforts on education
about the relationship and dialogue with stakeholders.
The Sustainability Office, which is linked to the Office of the Senior Vice President of Organi-
zational Development and Sustainability, is responsible for safeguarding this management pro-
cess, acting as a mobilizer, instructor and disseminator of the practices to the whole company
and ensuring that all have social and environmental indicators and targets when conducting
the company’s day-to-day business.
We are also including and harmonizing our sustainability practices in our international operations.
In 2009, we created the Sustainability Office for Latin America in order to strengthen sustainabi-
lity management in the other Latin American countries where we operate.
ABOUT THIS REPORT
This is our tenth sustainability report prepared based on Global Reporting Initiative
(GRI) guidelines. For the third consecutive year, we declared the A+ application level,
with external verification conducted by Det norske Veritas (DnV) and data checked
by GRI itself.
we present information on all our operations, but most indicators still refer to the
Brazil-ian operations. The progressive consolidation of data on all operations helps
us continually improve the report. The criterion for selecting the information for the
printed version focused on the relevance of the topics for natura and its stakehol-
ders.
COLLECTIVE CONSTRUCTION
In line with our strategy to increasingly involve our stakeholders in the development
of the desired future, we began for the first time in 2009 to prepare a wiki Report,
the content of which is being developed collaboratively with our stakeholders.
The main objective of the process was to start a journey to transform the Annual
Report into a living document, to serve as communication and continuous dialogue
with stakeholders. To this end, six virtual discussion forums were held by means of
the natura Conecta platform, one for each high-priority sustainability topic: Ama-
zon, Biodiversity, Education, Greenhouse Gases, Impact of Products, and Quality
of Relationships. The results were included in this report and will be considered in
the preparation of our Strategic Planning.
Stakeholders were invited to visit the discussion forums on high-priority sustai-
nability topics and post their messages. Each forum had an introductory text, an
invitation to reflection, in addition to a video film produced by natura on the
respective topic. The video explained why the topic is important to society and to
natura, presented the actions we develop that are related to the topic and asked
the participant: what do you think about this matter? Do we manage to make a
positive contribution with respect to this topic? How can we improve?
naturaannualreport
22
To encourage more people to engage in the process, we distributed to the people
registered in natura Conecta forms via e-mail with questions on the adherence
of natura’s actions regarding the high-priority topics, opportunities, and improve-
ments. In addition to the discussions that took place in the forums, we considered
in the analysis the 320 replies sent between February 4 and 10, 2010, by employees,
consultants, consumers, and suppliers.
we found that much of what has been offered by our stakeholders was in line with
our thinking. This activity represents an opportunity to evolve our process of dia-
logue with our stakeholders and to include their voices in natura’s management.
Systematizing responses led to the collective development of the text on the follo-
wing page, which was validated by our stakeholders through the virtual platform.
we thank all the participants and invite our readers to engage in our dialogue.
THE NATURA WE SHARE
we recognize that natura is a company that is committed to social and environmental
issues, concerned with the impacts of its products, and open to dialogue. we notice
its respect for nature and regional culture, its vanguardism in the sustainable use of
raw materials and biodiversity, and in the creation of value to suppliers, consultants,
and the people who live in the Amazon. For this reason, we expect from natura more
efficiency in its actions and support its playing a greater lead role in bringing awareness
to society.
we believe that natura is an example for people and the market, and it has a role in
shaping opinions, bringing awareness to the corporate segment, promoting and disse-
minating its good practices, and mobilizing the creation of an innovative movement that
involves other companies, suppliers, universities, non-governmental organizations, and
public authorities.
Therefore, communication is an important focus of attention, whether in the way
natura communicates its value proposal to society by means of the media, or the
service to stakeholders through the communication channels that have already been
established, such as the website, the natura Customer Service (nCS), and the natura
Service Center (nSC). we understand that natura’s communications with its con-
sultants, and their communications with consumers, can be improved, as well as the
communications with those inside the company. The existing channels can be further
explored, mobilizing society and encouraging sustainability actions.
There are opportunities for improvement on many other fronts. we suggest that na-
tura expand its sustainable work in the use of biodiversity to other regions of Brazil.
we verified that its actions are concentrated on the Ekos line, which uses raw mate-
rials from the Amazon rainforest, and we see the possibility of expanding these actions
to other product lines and geographic areas.
we support the search for new technologies and the constant improvement of pro-
ducts and packaging, as well as the investment in reverse logistics, which collects empty
packaging after use and properly forwards them for recycling.
we suggest that natura increase investments in the training of consultants so that they
will have more opportunities to engage in socio-environmental projects and dissemi-
nate them to society, expanding the company’s influence network. we believe that the
actions and projects related to education are not sufficiently publicized and need more
investments, but we recognize the importance of initiatives such as the Crer Para Ver
(Believing is Seeing) Program.
Finally, we believe that natura seeks to improve its interaction with its different
stakeholders. And we share the view that this is the way to make lasting relationships..
Participants of the Natura Conecta
naturaannualreport
23
HIGH-PRIORITY SUSTAINABILITY TOPICS
AmAZON
We believe that sustainable development in the Amazon, based on the maintenance and
appreciation of its natural and cultural heritage, is a requirement to ensure its future. For the
Amazon rainforest to play its beneficial planetary role, it is vital to direct educational, scienti-
fic, and technological resources to the region, in addition to stimulating the development of
sustainable chains that combine job creation and income generation with the balanced use
of natural resources. Only an open and collaborative approach, with the involvement and the
co-responsibility of our partners and stakeholders, can improve the situation of the Amazon
region.
In 2009, we were focused on the expansion of our activities in the Amazon by means of semi-
nars with experts. We also visited the region often to experience the local reality. These activ-
ities involved Natura’s senior management in order to develop in 2010 a program of initiatives
that contribute to the sustainable development of the region and provide new opportunities
for the business.
“NATURA IS NOT THERE (IN THE AMAZON REGION)
BASED ON THE RESOURCE EXPLORATION MODEL. BUT,
ON THE CONTRARY, IT IS BASED ON THE SUSTAINABLE
DEVELOPMENT MODEL.”
Poliana Roman, Natura consultant
BIODIVERSITY
The degradation of biodiversity is a major threat to life on our planet. By using ingredients
from biodiversity sustainably while appreciating traditional regional and local cultures in our
technological platform, we are contributing to the balanced use of these natural resources.
We understand that generating income to the supplier communities and encouraging the
adoption of sustainable practices allow us to evolve in our commitment to sustainable de-
velopment. During 2009, we internally disseminated our Policy for the Sustainable Use of
Biodiversity and Cultural Heritage.
We will maintain the incentives for the creation of community development funds and fair
price value chains, and remuneration for the use of genetic heritage and traditional know-
ledge. We expect these initiatives to be integrated and successful. We will also focus on the
development and implementation of Relationship Plans with the supplier communities and
their settlements.
In order to ensure the best results in this process, we systematically monitor its actions
and results by means of the Biodiversity managing Group (BmG), which is made up of the
executives involved in the process and led by the Sustainability Executive Officer. Thus we
provide for the integration of different views on the topic and on the company’s initiatives.
We will continue to contribute to governmental efforts toward the establishment of a new
regulatory framework for access to Brazilian biodiversity. Internally, we will eliminate the
vulnerabilities related to the existing regulatory framework or the one that replaces it (learn
more on page 64).
“I FEEL THAT THIS SPEECH IS STRONGLY CONNECTED WITH
A SPECIFIC LINE OF PRODUCTS (EKOS) AND NOT TO THE
COMPANY AS A WHOLE.”
Fabio Betti Rodrigues Salgado, Natura consumer
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EDUCATION
Natura considers education one of the most decisive and powerful mechanisms to transform
society. Our business, given its reach and influence, gives us the opportunity to be an important
agent in strengthening the movement of education and social change.
Our work has gained new strength with the creation of the Natura Institute, an independen-
tly headquartered, non-profit institution that will assume Natura’s private social investments,
which include managing the projects of the Crer Para Ver (Believing is Seeing) Program. Throu-
gh this program – which represents one of our main expressions in the field of education
– we have developed initiatives for improving the quality of public education, focusing on the
encouragement of reading and the improvement of writing. Internally, we recognize that the
effort we have been making in education over the years is still insufficient by our standards.
We understand that education for sustainability must promote reflections, develop knowledge,
and train managers to identify socio-environmental challenges and convert them into business
opportunities that promote sustainable development.
In 2009, we put into practice a leadership development program with an annual investment of
0.4% of our net revenues, which started to be applied to the 484 managers of the company
and which, in 2010, will be extended to other stakeholders (learn more on page 28).
“A COUNTRY, A SOCIETY, A COMPANY, CANNOT GROW
WITHOUT KNOWLEDGE. IT IS OUR GREATEST HERITAGE
BECAUSE, ONCE OBTAINED, IT BECOMES PART OF
US. NATURA IS AWARE OF THAT AND INVESTS IN ITS
INTERNAL AND EXTERNAL STAKEHOLDERS.”
Ariane Chacon da Cruz, Natura consultant
GREENHOUSE GAS EFFECTS
Climate change has become one of the greatest challenges of society. If nothing is done, we
will suffer the consequences of the increase in global temperature caused by the growing
emission of greenhouse gases. Natura considers this an extremely important issue and is
concerned that nations’ made no progress toward controlling GHG emissions at the Clima-
te Change Conference (COP15) in 2009 in Copenhagen. At this meeting, we announced
the partnership that we signed with WWF to reduce by 10% our emissions related to the
so-called scopes 1 and 2 of GHG by.2010.
Through our Carbon Neutral Program, we have set the target of reducing by 33% our GHG
emissions in all our chain within five years, between 2007 and 2011. In 2009, we reduced our
emissions by 5.2%, for a total since 2006 of 16.1%. This program also includes the offsetting
of emissions we could not avoid by means of socio-environmental projects that promote
carbon capture and, at the same time, contribute to the development of local communities
(learn more on page 63).
“I BELIEVE NATURA CAN DO MORE, AND SHOULD...
RESEARCH ON REDUCTION SHOULD BE INCREASED. OUR
CLIMATE HAS ALREADY CHANGED AND SOME IMMEDIATE
ACTION IS NECESSARY! NATURA IS AN EXAMPLE, AND
SHOULD SEARCH FOR MORE.”
Fabiolla Pereira de Paula, Natura consumer
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25
ImPACT OF PRODUCTS
We understand that in our systematic efforts to reduce the negative impacts of our products,
we should invest in innovative instruments and practices. Our constant focus should be on the
reduction of these impacts, including social and environmental aspects in decision-making in all
areas and processes of the company.
Accordingly, we have invested in using more plant and organic substances in our product for-
mulas. In packaging, we offer the use of refills and use recyclable and recycled materials. In 2009,
we reached the highest rate of use in our products of materials that come from renewable
plant sources in our history: 79.2%. We also use ecological design concepts, aimed at making
post-consumption recycling easier.
We have mobilized our consultants from from some Brazilian regions so that, voluntarily, they
collect Natura’s post-consumption packaging from their customers and forward them, by me-
ans of partner transportation companies, to the cooperatives of local garbage collectors. Ac-
cordingly, in addition to reducing environmental impacts, we contribute to the social inclusion
and income generation of people who make a living from the collection of these materials.
To our customers we offer the guarantee of the use of safe, animal-testing free products, which
are approved by dermatologists and multidisciplinary teams. And we are committed to the
elimination of controversial ingredients.
“IT IS IMPORTANT TO EXPAND THE KNOWLEDGE NETWORK BY WAY OF JOINT INNOVATION
TEAMS (COMPANIES, SUPPLIERS, UNIVERSITIES, NGOS, ETC.) THAT SEARCH FOR SUSTAINABLE
SOLUTIONS FOR REPLACING PACKAGING AND INPUTS.”
Helen Zampoli Augusto, Natura supplier
QUALITY OF RELATIONSHIPS
We believe that sustainable results are achieved by means of quality relationships and, for this
reason, in addition to open dialogue channels, we try to cultivate ethical and transparent rela-
tionships with all of our stakeholders. Accordingly, in addition to expanding the Ombudsman’s
work, we have recently included relationship quality management in our strategic planning
and developed structured education processes for the relationships with and engagement
of stakeholders. The availability of the lessons learned from these initiatives could lead to the
evolution of our processes and actions, helping raise the standard of our relationships.
To this end, it is important to solidify the mobilization and training of managers to prepare
and implement relationship plans, which should be continuously monitored by indicators.
In 2009, we shared our wishes with employees, consultants and NCAs, consumers, share-
holders, surrounding communities, suppliers, and supplier communities, and help them to get
to know us better and interact with us. In this process, a rich learning experience, we directly
involved around 1,500 people, 1,120 of whom participated in person-to-person meetings
in Brazil. This process expanded our social networks on the Internet, which allowed our
stakeholders to jointly prepare a document on the role of Natura concerning high-priority
sustainability topics.
“I HAD THE PLEASURE OF RESPONDING TO THE
QUESTIONNAIRES, AND I HAD NEVER BEFORE SEEN
A COMPANY THAT WANTED TO HEAR EVERYTHING
WE HAD TO SAY, EVEN THOUGH IT WAS NOT ALL
COMPLIMENTS.”
Fabiane Alves dos Santos, Natura consultant
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26
DEVELOPmENT OF OUR COmmITmENTS
Over the years, we have established clear commitments to the evolution of our performance indicators as a way to
continually improve the management of our impacts. This year, in addition to relating our targets as to the high-priority
sustainability topics, as we did in 2008, we also aligned the 2010 targets with our socio-environmental budget, the objective
of which is to further integrate sustainability with our strategic planning cycle.
To learn more about the targets presented in this table, please refer to the chapter on the related stakeholder.
EmPLOYEE
Hight-priority Topics
Commitments for 2009
Commitments for 2010
Quality of
relationships
Obtain a 71% favorable response rate from employees in the
Organizational Climate survey.
Obtain a 77% favorable response rate
in the Organizational Climate Survey.
TARGET ACHIEVED - We obtained a 72% rate in the Brazilian
operations. This result is due mainly to the increase of eight
percentage points in favorable response by the operational staff as
a result of the RenovAção Project. (Renovação means “renewal” in
Poruguese, but this form stresses the word Ação, or “action.”).
Education
Invest 3.5% of total payroll in employee training.
TARGET ACHIEVED - In Brazil, investment in education allowed
for the training and development of 4,714 employees; the total
amount invested represents 4.4% of total payroll.
Provide an average of 100 hours of
training per employee in Brazil.
CONSULTANTS AND CONSUmERS
Hight-priority Topics
Commitments for 2009
Commitments for 2010
Quality of
relationships
maintain a 90% favorable response rate from consultants in the
Satisfaction Survey.
Obtain a loyalty rate of 18% with
consultants.
TARGET ACHIEVED - We maintained the same level as the
previous year for both the quality of relationship (climate) rate,
which was at 90%, and the satisfaction rate, which was at 88%.
Obtain a loyalty rate of 40% with
Natura Consultant Advisers
Education
Collect R$ 3,744 million from the sale of products from the Crer
Para Ver (Believing is Seeing) line.
Collect R$ 6 million from the sale of
products from the Crer Para Ver line.
TARGET ACHIEVED - We collected R$ 3,768 million. In order
to achieve this goal, we invested in the launch of products such as
new T-shirts and shopping bags.
Have 463,054 consultants participate in training courses.
TARGET ACHIEVED - 527,000 consultants were trained
(a total of 583,000 consultants participated in the training
courses, excluding repetitions).
2010 – Have 100,000 consultants engaged in the movimento
Natura (Natura movement).
Have 100,000 consultants engaged in
the Natura movement
Have 500,000 consultants participate
in training courses.
CONSUmERS
Hight-priority Topics
Commitments for 2009
Commitments for 2010
Quality of
relationships
maintain a 47% brand preference rate according to the Brand
Essence survey (brand’s image).
maintain the consumer loyalty rate
at 46%.
TARGET noT ACHIEVED - We obtained a rate of 46%.
Statistically speaking, the target was met because there is a
margin of error in this survey. However, we chose to be more
conservative and consider the target not achieved.
naturaannualreport
27
Hight-priority Topics
Commitments for 2009
Commitments for 2010
Quality of
relationships
Publish the Relationship Principles with consumers.
TARGET noT ACHIEVED - We published the Relationship
Principles with consumers at the beginning of 2010. The
principles address topics such as dialogue channels, relationship,
quality of products and services, sustainability, and satisfaction,
and are available at www.natura.net/principios
There are no formal commitments
on this issue to 2010.
Impact
of Products
Eliminate the chemical class parabens from the product
portfolio by December 1, 2010.
Eliminate parabens from the
portfolio by December 1, 2010.
TARGET PARTIALLy ACHIEVED - more than 90% of the
product portfolio is free from parabens. We made progress
in research into new preservatives and continued replacing
this ingredient.
Eliminate the chemical class phthalates from the portfolio as a
formulation ingredient by July 1, 2010.
TARGET PARTIALLy ACHIEVED - more than 95% of the
product portfolio is free from phthalates. We discontinued
the use of phthalates in PVC packaging in contact with the
products.
Eliminate phthalates from the
portfolio as a formulation
ingredient by July 1, 2010.
SOCIETY
Hight-priority Topics
Commitments for 2009
Commitments for 2010
Education
Implement the Trilhas (Trails) project in 210 Brazilian
municipalities. The project aims to create opportunities for pre-
school children to have more access to children’s literature and,
consequently, to the culture of the written language.
TARGET ACHIEVED - The Trilhas Project was implemented
as a result of two years of development and, in 2009 it was
present in 210 new municipalities.
There are no formal commitments
on this issue to 2010.
DIFFERENT STAKEHOLDERS
Hight-priority Topics
Commitments for 2009
Commitments for 2010
Quality of
relationships
SUPPLIERS
Involve our stakeholders in the determination and monitoring
of Natura’s strategic priorities through a process of
engagement.
TARGET ACHIEVED - Natura’s strategic priorities were
analyzed by stakeholders during many dialogues in 2009, and
their contributions provided valuable insight for our strategic
planning.
There are no formal commitments
on this issue to 2010.
Hight-priority Topics
Commitments for 2009
Commitments for 2010
Quality of
relationships
Obtain an 85% favorable response rate by supplier companies
in the Supplier Satisfaction Survey.
Obtain an 85% favorable response
rate from supplier companies.
TARGET noT ACHIEVED - We obtained a rate of 82%.
General supplier satisfaction increased in relation to 2008 due
mainly to the increase in the satisfaction of production input
suppliers.
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SUPPLIER COmmUNITIES
Hight-priority Topics
Commitments for 2009
Commitments for 2010
Quality of
relationships
Biodiversity
Publish the Relationship Principles with supplier communities.
TARGET PARTIALLy ACHIEVED - The principles are part
of the policy for the sustainable use of biodiversity, which was
published internally. The publication of the policy and relationship
principles also took place informally, in visits made to some
communities. Formal presentation will take place in 2010.
Increase by 44% the resources
allocated to the supplier
communities (made up of supply,
sharing of benefits, funds and
support, image use, training,
certification, and assistance).
Begin the implementation of local development plans in three
communities in 2009.
TARGET ACHIEVED - The plans are being implemented in the
Iratapuru, Turvo, and Reca communities.
There are no formal commitments
on this issue to 2010.
SURROUNDING COmmUNITIES
Hight-priority Topics
Commitments for 2009
Commitments for 2010
Quality of
relationships
Publish the Relationship Principles with surrounding
communities.
There are no formal commitments
on this issue to 2010.
TARGET ACHIEVED - The relationship principles were
discussed and approved by two stakeholder panels created for
these communities.
ENVIRONmENT
Hight-priority Topics
Commitments for 2009
Commitments for 2010
Greenhouse
Gases (GHG)
Reduce by 3% relative greenhouse gas emissions.
TARGET ACHIEVED - We were able to exceed the reduction
target of 3% for 2009 and achieved a drop of 5.2% in our
relative GHG emissions, that is, kilograms of CO2e (carbon
dioxide equivalent) per kilo of product billed.
Reduce by 2011 our relative GHG
emissions by 33%, based on the
inventory we performed in 2006.
Reduce by 2012 our absolute GHG
emissions related to the 1 and 2
scopes of the GHG Protocol by
10%, based on 2008 emissions.
Bidodiversity
Include two new ingredients from biodiversity in phase III of the
certification process.
There are no formal commitments
on this issue to 2010.
TARGET ACHIEVED - Eight new ingredients were included.
The cumulative figure of certified ingredients accounts for the
exclusion of three ingredients that were previously mentioned
as certified as a result of the discontinuation of the products that
used these raw materials and the replacement of the supplier area.
Impact
of Products
Increase to 79% the materials in our products that come from
renewable plant sources.
TARGET ACHIEVED - We achieved a rate of 79.2%, the best
rate ever obtained by Natura. This performance is due to the
increase in the sale of products that use a larger quantity of
plant raw materials in their composition.
Obtain a 19% refill rate on items billed
TARGET noT ACHIEVED - We obtained a rate of 18.4%. We
remain committed to education and awareness on the sale of
refills despite the reduction in the sales promotions of these
items in order to balance promotional efforts, a strategy that
has been used since 2008.
Waste
Water
Obtain an 18.5% refill rate on
items billed.
Reduce by 6% the total weight of
waste per unit billed.
Reduce by 10% the consumption of
water per unit billed.
The relationship quality indicators above have a margin of error that corresponds to a confidence level of 95%.
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29
NATURA mANAGEmENT SYSTEm
Institutionalizing the Essence of Natura and making it permeate all our decisions: this is the driving
force behind the Natura management System, which we started to develop in 2007 when we
moved from a more centralized management approach to a more integrated model, a process
that gained speed in 2009. The system guides business management by means of three central
pillars: Business Units (BUs) and Regional Units (RUs), which are supported by processes, the
strengthening of the organizational culture, and the development of leaderships.
We divide our activities into seven BUs (four in Brazil and three abroad), which group to-
gether brands and product categories, and eleven RUs. Five RUs are in Brazil: São Paulo city;
interior and coast of São Paulo; South; North and Northeast; and Rio de Janeiro, minas Gerais,
and the midwest. The remaining six are abroad: Argentina, Chile, Peru, Colombia, mexico, and
France. The BUs and RUs provides management with more autonomy and responsibility, so
their decisions are more closely connected to the interests of local stakeholders, in particular
consultants and consumers.
For this system to work, we use an integrated planning methodology, from overall strategy to the
designation of targets and indicators aligned with economic, social, and environmental criteria,
linked to the payment of bonuses and results. We have also created a project office to ensure
that the choices are well implemented.
It is focused on 16 strategic projects, all directly connected to our growth plans for the next few
years, approved by the Board of Directors, and regularly monitored by senior management.
mANAGEmENT BY PROCESS
The Natura management System is supported by 18 macro-processes, which apply to the en-
tire company. They are essential for us to continue to expand our activities with the certainty
that we follow the same procedures wherever we are as we reproduce our value proposal in
different places.
In 2009 we made progress in implementing this approach, turning all Natura formal gatherings
into standardized processes. The challenge for 2010 is to finish the mapping of the other acti-
vities. This new organizational design will allow us to identify, create, and seize opportunities in
different regions and also for different categories of products. We take into consideration the
opportunities and risks of economic, environmental, and social impacts, as well as the develo-
pment of our culture, brand, and relationship with our different stakeholders.
ORGANIZATIONAL CULTURE
We have been working over the past two years to create and strengthen Natura’s organiza-
tional culture. This initiative seeks to ensure that the elements of our Essence permeate the
culture in the company’s behavior, formal gatherings, symbols, and the way we run our business.
We developed in 2009 the Culture Dialogues, a collaborative process for interpreting our
organizational culture, involving 146 employees from the operating, administrative, sales, and
senior management areas. These professionals will play an essential role in disseminating the
results to other employees. This long-term process is expected to be completed by 2011.
We want this culture to be the foundation of our vision of the future, maintaining and rein-
forcing our Essence. The culture will support the ways our employees act in terms of internal
practices, systems, and formal gatherings, which were reorganized by the new Natura manage-
ment System that was created to support our new growth cycle. In 2010, we will focus on de-
veloping the drivers of our culture, which will define the behaviors expected of individuals and
the alignment of formal gatherings, symbols, systems, and processes of Natura as a whole.
DEVELOPmENT OF LEADERSHIPS
Over the past few years and due to the growth of the business, Natura attracted at least half
of the new management from outside the company. We believe, however, that the success of
our activities depends directly on our leadership being true to our corporate Essence, making
the leadership selection and hiring process even more challenging.
Thus we want to encourage the internal promotion of professionals who are aligned with our
corporate behavior, and we have decided to make a significant investment in the training of lea-
ders inside Natura to support the future development process of the company. The long-term
objective of the program is to train, within five years, leaders who are aligned with our Essence.
naturaannualreport
30
In order to support the new Natura management System, we are working to strengthen our
leadership team, which is governed by the Executive Committee and involves the leaders of
the BUs, RUs, and processes, all of which have greater autonomy and responsibility for results
(further information on page 38).
INNOVATION
Innovation is one of the pillars for achieving sustainable development. The potential for develo-
ping new business approaches is vast and encompasses science and technology research, the
development of new concepts and products, business strategy, and the management system and
new forms of relationship with stakeholders. The Natura management System itself is a driver
of our innovation process. The development of an increasingly agile and decentralized structure,
closer to our stakeholders, and collaborative, helps us maintain a continuously innovative process
to help transform society.
In order to promote continuous product innovation, which involves science and technology, the
generation of new concepts, product development, new models and methods to ensure the
safety of products, and strategies in regulatory issues, we allocated in 2009 R$ 111.8 million, the
equivalent of 2.6% of net revenues.
We launched or relaunched 103 items in a total portfolio of 685 products. In 2009, we maintai-
ned our innovation rate at 67.6%, the same level as in 2008. This rate measures the sales over
the year of the products launched over the past two years. It shows the importance that product
innovation has in Natura’s commercial performance.
InnoVATIon InDICAToRS
Investment in inovation (R$ million)
net revenue invested in innovation (%)
number of products launched (un)
Innovation rate1 (%)
2007
108,4
3,4
183
56,8
2008
103,0
2.8
118
67,5
2009
111,8
2,6
103
67,6
1. Gross revenue arising from products launched or improved over the past 24 months divided by Natura gross revenue for the
past 12 months.
Since 2007 we have been providing an environmental table for our products, giving con-
sumers information on the origin, processing, and percentage of certification of raw mate-
rials, in addition to percentages of use of recycled and recyclable materials and the number
of refills. The table has an educational purpose, contributing to our customers’ awareness of
the environmental impacts of products.
The search for renewable raw materials is reflected in the make-up of our products. In 2009,
we exceeded the target of increasing to 79% the total use of renewable plant materials in
our products, ending with a rate of 79.2%.
EnVIRonMEnTAL TABLE
Product
% of renewable plant material
% of natura plant material1
% of material with origin certification1 2
Packaging
% of post-consumption recycled material
% of recyclable material
2007
78.8
5.6
13.2
0.7
90.6
2008
77.5
8.0
20.3
0.7
85.8
2009
79.2
5.2
16.1
0.7
85.9
1 The figures for the “natural plant” and “origin certification” indicators for 2008 were recalculated and the data were adjusted
at the beginning of 2009.
2. Origin certification: 99% organic agriculture; 1% forest stewardship.
naturaannualreport
31
In order to promote product innovation, we strive for excellence in:
• Scientific research to identify ingredients from Brazilian biodiversity and the viability
of these new ingredients in the preparation of products with exclusive benefits;
• Scientific fundamentals relating to skin and hair, and deep understanding of consu-
mer needs;
• New models and methods to guarantee the safety of our products and global stra-
tegies for regulatory issues;
• Cosmetic Vigilance System, which monitors possible adverse effects of products,
protects the end consumer, and drives the innovation process;
• Focus on the scientific understanding of controversial elements and replacement
strategy.
• Conceptualization and development of new products that provide a continuous
flow of product launches in both the short and long term;
• New packaging, and other innovative and exclusive ways of providing benefits to
consumers with minimal environmental impact.
These actions promote and support major innovations in the market and in scientific circles,
product approval by consumers, and exclusive proprietary technologies, which are develo-
ped either internally or through a network of strategic partners made up of Brazilian and
foreign science and technology institutions.
This open innovation model began in 2005. Our initial expectation was that by 2012 we
would have 50% of our innovation projects completed by means of external partnerships.
We reached this percentage in 2009, three years before we had expected. The quick ac-
complishment of our target represents the recognition by scientists of our commitment to
innovation and allows a greater flow of innovation to our projects as we promote applied
research in important research centers (learn more on packaging innovations on page 65).
NATURA CAmPUS
our work with partners is part of the natura Campus Technological Innovation Pro-
gram created in 2007, which is supported by the national Council for Scientific and
Technological Development (CnPq), the State of São Paulo Research Support Foun-
dation of (FAPESP) and the Research and Finacing Projects (FInEP). These sponsoring
institutions contribute to the joint financing of projects and provide equipment, scien-
tific scholarships, and research materials for participants.
An important tool of the program is the natura Campus portal (www.natura.net/cam-
pus), launched in 2007. It has been facilitating and strengthening our relationship with the
academic community. In 2009, we received 9,000 monthly visits through the portal. we
currently rely on a database of voluntary participants that brings together 262 research
groups linked to 95 different science and technology institutions. In 2009, we updated the
content of our website on the Internet and disseminated the new technological topics
for virtual interactions. we received 11 new proposals from seven institutions through
the portal, and the contracting of one was approved at the beginning of 2010.
The topics we focused on in 2009 included sustainable technologies, the efficiency and
safety of our products, the well-being and the effect of our products on people’s senses.
Every two years we publicly and financially recognize the best project through the natu-
ra Innovation Award, the last being given in 2008, with a new one expected for 2010.
In 2009 we implemented the scientific topic committees, through which we rely on
the participation of experts and researchers to discuss future technological trends.
This is an interesting way for natura to work more closely with members of the
scientific and academic communities.
In 2009, we received R$ 600,000 in financial assistance from FInEP for our Research
and Development program. we also obtained financing of R$ 81.7 million from the
Brazilian national Development Bank (BnDES), intended for investments in infor-
mation technology and innovation, and in industrial and logistics training.
naturaannualreport
32
In its business model, Natura bases its commercial structure on one fundamental pillar: the
relationship dynamics between its Relationship managers (Rms), Natura Consultant Advi-
sers (NCAs) and Consultants (NCs).
The Relationship managers are employees of Natura who make up a group of professio-
nals that have well defined roles in their relationship with the NCAs and NCs. They are
responsible for managing and training the NCAs, providing feedback and training them in
the activity by means of cycle meetings, special events and direct contact in their day-to-day
activities. The Rms also work directly with the Natura consultants, preparing this group in
training dynamics and by means of the Natura meetings: the main in-person activity carried
out every sales cycle.
The role of the NCAs, in turn, is to invite new consultants to the activity, contributing to the
systematic renewal of the sales channel. They should also encourage consultants, showing
them the attractions and income opportunities in each cycle. They guide de NCs in their
activities and on the proper channels to solve possible doubts and problems. Finally, they
should monitor the consultants’ business and encourage them to participate in training
course and events organized by Natura.
SALES FORCE
SALES
MANAGER
RELATIONSHIP
MANAGER
CONSULTANT
ADVISER
NATURA
CONSULTANT
FINAL
CONSUMER
We have streamlined our sales channels through the Internet. Besides making transactions
easier, the virtual channel helps strengthen the relationship with the NCs. We have sought to
open up communications so that our consultants can always be updated on corporate news
and product launches through initiatives such as the Blog Consultoria (Consultancy Blog) –
(www.blogconsultoria.natura.net), created for our consultants to share information. We also
developed hot sites for product release campaigns, and in 2009 we created the Portal do
Conhecimento (Knowledge Portal), which makes training content available for consultants.
We have innovated and invested strongly in the expansion of the interface with our stakehol-
ders through the Natura Nós (Natura Us) and Natura Conecta (Natura Connection - natu-
raconecta.educartis.com) social networks. These two initiatives use a web 2.0 platform. We
believe that the virtual environment and interaction with our stakeholders can improve our
engagement with these stakeholders and create new relationship opportunities, strengthe-
ning ties and the pace of collective and collaborative future actions.
Natura Nós is a social network similar to the well-known “Facebook” network, but for the
time being accessible only by employees, in-house outsourced workers, and relationship
managers. It has 2,500 members, who interact without Natura’s intervention and exchange
messages on different subjects. Natura Conecta is a network open to the participation of
anyone and develops activities that are both created and moderated by Natura to engage
the participants. At the end of 2009, there were 8,042 members in this network. In 2009
Natura Conecta was an important means of increasing stakeholders’ participation in virtual
discussions on topics related to sustainability and our business. This was possible through
lectures and roundtables (broadcast by video on the Internet) and wikishops (virtual deba-
tes, with open chat rooms for the participation of whoever is interested). (Learn more on the
chapter Quality of Relationships).
naturaannualreport
33
WHO WE
WORK WITH
QUALITY OF RELATIONSHIPS
What are the main challenges in the future? How can our value proposal contribute to
a better world? What do we need to do now to build the future we want? Facing these
questions and the moral crisis affecting humanity has led us to a conviction: answers to
these questions must be developed through a collective process of thinking about the
future, focused on the expansion of awareness and on the search for the meaning of
our choices.
The process of relationship management, which is part of the process of sustainability
management, seeks the mutual creation of answers for these questions. It is directly re-
lated to the evolution of our management model, because more and more we want the
contributions of our different stakeholders to help us improve our methods of planning
and managing.
Relationship management consists of two work fronts: one focused on group actions,
aimed at the collective creation of shared solutions by means of dialogue panels with
our stakeholders; and the other, focused on actions aimed at individuals, searching for
self-development and greater awareness. Throughout 2009, we developed both person-
to-person and vir tual activities.
In 2009, we shared our wishes with employees, consultants, consumers, shareholders,
surrounding communities, suppliers, and supplier communities, and helped them get to
know us better and interact with us. In this rich learning experience we directly involved
around 1,500 people, 1,120 of whom participated in in-person meetings held in Brazil.
We held nine in-person discussion panels throughout 2009. In November we worked
with representatives of our relationship stakeholders to analyze the company’s plans and
Natura’s Strategic Planning (NSP), which are both in place. In 2010, requests received
from the different stakeholders in the course of the year will be an important input for
formulating strategic planning for the coming years, so that the opinions of these stakeholders
can be incorporated into our future plans. The main challenges in the area are:
• Expand the potential of collective intelligence by maximizing virtual interaction;
• Develop ways of including “analogical” stakeholders, (who do not use digital
means of communication) especially NCs and NCAs.
We use our Natura Conecta (Natura Connects) social network to identify possible par-
ticipants in person meetings held throughout the year. In 2009, through Conecta, we held
19 wikishops, as well as other virtual activities such as roundtables and forums. In these
vir tual debates, we have been managing to map and discuss the topics of interest to
our stakeholders.
To encourage individual growth, we also carried out in 2009 virtual roundtables and in-
person lectures on topics such as Cultural Biology (with Humberto maturana, a Chilean
scientist and Doctor in Biology from Harvard University, and Ximena Dávila, a Chilean
psychologist) and the U Theory (with Otto Scharmer, a professor from the Sloan School
of management at the massachusetts Institute of Technology), which offers ways of col-
lectively creating a future. Throughout 2009 other lectures on topics related to raising
awareness and self-development took place, involving around 850 people in total.
naturaannualreport
34
DIALOGUE PANELS
nº of
Stakeholders
involved
participants
___________ __________
Month
held
________
Key topics
__________________________________
Surrounding
communities
20
July/2009
mapping of the problems and opportunities
for improving the relationship and definition
of potential shared commitments.
Supplier
communities
14
August/2009
multistakeholders
43
August/2009
mapping of the problems and opportunities
for improving the relationship, definition
of shared commitments and review of
Natura’s relationship survey with this
stakeholder group.
Feedback to stakeholders on the 2008
engagement process, evaluation of the
2008 Annual Report and start of collective
construction of the 2009 report. Discussion
on the desired common future.
Specialists in
biodiversity
22
August/2009
Dialogue on potential joint paths for the
Sustainable Use of Biodiversity.
Suppliers
30
September/2009 Review of relationship plan with suppliers
and discussion of the desired future based
on the principles of the Qlicar Program.
Employees
50
October/2009
Pioneer experience by Natura in the
debate on the Gross Domestic Happiness
(GDH) index for companies.
Surrounding
‘communities’ –
(2nd)
Specialists in
annual reports
20
November/2009 Definition of shared action plans and
review of Relationship Principles with the
Surrounding Community.
10
November/2009 Evaluation of annual reports as business
management instruments and how to
improve Natura Annual Report.
multistakeholders
48
December/2009 Review of 2010 Natura Strategic Planning
and contributions from stakeholders to the
construction of a desired common future.
Consumers
22
January/2010
Review of Natura’s strategy to the three
pillars of products, channel and corporate
behavior.
naturaannualreport
35
In the table below, we present the main topics that our stakeholders wanted to see addressed
in the 2009 Annual Report, and the responses from Natura:
Stakeholders
____________________
Suggested topics
____________________________________
Responses from natura
__________________________________
Brazilian Foundation for
Sustainable Development
(FBDS) and SustainAbility
Explain the governance
structure for sustainability
issues.
The information is included in the
Governance section of the chapter entitled
Our moment.
FBDS - SustainAbility
Publish the results of stakeholder
engagement (opinions and suggestions).
Specialists
Launch the Wiki Report and give
stakeholders a voice in the Annual Report.
Specialists
Publish the list of Natura’s majority shareholders
We have included, together with the six
high-priority sustainability topics, tables with
the principal contributions from stakeholders
on each topic.
The Wiki Report was launched in 2009. The
Natura We Share section of the chapter entitled
What We Aim For presents the voice of the
stakeholders who participated in the debates on
the Natura Conecta networking platform.
The list of Natura’s majority shareholders
can be found in the Shareholders section of
the chapter entitled Who We Work With.
Consultants and NCAs,
Shareholders, Suppliers,
Employees and Consumers
Address the Non-Service Rate and Natura’s
position on matters such as out-of-stock
products and delays in delivery.
Natura’s position on these matters is
available in the box entitled Quality of
Services, in the chapter Who We Work With.
Employees and NCAs
Information on the consolidation of the
Natura Consultant Advisers model.
This issue was addressed in the chapter Who
We Work With, under Consultants and NCAs.
Shareholders
Importance of training leaders in the
company’s culture.
Suppliers
Employees
Data on dialogue with suppliers
and on the feedback from Qlicar
supplier development program.
Natura’s position on issues such as the
murumuru Case and the Urban Installations
exhibition, which stirred up a controversy in the
city of São Paulo.
Employees and
Consultants
Information on Natura’s Houses.
This is a strategic matter for Natura and it
is tackled twice in the report: in the Natura
management System section of the chapter
What We Aim For, and under Employees, in
the chapter Who We Work With.
This information is contained in the Suppliers
section of the chapter Who We Work With.
The murumuru Case is dealt with in the
Supplier Communities section, and Natura’s
position on the exhibition that breached
São Paulo’s Clean City Law can be found in
the Consumers section, both in the chapter
Who We Work With.
This data can be found in the Consultants
and NCAs section in the chapter Who We
Work With.
naturaannualreport
36
To encourage individual growth, we also carried out in 2009 virtual roundtables and in-person
lectures on topics such as Cultural Biology (with Humberto maturana, a Chilean scientist and
Doctor in Biology from Harvard University, and Ximena Dávila, a Chilean psychologist) and
the U Theory (with Otto Scharmer – a professor from the Sloan School of management at
the massachusetts Institute of Technology), which offers ways of collectively creating a future.
Throughout 2009 other lectures on topics related to raising awareness and self-development
took place, involving around 850 people in total.
OmBUDSmAN’S OFFICE
The Natura Ombudsman’s Office was created in 2006 to establish a dialogue channel be-
tween the company and its stakeholders. It helps us ensure compliance with the relationship
principles, which translate our Essence into daily activities. It also allows us to identify oppor-
tunities to improve our processes, policies, and relationships, based on the requests received.
The Ombudsman’s Office is linked to Natura’s Office of the Senior Vice President of Organi-
zational Development and Sustainability.
Through this channel comments are received, analyzed, and forwarded to the manager responsi-
ble. The Ombudsman’s Office directly contributes to the search for a solution to every case.
The Ombudsman’s Office receives complaints of violations of conduct, such as discrim-ination,
corruption, harassment, or other critical issues. These are analyzed with the departments in
charge. In Natura’s history, we have never had a proven discrimination complaint. All of the
complaints that represent possible violations are reported to the Ethics Committee, in which
the company’s CEO participates. When necessary, the support of the Internal Audit depart-
ment is requested (learn more on page 16). Last year, the volume of calls to the Ombudsman’s
Office grew 31% compared to 2008, a cumulative increase of 69% since 2007.
This channel serves the internal stakeholders from the operations in Brazil and other Latin
American countries, suppliers (Brazil), and consultants related to the Brazilian operations in a
pilot project for sales managers in São Paulo.
ToTAL nUMBER oF CoMPLAInS RECEIVED
By THE oMBUDSMAn´S oFFICE
Internal Stakeholders - Brazil
Internal Stakeholders - Latin America
Suppliers Brazil
Consultants Brazil3
Total
2007
649
29¹
12²
n.a.
690
2008
783
26
19
52
880
2009
1.096
13
13
34
1,156
1. Data related to the period from October to December 2007 (launch of the Ombudsman’s Office: October 2007).
2. Data related to the period from May to December 2007 (launch of the Ombudsman’s Office: May 2007).
3. Data related to the pilot project for a sales management office in Greater São Paulo.
The Ombudsman’s Office carries out a satisfaction survey on the services provided by
the channel with employees from its Brazilian operations. We reached a 98% level of satis-
faction, a result we consider statistically equivalent to the figure in 2008 (96%). (Graph 1)
In July 2009, we began a satisfaction survey on the Ombudsman’s Office with the NCs and consu-
mers, a process still in the implementation phase, with results expected to be available in 2010.
The growth in complaints shown in 2009 was strongly driven by requests from internal
stakeholders in Brazil, which totaled 1,096, a growth of 40% in comparison with the previous
year. Of these, 81% were related to technical questions, such as policies, processes, standards,
procedures, and infrastructure, and 19% to attitudes and behaviors.
1. SATISFACTIon wITH THE
oMBUDSMAn’S oFFICE
CHAnnEL1
97%
98%
96%
People management was the topic most mentioned by the internal stakeholders in Brazil.
The majority of the comments referred to benefits, such as private transportation and me-
dical assistance. The complaints resulted in important gains for employees, such as improve-
ments in the health insurance plan and the implementation of 17 new charter bus lines.
2007
2008
2009
1. The percentages refer to the positive
replies to the question: “are you satisfied
with this dialogue channel?”
naturaannualreport
37
INTERNAL STAKEHOLDERS IN BRAZIL
The growth in the number of contacts in 2009 was strongly driven by requests from internal
stakeholders in Brazil, which totaled 1,096, a growth of 40% in comparison with the previous
year. Of these, 81% were related to technical questions, such as policies, processes, standards,
procedures, and infrastructure, and 19% to attitudes and behaviors. (Graph 2)
We noted a reduction in the number of suggestions and queries, at the same time as an incre-
ase in the number of criticisms. This demonstrates that the Ombudsman’s Office is establishing
itself as a channel for handling critical topics, such as the misuse of resources, moral or sexual
harassment, illegal business transactions and arbitrary management, among others.
2. PRoFILE oF THE ConTACTS
By BRAzILIAn InTERnAL
STAKEHoLDERS
Complains/ethical misconducts
2%
Queries, compliments
and sugestions
17%
Of all processes, people management was the most criticized by the Brazilian internal stakehol-
ders. The majority of the contacts referred to benefits, such as transportation and health care.
Based on this information, we could offer our employees some important improvements, such
as better health insurance and 17 new chartered bus routes.
Of the complaints received last year, 60% were proven and 10% were still being analyzed in
march 2010. Of the contacts made by the internal stakeholders in Brazil, 40% came from the
operational staff, who also represent 40% of all Natura’s employees in Brazil. The group that
least used the services of the Ombudsman’s Office was the sales staff, who represented just
4% of all the contacts but correspond to 15% of the company’s employees.
INTERNAL STAKEHOLDERS IN LATIN AmERICA
In the other operations in Latin America (Latam), the number of contacts received from
internal stakeholders fell 50%, since no activities were developed to support the channel. Ne-
vertheless, of all the contacts made by the Latam internal stakeholders, 64% were related to
complaints. In other words, although the number of contacts decreased, the topics heard by
the Ombudsman’s Office unmistakably needed to be analyzed.
CONSULTANTS AND NCAS
The service model of the Ombudsman’s Office for consultants still needs to be approved.
Although a pilot project has been developed with a group of 10,000 consultants, we will only
resume the process of adjusting and implementing the channel when we have achieved a
better performance in the service offered to this group.
Having said that, the Ombudsman’s Office works in partnership with the company’s service
division, receiving critical complaints (related to ethical misconduct, behavioral matters or un-
resolved technical problems) via Natura’s Service Center. In 2008, we handled 687 cases, and
in 2009 this number rose to 6,613, since behavioral complaints were not received in 2008. This
project has brought us some important insights for the construction of the Ombudsman’s
Office´s model still to be established for this public.
SUPPLIERS
The Ombudsman’s Office has been available to suppliers since may 2007. Of the 13 con-
tacts received from suppliers in 2009, 50% dealt with critical process issues and 50% were
complaints (behavioral matters or ethical misconduct). The topics included the competitive
process, the selection of suppliers and contract management, which covers the negotiating
and payment stages. The fact that half the contacts made by suppliers were related to ethical
misconduct, as was the case with internal stakeholders in Latin America, is an indication of the
consolidation of the reliability of the channel.
CONSUmERS
Just like for our consultants, the Ombudsman’s Office is not available for our consumers yet.
But we have also conducted a similar project to find solutions to critical complaints received
through Natura’s Customer Service Center. Accordingly, in 2009 we handled 2,523 critical
complaints from this stakeholder group.
Criticisms
81%
Total contacts 1,096
naturaannualreport
38
EmPLOYEES
The high-quality relationships we seek to maintain internally have led to rapid improve-
ments in labor relations over the past two years. Adherence to Natura’s proposals, and
the trust in its value proposal and in the relationship history itself were some of the con-
tributing factors. However, there is room for improvement, and we worked hard on this
in 2009.
Consistent with our strategy for implementing a robust management system at Natura,
we initially focused our efforts on the leadership training and development program, to
which the largest por tion of our investments were allocated.
We also worked directly on one of the weaknesses identified in 2008 and sought, by
means of the RenovAção (Renewal) project, to improve our relationship with operational
employees on a sustained and structured basis.
The number of employees, which was reduced in 2008 as a result of the management res-
tructuring process, increased again in 2009 to meet business growth demands, maintaining
levels of productivity and efficiency
nUMBER oF nATURA EMPLoyEES
Brazil
Argentina
Chile
Mexico
Peru
Colombia
Venezuela1
France
Total
Other employment contracts2
Interns
Temporary workers3
In-House outsourced workers 4
2007
4,798
276
179
259
229
79
63
36
5,919
73
151
1,170
2008
4,386
306
222
277
290
135
50
32
5,698
66
445
1,787
2009
4,821
331
264
335
296
168
n.a
45
6,260
47
340
1,310
1. Operations in Venezuela were discontinued in August 2009. In April, the Venezuelan operations had 52 employees.
2. Includes operations in Brazil, Argentina, Chile, Colombia, Peru, and Mexico.
3. Temporary workers are those hired for a pre-determined period of time and registered in accordance with labor laws by em-
ployment agencies and subordinated to these agencies. In Brazil, we counted those temporary workers who were in the company
on December 10, which is the date payrolls are closed..
4. Outsourced employees are the suppliers who are assigned to the company’s plants.
This change in people management led to a significant increase in the main indicator that me-
asures the quality of relationships with employees: the Natura Organizational Climate survey.
The overall favorable responses, covering all of our operations, increased two percentage
points to 74%, placing us for the first time among the 10 best companies in employee
climate management, according to the specialized consultancy Hay Group. Our target for
2010 is 77%.
In its international operations, Natura’s organizational climate remained, on average, sta-
ble at 79%, with a notable improvement by Colombia, which showed an increase of four
percentage points to 88% of favorable responses.
In Brazil, a 72% rate of favorable responses exceeded the climate target of 71% establi-
shed for 2009. This result was due mainly to the increase of eight percentage points in
favorable responses by the operational staff as a result of the RenovAção Project (learn
more on page 38). The topics that showed an improvement from 2008 were Leadership,
which was considered a point needing attention in the previous year ; Engagement, Ethics,
Compensation and Benefits; and Sustainable Development and Training, which showed
outstanding results when compared to the Brazilian market’s best practices.
Despite the improvement in the organizational climate with all stakeholders, we identified op-
portunities for improvement in aspects related to quality of life, decision-making processes, and
relationships, which will be our focus in 2010. However, there is evidence that organizational
changes such as the implementation of the Natura management System, focused on processes,
culture, and leadership, have positively affected the results of the survey.
naturaannualreport
39
oRGAnIzATIonAL CLIMATE SURVEy – FAVoRABLE RESPonSES (%)1
Brazil
Argentina
Peru
Chile
Mexico
France
Colombia
Venezuela2
natura
2007
71
69
80
72
83
56
86
61
72
2008
69
80
77
83
85
60
84
17
72
2009
72
77
78
77
84
75
88
n.a
74
1. Equivalent to the percentage of employees who checked 4 or 5 (top 2 boxes) on a score of 0 to 5 points.
2. Operations in Venezuela were discontinued in August 2009.
GROSS NATIONAL HAPPINESS
For a company like natura, which seeks to widely understand its impacts on society,
the standard measurements seem to be limited. Therefore, we decided to internally
discuss the application of the Gross Domestic Happiness (GDH) index, which inclu-
des a number of elements that are considered intangible but that are in line with our
Essence. The GDH is based on the belief that the true development level of a society
is best measured by criteria that go beyond material wealth indicators.
The GnH was created in Bhutan to measure the well-being of that country and
has nine levels: living standards; good governance; education; health; community
vitality; ecology; culture; time use; and psychological well-being.
we gathered 50 volunteer employees to test a pioneering form of the GnH in the
corporate environment. This work was developed in partnership with the Instituto
Visão Futuro (Future Vision Institute), which is responsible for disseminating the
principles of GnH in Brazil. our objective for 2010 is to integrate this work with
the Cultura (Culture) Program. As a result, a larger number of employees will be
able to experience the process of GnH application at natura.
TURNOVER
Another positive fact in 2009 was the considerable drop in our turnover rate, which in the
Brazilian operations was 7.5%, compared to 12.4% in 2008. There was also a reduction in
our international operations, except for Colombia, where we carried out an internal restruc-
turing process, and in Peru, where some employees were replaced as a result of a strategic
corporate decision.
Natura made 65% of the replacements of the total number of employees who left the
company. In absolute figures, the turnover rate was higher among operational staff, but in
percentage terms this number was higher among the administrative personnel.
EMPLoyEE TURnoVER RATE (%)1
Brazil
Argentina
Chile
Mexico
Peru
France
Venezuela¹
Colombia
2007
9.0
16.1
20.4
56.5
17.2
4.0
43.5
4.6
2008
12.4
16.6
13.9
42.7
12.2
35.0
31.9
35.4
2009
7.5
12.5
13.6
25.3
16.6
15.5
n.a
39.7
1. Although the turnover rate has not been considered relevant in the exercise of materiality, we decided to continue releasing this
data for the countries where we operate, since the indicator reflects the significant organizational changes that have occurred
in recent years, both in the Brazilian and international operations. Internally, we also monitor turnover by length of service and
salary group.
2. Operations in Venezuela were discontinued in August 2009. Until April, the turnover rate was 11.4%. .
naturaannualreport
40
ATTRACTION AND ENGAGEmENT
Natura’s main, long-term objective is to train its professionals internally and, therefore, bring
them in line with its Essence and organizational culture. For this reason, we started a re-
formulation in the talent attraction and recruitment process. We started in 2009 with the
trainee program, and in 2010 we will extend this to the other groups, focusing on promotion
opportunities for our employees.
To support the expansion of our business, we carried out in 2009 a broad trainee selection
process, which was remodeled to meet the demand of our leadership-training program.
Called Next Leaders, the selection process was based on the search for diversity and the
identification of candidates who share our beliefs and world vision, and for this reason we
did not use Natura’s name at first. We did not make any requirements regarding college
graduation or fluency in languages and increased the age limit to 28 years old. We used the
Natura Conecta social network for both disseminating the program and for conducting the
first stages of selection processes. Thirty-four employees were selected for the program,
which is expected to last two years.
The number of interns at the company, meanwhile, fell 28.8% in 2009, since we decided not
to conduct a selection process for this type of employment contract. Instead, positions were
filled on an individual basis. Our intern program is being reviewed, and a new and reinvigo-
rated selection process will begin in 2010, since we understand the importance of creating
opportunities in Natura for young undergraduates.
Generally speaking, we try to promote internal recruiting through the Internal Job Oppor-
tunities Program. Our rate of internal recruitment, however, fell by 10 percentage points in
2009 compared to the previous year. This occurred for two main reasons: the reformulation
of the desired profile for management positions; and a reduction in the number of eligible
employees for the Internal Job Opportunities Program – 75% of our managers have held
their positions for less then two years, meaning they have not completed their probation
period yet. We recognize the need for adjusting the program, and we hope to implement
the necessary changes in 2010.
Natura does not have an official staff recruitment policy for its international operations. Ho-
wever, in all the countries where we operate, the majority of the employees are nationals,
since we understand the importance of our staff having a thorough understanding of the
regional context. This is why we have structured our activities into RUs and also established
the base of our international operations in Buenos Aires, Argentina.
nUMBER oF CAnDIDATES FoR EACH PoSITIon AT nATURA (BRAzILIAn oPERATIonS)
Candidates for the trainee selection process
Candidates for the intern selection process
Candidates for other selection processes
Positions offered/filled by employees (%)
2007
28,742
14,639
46,686
64
2008
n.a
n.a
21,441
71
2009
13,298
n.a
132,062
61
When recruiting staff for our international operations, we understand that we should strike
a balance between people who know Natura and people who know the local market. This
is why we hire people from the respective countries, but also Brazilians. In Chile and Colom-
bia, for example, 50% of the members of senior management were recruited from the local
community in 2009. In mexico, meanwhile, the figure was 20%. Although the percentages may
seem high, these changes in international management personnel are fairly negligible, referring
to just one employee joining or leaving the company.
MEMBERS oF THE SEnIoR MAnAGEMEnT RECRUITED FRoM THE LoCAL CoMMUnITy1 (%)
Argentina
Chile
Colombia
France2
Mexico
Peru
Venezuela3
2007
33
17
100
n.d
71
33
40
2008
33
50
0
0
50
33
60
2009
33
50
50
n.d
20
0
n.a
1. Senior management is staff from the Salary Groups 19 and higher.
2. In France, in 2007 and 2009, this indicator was not tracked.
3. Operations in Venezuela were discontinued in August 2009..
naturaannualreport
41
Broadly speaking, when we give feedback on performance to our staff, 100% of employees
who have been at the company at least for three months, in Brazil, receive regular perfor-
mance appraisals and career development assessments. In 2009, we opted for a simplified
assessment and an analysis of the results of 2008 based on competencies in four areas: self-
knowledge, relationship, protagonism and sustainability.
However, we felt the need to improve this evaluation system. In 2010, therefore, we are
going to implement a new model to measure the performance of our employees and im-
prove the feedback process. The changes will follow guidelines designed to better tailor and
restructure the competencies, so they are more in line with the values of Natura.
In 2009, we also implemented a pilot program involving 80 managers, called Engagement of
Employees. We used an innovative human resources methodology we call the 360-degree
cycle. managers can evaluate their life purposes inside and outside the company. Based on
this self-analysis, added to external evaluations, we can start to outline together with them,
in a collaborative manner, plans for their future inside Natura. In December 2009, the project
was expanded to include Natura’s entire leadership staff, which consists of 448 leaders
throughout our business operations.
In virtue of innovative projects such as this, Natura won the 1st place in Latin America and
the 11th place among the 25 best companies from around the world in leadership develop-
ment, according to the survey “Top Companies for Leaders”, developed by the international
human resources consulting firm Hewitt Associates in 2009. The survey evaluates criteria
such as the consistency and alignment of leadership programs; the commitment of the senior
leadership to the program; how well it fits the culture ; the high standards proposed to the
leaders; the vision of the future and innovation; as well as the coherence to ethical values
and results. In 2009, 537 companies accepted the consulting firm’s invitation, responded to
the questionnaires of the consulting firm and allowed their leaders to be interviewed. 87 of
these companies were from Brazil.
ReNoVAção (RENEWAL)
The quality of the relationship with our plants’ operational staff presented structural ele-
ments of dissatisfaction that our leaders needed to address. To solve the problem, we de-
veloped the RenovAção project, which involved 2,515 employees from the operating areas
in direct dialogues with senior management. This contact helped us design a structured
plan with clear objectives to be achieved within five years: to increase the level of favorable
responses from this group to 80% and to have at least 5% of Natura’s leaders coming from
these stakeholders. To this end, we need to prepare in 2010 a career plan that creates real
possibilities for the promotion, inclusion, and development of our employees in the opera-
tional areas.
Some initiatives have already started to meet the needs of these stakeholders. We have
established mechanisms to identify and train leaders within the operating units, and we have
also implemented new means of internal communication.
TRAINING
The preservation of our Beliefs and Values in Natura’s new growth cycle is closely related
to our strategy for training leaders to become managers, vice presidents, and senior vice
presidents. For this reason, in 2009 we started the Leadership Development Program, which
is intended over five years to find 120% of our successors and validate development plans
for all critical succession positions in the short, medium, and long terms. Our challenge will
increasingly be to fill positions with leaders trained within Natura itself who champion our
principles. The new program includes our operations in Brazil and abroad. It enhances the
Leader Training Program, which existed until mid-2009 and trained 28 employees over the
past two years. In 2010 we intend to extend the same approach we adopted for training
leaders to the other stakeholders of Natura.
In 2009, we exceeded the target of investing 3.5% of the total payroll of the Brazilian opera-
tions in employees’ training. During the year, investment in education for these stakeholders
totaled R$ 20.2 million, the equivalent to 4.4% of payroll. This was 43.8% higher than in 2008,
benefiting a total of 4,714 employees.
Among the training courses provided, there were strategic workshops on our commercial model
aimed at the consolidation of the Regional Units and Business Units. These courses were also
provided to the employees of foreign operations, where we also invested in the development of
leaders and the training of internal multipliers to train others for their functions.
naturaannualreport
42
most of the training courses provided to management and administrative employees, including
the sales force, were focused on team development. Investments in training totaled R$ 2,24
million in our foreign operations, which represented an increase, except for Argentina and
France. In the other Latin American countries, investments were focused on the program for
training the sales force and employees of the administrative, marketing and operational areas.
In 2009 we addressed topics related to human rights, environment and social responsibility
during the Integração Nossa Essência (Our Essence Integration Program) program, which was
aimed at all employees (including outsourced workers) and during lectures titled “Você tem
fome de quê?” (What do you crave?), which were open to all employees. By means of the
Integração Nossa Essência program, we provided 3,373 hours of training last year.
Although there are no specific training courses on issues related to corruption and human
rights, in the Integração Nossa Essência program, the new employees are taught Natura’s rela-
tionship principles, which are inspired by the Declaration of Human Rights. By means of these
principles, we take an official stand against corruption, forbidding behaviors that can be charac-
terized as corruption, bribery or a kickback. In 2009, we did not develop specific programs on
human rights for the security personnel as we had expected.
InVESTMEnTS In EDUCATIon AnD TRAInInG oF EMPLoyEES (R$ THoUSAnDS)1
operation
Brazil²
Argentina
Chile
Mexico
Venezuela3
Peru
Colombia
France
Total
2007
15,951.9
86,9
109, 7
416,7
n.d
31,4
19,5
71,1
22,460.1
2008
14,062.0
162,5
82,7
496,8
98,1
74,9
87,1
73,4
15,137.6
2009
20,221.3
103,3
164,6
1,567.1
n.a
222,7
130,0
51,0
16,686.1
1. The figures in Brazilian reais were translated into US dollars at US$ 1: 2007 - R$ 1.9480; 2008 - R$ 1.8346; 2009 - R
2. Investments in Brazil include the training of the sales force (sales managers and relationship managers).
3. Operations in Venezuela were discontinued in August 2009..
In 2009, we recorded an average of 82 hours in training per employee, 12.8% lower than the
94 hours seen in 2008. This reduction is transitory, as we decided to focus on the training of
leaders and structure a more comprehensive program for 2010. For 2010, our target is to
provide an average of 100 hours of training per employee. For 2010, our target is to provide
an average of 100 hours of training per employee.
AVERAGE HoURS oF TRAInInG PER yEAR PER EMPLoyEE, PER FUnCTIonAL CATEGoRy In
BRAzILIAn oPERATIonS1
Production
Administrative
Managers
Executives
Total²
2007
120
92
90
55
105
2008
105
90
68
9
94
2009
86
79
61
78
82
1. This indicator includes the training of the sales force (sales managers and relationship managers).
2. It includes total hours of all levels divided by total employees in December of the respective year.
We also had the Natura Educação (Natura Education) Program by means of which scholar-
ships are granted to our employees and their families to encourage continuous education.
In 2009 investments in this program grew 16.7% compared with the previous year and the
number of scholarships granted grew 29.2%.
BRAzILIAn oPERATIonS – nATURA EDUCAção PRoGRAM¹
Scholarships granted
Scholarships granted/enrollments (%)
Amount invested in the natura Educação
program (R$ thousands)
2007
568
44.4
974
2008
473
32.6
720
2009
611
48.3
841
1. All employees enrolled and awarded with the scholarships are considered to have been served by the program.
naturaannualreport
43
nATURA EDUCAção PRoGRAM - CoURSES ATTEnDED By EMPLoyEES oR THEIR FAMILy
MEMBERS THAT ARE ToTALLy oR PARTIALLy SUBSIDIzED By nATURA
Technical/vocational
Languages
Preparatory course for College
EntranceExamination (Vestibular)
University
MBA and post-graduate
2007
83
142
9
234
100
2008
48
118
11
219
77
2009
77
117
6
292
119
CORPORATE VOLUNTEER WORK
Over the years, we have been encouraging the participation of our employees in corporate
volunteer work program in order to disseminate the importance of social engagement and
promote the relationship of our employees with the surrounding communities of Cajamar and
Itapecerica da Serra, making them aware of their social realities.
The absolute number of employees involved in these activities, however, dropped from 57 in
2008 to 52 in 2009. On the other hand, 646 people have benefited from the Sala de Leitura
(Reading Room) and Orientação Profissional (Professional Guidance) programs. This is still a
challenge that we have to face. In order to increase participation and adopt a suggestion made
by the employees themselves, we are opening volunteer work fronts on weekends as well.
DIVERSITY
We value diversity and consider it to be a basic element in the development of a fairer and
more sustainable society. However, we believe that the reality in Brazil – and Latin America
– poses a challenge of inclusion. We are a historically diverse people, mainly mixed-race and
syncretized, but we face large barriers to social inclusion.
Some of our main projects in 2009, such as the RenovAção project and the selection of
employees, are based on opening opportunities. In the case of trainees, for example, we
gathered participants from different ages, universities, and locations in Brazil, by means of a
virtual process that broke the paradigms of conventional hiring programs in a clear exercise of
inclusion and respect for differences.
In 2009, we saw an increase in the number of women in positions of leadership at Natura.
Although it is still disproportional, the participation of women in vice president and senior vice
president positions grew from 3 in 2008 to 6 professionals in 2009, compared to the partici-
pation of 35 men in these positions.
We currently have a program to include disabled people in the commercial area in positions such
as marketing assistant, and in customer service and sales. Through our regional units structure, we
are mapping new jobs and opportunities to include disabled people in different regions in Brazil.
ConTRACTInG AnD TRAInInG oF DISABLED PEoPLE
Brazilian operations
number of disabled employees
Disabled people in relation to total employees (%)
number of disabled people trained in the Competências
Básicas Profissionais (Basic Professional Skills) program
2007
251
5.2
49
2008
237
5.4
39
2009
236
5.0
67
We believe that the inclusion of these people not only takes place through contracting but
also through interaction between the company, the society and other employees. In 2009 we
trained 67 people within the Competências Básicas Profissionais program, which was develo-
ped in partnership with the Favalli Institute. We also have the Padrinhos em Libras (Sponsors
in Brazilian Sign Language – Libras) program in which 43 employees are being trained in sign
language to improve communication and inclusion of the hearing impaired.
DIVERSITy
Total employees in Brazil
Disabled employees (%)
In relation to the total number of employees (%)
In management positions in relation to total
management positions (%)
In executive positions in relation to total
executive positions (%)
2007
4,793
2008
4,386
2009
4,821
5.2
0,0
0,0
5.4
0,0
0,0
5.0
0,0
0,0
naturaannualreport
44
Women
In relation to the total number of employees (%)
In management positions in relation to total
management positions (%)
In executive positions in relation to total
executive positions (%)
63.9
53.4
20.0
Black and multiracial women
In relation to the total number of female employees (%) nA
In management positions in relation to total number
of women in management positions (%)
In executive positions in relation to total number
of women in executive positions (%)
nA
nA
Black and multiracial men
In relation to the total number of male employees (%)
In management positions in relation to total number
of men in management positions (%)
In executive positions in relation to total number
of men in executive positions (%)
Above 45 years of age
In relation to the total number of employees (%)
In management positions in relation to total
management positions (%)
In executive positions in relation to total
executive positions (%)
nA
nA
nA
9.1
7.5
26.7
63.7
52.3
19.2
nA
nA
nA
nA
nA
nA
10.5
8.2
38.5
60.5
51.9
17.6
nA
nA
nA
nA
nA
nA
12.2
11.3
35.3
In our diversity indicator, data related to comparison by race is still being consolidated; we star-
ted a reference file update campaign at the beginning of 2009, and its results will be reflected
in the 2010 data.
COmPENSATION
The compensation practices adopted by Natura follow a corporate policy with guidelines that
are similar in all countries in which the company operates. However, there is room for adjusting
these practices to local markets.
To determine the salaries of our employees, we compare our salary grid with reference markets,
such as competitors in the consumer goods segment, Brazilian multinational companies, listed
companies, and companies that have compensation practices that are similar to those of Natura.
In accordance with the annual survey carried out by the consultancy Hay Group on several func-
tions and groups of employees, Natura maintains a higher average salary than the market.
We still need to make progress towards salary equality between men and women who have the
same positions, whether in the production, administrative, management, or executive areas. This
is a focus of attention, and solutions should be aligned with the people management processes.
By means of the Caminhos (Paths) Project, we will make performance analysis of employees who
are in the same positions with different salaries in order to adjust salaries over time.
In 2009 compensation in Argentina grew due to a collective bargaining agreement. The other
operations reflect a salary table adjustment or increase in the local minimum wage. In the
Benevides unit, on the other hand, where market compensation is lower than the average in
the Brazilian market, the difference caused a reduction in the proportion between the lowest
salary paid by Natura and the minimum wage.
MARKET PRESEnCE – PRoPoRTIon oF THE LowEST SALARy CoMPARED To THE LoCAL
MInIMUM wAGE, PER oPERATIon
Brazil
Argentina
Chile
Peru
Mexico
Colombia
Venezuela¹
France
2007
1.9
1.1
1.5
1.6
2.8
1.5
1.9
1.3
2008
1.2
1.5
1.4
1.6
4.6
1.1
1.9
1.1
2009
1.1
2.0
1.3
1.7
4.8
1.6
n.a
1.5
1. Operations in Venezuela were discontinued in August 2009. Until April, the variation in the proportion of salary was 1.9.
naturaannualreport
45
Also, in the compensation field, in line with the growth and internationalization of Natura, we
have an expatriation program that seeks to strengthen the quality relationships we have with
our expatriated employees and their families, providing a package of differentiated services and
benefits, as well as a career development opportunity. We currently have approximately 18
expatriated employees in the operations in Chile, Argentina, Peru, mexico, France and Colombia.
Our differential in relation to the market is the Variable Compensation model, which is adapted
to the characteristics of each group of employees, such as form of payment, targets and amounts.
The distribution limit for the non-executive employees is 3% of Operating Income. In 2009, we
paid professionals from the operational area, on average, three to four additional monthly salaries
a year.
In 2009, collective bargaining agreements provided our employees from the Brazilian operations
with an average salary increase of 6%. The female employees from the administrative area, which
includes the sales force – relationship managers and sales managers – recorded an increase hi-
gher than the collective bargaining agreement due to the sales bonuses obtained throughout the
year, a growth of 23% compared to 2008.
SALARy PRoFILE (R$) – AVERAGE MonTHLy SALARy In BRAzILIAn oPERATIonS.1 2
Women - total (R$)
Average monthly salary in production positions
Average monthly salary in administrative positions
Average monthly salary in management positions
Average monthly salary in executive positions
Men - total (R$)
Average monthly salary in production positions
Average monthly salary in administrative positions
Average monthly salary in management positions
Average monthly salary in executive positions
Black and multiracial women (R$)
Average monthly salary in production positions
Average monthly salary in administrative positions
Average monthly salary in management positions
Average monthly salary in executive positions
Non-black and non-multiracial women (R$)
Average monthly salary in production positions
Average monthly salary in administrative positions
Average monthly salary in management positions
Average monthly salary in executive positions
Black and multiracial men (R$)
Average monthly salary in production positions
Average monthly salary in administrative positions
Average monthly salary in management positions
Average monthly salary in executive positions
Non-black and non-multiracial men (R$)
Average monthly salary in production positions
Average monthly salary in administrative positions
Average monthly salary in management positions
Average monthly salary in executive positions
Over 45 years of age (R$)
Average monthly salary in production positions
Average monthly salary in administrative positions
Average monthly salary in management positions
Average monthly salary in executive positions
2007
3,815.5
1,009.3
4,458.9
11,307.3
28,284.5
3,291.2
1,235.1
4,188.4
11,613.2
32,156.4
NA
nA
nA
nA
nA
NA
nA
nA
nA
nA
NA
nA
nA
nA
nA
NA
nA
nA
nA
nA
6,729.6
1,547.6
7,021.3
14,809.8
36,459.0
2008
4,352.0
1,104.5
5,287.9
12,341.1
31,185.9
3,550.3
1,352.5
4,656.4
12,906.9
38,788.7
NA
nA
nA
nA
nA
NA
nA
nA
nA
nA
NA
nA
nA
nA
nA
NA
nA
nA
nA
nA
7,540.2
1,676.3
8,161.9
15,198.0
38,395.8
2009
4,755.1
1,150.0
6,137.4
13,105.1
34,309.8
3,574.3
1,362.3
4,621.5
13,886.2
42,162.5
NA
nA
nA
nA
nA
NA
nA
nA
nA
nA
NA
nA
nA
nA
nA
NA
nA
nA
nA
nA
8,067.5
1,712.7
8,961.0
17,437.9
38,242.9
naturaannualreport
46
Up to 45 years of age (R$)
Average monthly salary in production positions
Average monthly salary in administrative positions
Average monthly salary in management positions
Average monthly salary in executive positions
2007
3,317.4
1,110.5
4,016.6
11,177.3
29,535.9
2008
3,653.4
1,213.6
4,652.1
12,379.8
36,658.4
2009
3,850.4
1,240.7
5,266.5
13,068.4
41,570.5
1. The calculation does not take into consideration the payment of the short-term incentive (profit sharing).
2. For the purpose of the calculation of this indicator, the bonuses paid to sales managers and promoters were considered.
When the sales force employees are placed in their categories, this improves the average women’s salaries due to the bonuses,
excluding production jobs.
.In Natura’s operations in Brazil, the collective bargaining agreements signed with the unions
include all our employees, as determined by legislation. In the foreign operations, this matter
follows the laws of the countries where we operate.
Natura appreciates and recognizes the right of employees to be represented by their respec-
tive unions. We do not have formal processes for the identification of operations in which the
right to exercise freedom of association and collective bargaining may be at risk. However, we
place the Natura Ombudsman’s Office at the disposal of our employees to receive any type
of complaint (learn more in Quality of Relationships). In the Brazilian operations, the relationship
with unions is coordinated by our Human Resources department by means of meetings to
discuss agendas that are set in advance with union representatives.
At Natura, although procedures for the prior notification of operational changes are not
specified in the collective bargaining agreements, we have always tried to communicate such
changes in advance and, therefore, provide clarifications.
We have the Poupança Incentivada (Subsidized Savings Account) Program, a benefit offered
to all our employees to encourage a culture of saving money. All employee decides on the
amount they wish to contribute from a scale from 1% to 5% of their salary, and Natura con-
tributes with 60% on the contribution made by the employee, up until a maximum monthly
salary of R$ 13,129.00. Except for the relationship managers and sales managers, who receive
bonuses in every 12-day cycle in proportion to the results obtained, all our employees receive
an annual bonus in the form of a 14th month’s salary1.
In 2009 the company’s contributions dropped 54.9% compared with the previous years due
to a surplus in the pension fund. This favorable balance is the result of many employees who
have worked at Natura for less than five years leaving the company before they had the right
to redeem the contribution. (Graph 1)
BENEFITS
Natura offers a number of benefits to ensure the practice of well-being well among its em-
ployees. In 2009 we changed the system of our employee health plan, which used to be
managed internally. Due to the growth of our activities and consequent increase in the level
of actuarial risk, we concluded that a migration to a health insurance plan would be more
sustainable.
In the second half of 2009, we started to offer a six-month maternity leave to our female
employees. This practice has been encouraged by the federal government. We also increase
our offer of transportation to the employees from the surrounding communities. most of the
benefits are provided to permanent employees but a number of benefits are also offered to
temporary workers.
We maintained the relationship actions towards pregnant workers. The program offers cour-
ses to employees, in-house outsourced employees and wives of employees, in addition to la-
boratory tests, without any cost to employees and wives of employees, and appointments with
psychologists after birth and during the period of adaptation of their children at the nursery.
Benefits offered to employees from the Brazilian operations
• Natura Educação (Natura Education) Program
• Construindo o Futuro (Building the Future) Program (includes subsidized savings account)
• Nursery for employees’ children up to 2 years and 11 months old (Until 2007, the nursery
served children up to 3 years and 11 months old. The maximum age was reduced in order
to meet the demand. Therefore, we managed to ensure exclusive breastfeeding up to the 6th
month of life and the proximity with the mother without her having to quit her career).
• Support for employees in adoption processes
1 All registered employees are entitled to
the payment of a 13th month’s salary in
December of every year as required by Law
No. 4,090 of July 13, 1962
1. ConTRIBUTIonS MADE By
nATURA To THE PEnSIon PLAn
oF EMPLoyEES (R$ MILLIonS)
3.808
3.076
1.387
2007
2008
2009
2. All registered employees are entitled to
the payment of a 13th month’s salary in
December of every year as required by
Law No. 4,090 of July 13, 1962.
naturaannualreport
47
• Health plan
• Dental care plan
• Psychological/social service
• Check-up for management-level employees
• Medical services in the company’s facilities for the prevention of metabolic conditions
(diabetes, cholesterol and triglyceride) and cardiovascular conditions (hypertension)
• Partial reimbursement of expenses with medications for cardiovascular conditions, dia-
betes, kidney failure, oncology, hepatic diseases, neurological disorders, work-related
musculoskeletal disorders, and psychiatric alterations
• Telemedicine: electrocardiogram (EKG) via telephone in emergency cases
• Health Area: Admission, regular, laboratory and discharge health tests; general practi-
ce; gynecology, orthopedics, physiotherapy; acupuncture; global postural reeducation
(GPR); nutrition, treatments for work-related diseases, collection of samples, all available
at the company’s premises.
• Saúde em Movimento (Health in Movement) Program: incentive to practice physical
exercise. medical, nutritional and physical check-up before starting the activities.
• Gym subsidy for Relationship Managers
• Five free products for management-level employees
In addition to these benefits, the employees are entitled, in the company’s facilities to:
• Buy five Natura products per month with a 40% discount in the VIP shop
• Vacation Project (activities held in July at Natura’s Cajamar unit aimed at employees’
children aged between 6 and 12 years and 11 months)
• Professional guidance
• Cuidando de Quem Cuida (Taking Care of Those Who Take Care) Program: post-birth
meeting, course for pregnant women
• Daycare/exceptional children subsidy
• Life insurance
• Payroll loan
• Cars for management-level employees
• Family moment (with distribution of toys)
• Pharmacy agreement for discounts on medications
• Chartered transportation
• Christmas basket
• Gifts (Mother’s Day, Father’s Day and birthday)
• Sale of School Materials
Benefits offered to employees and outsourced employees:
• Course for pregnant women
• Corredores (Runners) Project
• Restaurant
• Laboral gymnastics
• Toys
• Christmas basket
• Chartered transportation
• Fitness services, swimming pool and multi-purpose sports court at the Natura sports
club (Cajamar and Itapecerica da Serra)
• Services: seamstress, laundry, shoe repair, eyewear shop, insurance, post office, travel
agency and book and movie rental
HEALTH AND SAFETY
In 2009, even with the increase in staff, we reduced the number of work-related accidents by
20% in the Brazilian operations, with an impressive drop in the rate of serious injuries and no
work-related fatalities. We increased investments in the prevention of accidents by 17.8% in
relation to 2008. We also established a Health Committee and began to develop a database
that will allow us to better understand the health conditions of our employees and identify
new preventive practices.
naturaannualreport
48
We identified that approximately 60% of the work-related accidents in 2009 occurred as a result
of practices that did not comply with safety rules and procedures. In total, 70% of the injuries of
employees were hand injuries. For this reason, we will focus on the following measures in 2010:
• Promote an even more robust and complete management system that considers all
elements that are essential to health and safety management;
• Intensify the Quase Acidentes (Near Accidents) according to which our employees are
encouraged to communicate any situation or installation that may cause accidents;
• Implement a program for the evaluation and improvement of behavioral issues;
• Expand the focus of the Internal Week of Work-Related Accidents for the specific
prevention of hand accidents and communicate in a more expressive manner the
proper practices that provide more safety to employees.
TyPICAL woRK-RELATED InJURIES AnD DAyS MISSED AnD ABSEnTEEISM RATE (InCLUDInG
oUTSoURCED EMPLoyEES) In BRAzILIAn oPERATIonS1
Employees – number of accidents with leave²
Employees - number of accidents without leave³
number of work-related accidents per employee
outsourced employees –
number of accidents with leave leave4
outsourced employees -
number of accidents without leave4
workdays missed5
Frequency rate of accidents with leave6
Frequency rate of accidents with/without leave7
Investment in the prevention of illnesses
per employee (R$)
Investment in the prevention of accidents
per employee (R$)8
number of cases reported to the national Institute
of Social Security on occupational illnesses – Cajamar
number of cases reported to the national Institute
of Social Security on occupational illnesses –
Itapecerica da Serra
2007
10
3
0,003
8
9
115
1,06
1,38
2008
16
5
0,005
11
2
131
1,71
2,24
395,7
479,6
465,9
722,8
7
0
5
1
2009
12
5
0,004
4
4
84
1,31
1,85
707,4
851,5
10
0
1. Only the accidents reported in the units of Cajamar and Itapecerica da Serra are considered.
2. Accidents with sick leave are those in which the employee does not return to his/her activities on the working day after the
accident.
3. Accidents without sick leave are those in which the employee returns to work on the same day of the accident or on the
first working day after the accident.
4. Both our “resident” and “non-resident” service providers are considered.
5. Refers to Natura employees.
6. Equivalent to the number of accidents or injured employees with leave divided by a million man-hours worked.
7. Equivalent to the number of accidents or injured employees with/without leave divided by a million man-hours worked.
8. Includes the whole budget of the Work Safety Department, expenses and the investments made by the Engineering and
Manufacturing area to ensure and/or improve work safety conditions. Expenditures with training are not included.
Formal agreements with unions include labor protection measures, in addition to the use of pro-
tection equipment; practices for the prevention of accidents with machinery and equipment; com-
munication of labor-related accidents; and the existence of an Internal Accident Prevention Com-
mission (IAPC). All employees from the Brazilian operations are represented in formal safety and
health committees and in the IAPCs.
The funds used in the prevention of illnesses increased 47.5% in 2009 compared with the previous
year. This was due to investments in prevention programs, as well as in improvements in infrastruc-
ture and services. In 2009, the outpatient clinic started to operate 24 hours a day, which required
the contracting of first-aid drivers for the same period.
naturaannualreport
49
In 2009, the number of work-related illnesses doubled. This was because last year we had a large
number of new hirings in a short period of time, which resulted in employees not having enough
time to receive and assimilate the information on health, work safety and ergonomics. Additionally,
with the review and reactivation of the readaptation program, which was focused on musculoske-
letal pathologies, it was possible to identify new cases of work-related illnesses.
One of the highlights of the year was the organization of the fourth Ergonomic Evaluation, which
is one of the phases of a program for the monitoring and control of risks associated with work-
related illnesses, such as Repetitive Strain Injuries and Work-Related musculoskeletal Disorders
(RSI/WmSD). Based on a previous diagnosis, it is possible to check the evolution stage in the
preventive work and establish guided action plans. The first evaluation took place in 1998 when
the program was launched. In 2009 we were able to eliminate job posts classified as posing high
ergonomic risk.
In addition to replacing machinery for more appropriate versions, we also developed preventive
measures, such as the practice of laboral gymnastics and the rotation of operational employees in
the use of machines. In 2009, ten new cases of RSI/WmSD were identified in the Brazilian ope-
rations. They were all checked by multidisciplinary health teams made up of occupational health,
orthopedist, physiotherapist, psychologist, ergonomist and acupuncturist doctors.
In 2009, we also established a Health Committee and began to develop a database that will
allow us to better understand the health conditions of our employees and identify new pre-
ventive practices.
In 2009, we followed the recommendations of the World Health Organization with respect to the
influenza H1N1, sending home for 7 days those possibly infected as well as those who work closely
to the suspected cases. There was a suspected case in the nursery and, consequently, activities were
suspended for some groups. For the mothers who did not have anyone to leave their children with,
Natura gave them time off work or provided financial assistance for hiring baby-sitters.
COmmUNICATIONS WITH EmPLOYEES
Communication is a key part of our organizational and cultural development processes.
Important changes include expanding the purposes of internal communication, causing
management to play the role of communicators, engaging in dialogue with their teams,
and, consequently, bringing together the internal communications of Natura’s Essence.
The information disclosed, in accordance with the profile of each stakeholder, became, ge-
nerally speaking, more strategic and relevant for the broad understanding of the company’s
main progress over the year.
An example of this new, more lively and dynamic phase of internal communication is
the Canal Natura (Natura Channel) – digital broadcast television whose programming is
shown at 22 points distributed at Cajamar, Itapecerica da Serra, Benevides, and also at the
Natura House in Campinas. The Natura Channel was strengthened in 2009, and the satis-
faction of employees with this means of communication reached 89%, a significant growth
in relation to the 76% seen in 2008. Interactivity is one of the channel’s characteristics.
Employees may suggest agendas and are also invited to work in the shows.
naturaannualreport
50
CONSULTANTS AND NCAS
Natura consultants (NCs) are an essential part of our history. Since 1974, when we opted for
the direct sales model, they have been responsible for taking not only our products to consu-
mers but also our Reason for Being, our Vision, and our Beliefs. In 2009, we reached a historical
figure: we exceeded the milestone of 1 million consultants working with Natura, 879,700 of
which are in Brazil and 159,200 in the international operations. In Brazil, the increase in the
number of NCs in 2009 was 20.5%, and abroad, 33.2%.
nUMBER oF ConSULTAnTS In BRAzIL AnD FoREIGn oPERATIonS (In THoUSAnDS)¹
Brazil
Argentina
Chile
Mexico
Peru
Venezuela²
Colombia
France
Total
2007
632.4
30.8
12.6
12.1
26.0
2.3
2.0
0.4
718.6
2008
730.1
37.3
17.5
20.0
35.2
2.8
5.9
0.8
849.6
2009
879.7
46.5
24.5
31.2
42.6
n.a.
13,0
1.4
1,038.9
1. This refers to the number of consultants at the end of the year.
2. Operations in Venezuela were discontinued in August 2009. Until the 2009 cycle, Venezuela had 2,300 consultants available.
The other foreign operations refer to the closing position of cycle 17.
In Brazil, an important part of this significant increase was the establishment of the Natura
Consultant Adviser (NCA) model, which was launched in 2008 and in the following year
implemented in the entire Brazilian operation. The design of this model starts with our
Relationship managers (Rms) further supporting the activities of the NCAs. The NCAs,
who also work as consultants, play an important role in attracting, advising, and developing
consultants. (Graph 1)
We ended 2009 with approximately 9,000 NCAs in Brazil, each of them serving as many
as 150 consultants. The NCA model meets the needs of our regionalization strategies
(learn more on page 28). They are a significant part of our commercial model because they
contribute to the strengthening and cultivation of relationships and leverage the growth of
our business.
The income distributed to consultants increased by approximately R$ 300 million, from
R$ 2 billion in 2008 to R$ 2.3 billion in 2009. However, we saw a reduction in the average
income per head for these stakeholders in the same period. This was due to an acceleration
in the increase in the number of new NCs, who at first show lower productivity. When the
length of time of the relationship with Natura is considered, both the group of NCs active
for less than one year and the group that has been with the company for longer showed an
increase in productivity in nominal terms in relation to the previous year. However, in the
composition mix, which establishes a productivity average among all NCs, the average was
reduced since there is a larger number of new consultants.
1. nUMBER oF nATURA
ConSULTAnT ADVISERS In BRAzIL
9.0831
5.8442
6303
2007
2008
2009
1. The increase in the number of NCAs is related to
the expansion of the model in the city of São Paulo
and in the Northern and Southern regions.
2. This takes into consideration the Midwestern,
Interior of São Paulo, Northeastern, Rio de Janeiro,
and Minas Gerais regions.
3. Pilot project in the Midwestern region.
AVERAGE AnnUAL InCoME GEnERATED (R$)
natura Consultant Advisers (nCAs)
Consultants (nCs)
2007
10,908
2009
9,841¹
4,247 4,097 3,987
2008
3,380
1. The increase in the income per head of the NCAs is related to the new regions that adopted the model and the number of
cycles in which these NCAs worked during the year.
TRAINING
We recorded 583,000 participations in training courses for consultants in 2009, training
527,000 NCs (the same consultant can participate in more than one course). As a result,
we exceeded our target, which was to have the participation of 436,000 NCs in training
courses in 2009.
In 2008, approximately 30% of the NCs took some kind of training course and, in 2009, this
rate increased to 40%. We also started a pilot project to offer advanced courses to these
naturaannualreport
51
stakeholders. The first, developed in partnership with the National Service for Commercial
Education (Senac), took place in São Paulo, with the offer of courses in entrepreneurship
and makeup technique to 2,000 NCs.
The new NCs take a training course called Boas-Vindas (Welcome), through which they
are monitored from the time they join Natura to the receipt of their first order. In this
activity, they become familiarized with the work of consultants and Natura, receiving basic
information on our value proposal, which involves the relationship with the sales channel,
our products, and our Values and Beliefs. In 2009, we reached nearly 100% in support and
training to NCs who started the activity between January and December, whether by
means of in-person training courses or by the distribution of 70,000 self-instruction kits
(containing a book, a DVD, and samples of products), which were sent to the new NCs
last year.
In 2009, we completed the roll out of the Social Security Education Program in Brazil. The
initiative, which started in 2006, aims to stimulate the inclusion of Natura´s consultants in
the Social Security system by means of raising awareness of the importance to contribute to
the social security system. Over four years, we trained 956 sales promoters and relationship
managers from across Brazil in 44 groups to work as agents to raise the awareness of the
NCs of the importance of the protection offered by Social Security. Since the beginning of the
program, we have also prepared and distributed approximately 880,000 folders and raised the
awareness of over 55,000 consultants. Only in 2009, 115 relationship managers from Rio de
Janeiro were trained and around 115,000 folders were distributed.
nC TRAInInG
new nCs
Initial training
Participations in training courses¹
2007
266,762
95,673
350,496
2008
303,958
164,927
458,217
2009
430,229
354,415
583,000
1. Takes into consideration the participation of the same NC in different training courses..
A good indicator of the quality of the relationships that we establish with the NCs is the
turnover rates, which are among the lowest in the world among direct selling companies,
according to a survey by Natura. This reflects the positive results of our strategies to retain
and train these stakeholders.
As a signatory of the Direct Sales Conduct Code before Direct Sellers and between Com-
panies of the Brazilian Direct Selling Association (ABEVD), Natura prepares its NCs to work
in the field in accordance with the company’s ethical standards.
In 2009, as in previous years, we did not record any legal or administrative case that implied
violation of data on consultants or loss of their privacy. Neither was there any record of legal
cases on issues such as child, dangerous, or slave labor involving the NCs.
NATURA HOUSES
Still in the experimental stage, the Natura Houses are aligned with our strategy to bring
our consumers and consultants together. In 2009, we inaugurated five new Natura Hou-
ses in Brazil, in the Greater São Paulo region (in the districts of Paraíso, Santo Amaro
and Itaquera – in the city of São Paulo – and in the cities of Osasco and Guarulhos). In
Latin America we have another 10 Natura Houses in mexico, Argentina, Colombia, Chile,
and Peru.
These facilities support the activities of consultants. There both consultants and consumers
can test our entire portfolio; courses and events also take place, such as the Encontros Natura
(Natura meetings), which are carried out at the beginning of each cycle to introduce the new
products to our sales force.
COmmUNICATION CHANNELS
Natura seeks to provide well-structured communication channels to consultants. In 2009,
by means of the Conectividade (Connectivity) Project, we invested in increasing the number
of orders made via the Internet, an efficient channel that allows NCs to make contacts
digitally. The Conectividade Project encourages the gradual migration of orders to the
naturaannualreport
52
vir tual channel, including discounts and promotions exclusively offered via the Internet.
To make access easier, all Natura Houses have computers available for the NCs to place
their orders electronically.
In 2009, 71% of our orders were placed on the online channel, totaling 8.94 million virtual
orders, compared to 53% in 2008. (Graph 1)
1. nUMBER oF oRDERS
PLACED VIA THE InTERnET¹
(In THoUSAnDS)
8.941,1
The NCA model contributed to the increase in online orders, as the NCAs educate NCs on
the use of this channel. Our website for the end consumer also allows the faster and more
effective registration of new consultants.
4.277,6
2.663,0
Another communication channel with the NCs is the Natura Service Center (NSC), through
which communication is made via a toll-free number. The NSC provides a wide range of
services, such as the receipt of orders, the answering of queries related to products and
promotions and handling compliments, criticisms, and suggestions. In each cycle the service
staff are trained to provide accurate information and to communicate significant changes. The
queries that are classified as critical are forwarded to the Ombudsman’s Office, which works
to re-solve these cases (learn more on page 34).
In 2009, we recorded 25% more queries received by the service center compared to the pre-
vious year. The average monthly number of queries through this channel, however, fell 14.5% in
the same period, closing 2009 with a daily average of 28,000 calls. This drop is directly related
to the increase in the number of orders placed via the Internet. (Graph 2)
2007
2008
2009
1. Orders received by consultants through the
Internet billed in the respective years.
2. AVERAGE DAILy CALLS
RECEIVED By nSC – nATURA
SERVICE CEnTER¹ (In
THoUSAnDS)
37,9
32,8
28,0
QUALITY OF SERVICES
2007
2008
2009
1. Calls related to the Brazilian Operation.
we identified a great opportunity for improving our services to nCs, in product
availability, and in delivery deadlines. Last year our consultants faced these proble-
ms again. Due to the significant increase in sales far above our projection in some
periods of the year, the non-Service Rate (nSR) increased again.
The nSR is a central issue for natura. one of its main points concerns the lack of
products related to miscalculation of demands and training along the production
chain. In 2009, we created a working group composed of the company’s leaders,
who adopted short, medium, and long-term solutions, such as offering more advan-
tageous alternative products to the nCs, maintaining promotions, resizing stocks,
managing portfolios, and reviewing the logistics model.
This will continue to be a strong focus point in 2010. we undertook to improve
this situation with a number of strategic actions that are already in progress, such
as investing in infrastructure, logistics, and information systems, and focused on
increasing the flexibility and robustness of the chain and the quality of demand
forecasting.
RECOGNITION AND INCENTIVES
The results of the surveys on the quality of our relationship with our consultants and on their
satisfaction remained high, 90% and 88% respectively, reaching the target set for 2009 and showing
the consistency of our performance at the time. The level of satisfaction of NCAs increased two
percentage points to 95% in 2009.
In the satisfaction surveys with NCs, NCAs, and consumers (learn more on page 45) we included
the loyalty rate, which combines the level of satisfaction with our company, the intention to con-
tinue the relationship with the company, and the intention to recommend Natura. The loyalty of
the NCAs, for example, rose six percentage points between 2008 and 2009 to 37%. The loyalty
of the NCs, on the other hand, remained stable compared to the previous year.
naturaannualreport
53
ConSULTAnTS (%)
Satisfaction¹
Loyalty2
Quality of relationship (Climate)3
nATURA ConSULTAnT ADVISERS – nCAs (%)
Satisfaction¹
Loyalty 2
Quality of relationship (Climate)3
jan/08
90
n.a
90
jan/08
87
n.a
93
jan/09
88
16
90
jan/09
93
31
96
jan/10
88
17
90
jan/10
95
37
96
1. Percentage of consultants and NCAs in Brazil who are “satisfied” and “totally satisfied” (top 2 boxes).
2. Percentage of loyal consultants and NCAs in Brazil. The loyalty rate is calculated based on the Top Box (% of consultants
who attributed the highest score) for satisfaction, intention to continue and recommend. There is no historical data for
January 2008.
3. Average of climate category attributes, which includes issues related to training and development, work conditions,
compensation, quality of life, and motivation.
Natura rewards consultants for their services, dedication, and good performance. NCs
who have been with Natura for 15 years are invited to visit the Espaço Natura (Natura
Plant) in Cajamar, spending two days with us and being welcomed at a gala dinner, where
they receive a souvenir directly from the vice presidents and senior vice presidents, sho-
wing our gratitude and recognition. In 2009, 64,030 NCs were rewarded for their length
of service and 10,572 for good performance, in both sales volume and in the sales of refills
and products of the Crer para Ver (Believing is Seeing) line (learn more on page 61). There
are rewards for the NCs who have been with Natura for five and 10 years, and awards
for outstanding performance.
We believe in strengthening personal relationships, and through the reward program we
invest in the loyalty of our sales force. This is a spontaneous action of Natura that is adjusted
to our operational strategy.
nCS RECoGnITIonS
Total nCs recognized for length of service
Total nCs recognized as outstanding (Destaque)
number of Awards distributed to
outstanding (Destaque) nCs
number of outstanding (Destaque) nCs
Recognition Events
2007
51,703
14,150
2008
65,000
14,493
1,120
1,120
49
56
2009
64,030
10,572
473
43
We also use incentive campaigns, which have become an important marketing tool aligned
with our strategy. In addition to stimulating sales, the campaigns strengthen the relationship
with our sales people, increasing the connection with the brand, recognizing the work of
our NCs, and helping them to increase their income. One of the main events is the Chronos
Convention, which in 2009 was held in Cabo de Santo Agostinho (State of Pernambuco).
At the time, we rewarded 300 NCs, who excelled in the sale of products from the Chronos
line during the year. (Graph 1).
mOVImENTO NATURA (NATURA mOVEmENT)
The Natura movement was created in 2005 to raise awareness and mobilize our con-
sultants in actions and projects, through which they can work as social change agents. In
2009, we had 13 projects in the different regions of Brazil. We involved 45,467 NCs in the
following projects: Crer para Ver (Believing is Seeing) Program, Água de Viver (Water to Live),
A Mata Atlântica é Aqui (The Atlantic Forest is Here), Reciclagem de Produtos Natura (Natura
Product Recycling), Mulheres da Paz (Women of Peace), Papo de Responsa (Serious Talk),
self-esteem actions, and income generation in low-income communities, among others. For
2010, the target will be to engage 100,000 NCs.
In the Reciclagem de Produtos Natura, for example, the NCs are encouraged to request the empty
packaging of our products when they visit their customers, and then return it to the transportation
company that delivers it to cooperatives of partner garbage collectors. As a result, we not only
ensure the proper destination of materials but also generate income for the cooperatives.
1. ToTAL oF PRIzES AwARDED In
InCEnTIVE CAMPAIGnS To nCS1
3.103.395
2.377.741
1.296.000
2007
2008
2009
1. The volume does not take into account
products from regular cycle promotions.
naturaannualreport
54
In 2009, this project, which was already run in the cities of São Paulo (state of São Paulo) and
Recife (state of Pernambuco), was extended to the coast of the state of São Paulo and Rio
de Janeiro lowlands (state of Rio de Janeiro), as well as to the state of Espírito Santo and to
Salvador (state of Bahia). In total, 18,141 NCs took part in the project and they collected 118
metric tons of post consumption packaging.
RECyCLInG PRoJECT
Penetration of participating consultants (%)
Total metric tons collected²
2007
10.0
90.8
2008
2.3
118.0
2009
2.4
120.0
1. Percentage of consultants participating in the project (delivery of box with waste) divided by total consultants who are active
in the cycle.
2. Embalagens e produtos Natura pós-consumo.
Last year, we also started a partnership with the NGO SOS mata Atlântica in the A mata Atlân-
tica é Aqui (The Atlantic Forest Is Here) project, which aims to inform and raise people’s awa-
reness of the importance of this biome. Our consultants were invited to participate in itinerant
exhibits on the Atlantic Forest held in 28 Brazilian cities in the states of São Paulo, Rio de Janeiro,
Santa Catarina, Paraná and Rio Grande do Sul. Between may and December 2009, 1,010 NCs
visited the exhibits.
Another project created in 2009, also in partnership with SOS Mata Atlântica, was the Água
de Viver (Water to Live) pilot program, which aims to engage and mobilize the Natura sales
force and the children from their respective communities on the water issue. Last year, 63
monitoring stretches were chosen in rivers of the three Brazilian southern states. By means of
this project, Relationship managers (Rm) were trained to become “water guardians”, learning
to conduct the monitoring. In the program, each Rm was responsible for monitoring a given
stretch of the river. In total, in addition to the Rms, 243 consultants and 270 children were
involved in the Água de Viver program.
Natura also supports the Papo de Responsa (Serious Talk) project conducted by the Rio de Ja-
neiro Civil Police and the Grupo Cultural AfroReggae (AfroReggae Cultural Group). By means of
lectures at schools in the state of Rio de Janeiro, the project aims to raise awareness on human
rights, violence, peace culture and of responsibility and the value of human life. We participate
trough financial support and the institutional strengthening of the project, and our consultants
work as agents of the proposal and appoint the schools where the lectures will be held. In 2009,
1,224 NCs were involved in the Papo de Responsa project.
Another highlight in the year was the partnership signed between Natura and the United Na-
tions Development Programme (UNDP). We mobilized and encouraged our consultants to
participate in the Brasil Ponto a Ponto (Brazil from End to End) campaign, which also involved
other partners of the UNPD and aims to work towards (shaping) a better country. In total,
72,127 NCs from all over Brazil were involved, being encouraged to express their opinions
during the Encontros Natura (Natura meetings) and virtually on Natura websites by answering
the question: “What needs to be changed in Brazil for your life to really improve?” The contri-
butions of the NCs will help to support the UNDP in the preparation of the Brazil´s Human
Development Report.
naturaannualreport
55
CONSUmERS
millions of people all over Brazil use Natura’s products, which are developed with the inten-
tion of awakening the senses and promoting well-being well. We work to maintain a por-
tfolio of choices that can go beyond functional needs. Accordingly, we believe that we can
contribute to increasing individuals’ awareness of themselves, of others, and of the world.
Natura continuously strives to be closer to consumers, and 2009 was important for the
strengthening of these ties. We have opened new channels so that consumers’ opinions and
ideas are ever more present in our daily lives, directly influencing our innovation process
right from the start, in the creation of new products, and taking care not to lose either the
essence of our brand or our ability to surprise.
In 2009, our consumers participated in two dialogue panels with representatives of all our
stakeholders. In January 2010, we also held a panel for consumers in which there were 22
representatives of these stakeholders from different regions of Brazil.
During this meeting, they offered opinions on our products, our sales channels, and our
corporate behavior, indicating areas for improvement and sharing their expectations of Na-
tura for the future. A diverse set of actions were suggested, such as creating more products
for men, intensifying the training of consultants to improve customer service, and increasing
the number of Natura Houses, thus offering more places to test products.
We intended to disclose Our Relationship Principles with Consumers in 2009, but we only
succeeded in doing this at the beginning of 2010. The principles address topics such as dia-
logue channels, relationship, quality of products and services, sustainability, and satisfaction.
They are available at www.natura.net/principios.
SURVEYS AND APPROACH
In 2009 we increased the volume of surveys and studies carried out with consumers by
approximately 200%. We created a Consumer Insight area to collect and increase our in-
formation on the market, further understand the behavior of consumers, and identify tren-
ds. This structure was reproduced in the Business Units, allowing us to collect even more
qualified information, separated by categories and products. The Regional Units have also
been contributing to the identification and collection of information on local needs.
A good example of this was the Oscar Freire Project, launched for the celebration of
Natura’s 40th anniversary. Through an Internet channel, consumers could choose which
products they would like to see back in our portfolio. The ones with the most votes were
returned to production and named “Natura Classics.” The project had more than 20,000
registered users and has attracted 15,000 requests to restore favorite products. Another
initiative was the Bela (Beautiful) Project, in which over 1,000 consumers tested the new
version of Chronos product before its launch, thus ensuring that we had the proper pro-
duct for the skin of Brazilian women.
As a result of our work in the market, the constant innovations, product portfolio, and
communication strategies, we maintained competitive investments in marketing, reaching
R$ 204 million cumulatively in 2008 and 2009, in addition to those in 2007, financed by
productivity gains of R$ 252 million in the same period.
We have been achieving positive results in terms of our brand acceptance, which continued
to show high rates: according to the Brand Essence/Ipsos image survey, the overall evalua-
tion reached 81% and our consumer preference reached 46%, 30 percentage points higher
than the second place. (Graph 1)
In order to improve the monitoring of the quality of relationships with our stakeholders, in
2009 we included in the loyalty indicator, which was measured previously only by the level
of satisfaction, two new evaluation indicators: intention to continue the relationship with
the company and intention to recommend Natura. We achieved a 46% loyalty rate with
the consumers. This indicator is also being measured for suppliers and consultants (learn
more on page 43). (Graph 2)
1. GLoBAL EVALUATIon oF
BRAnD IMAGE SURVEy (%)¹ 2 3
83
81
80
2007
2008
2009
1. Source: Brand Essence..
2. The 2009 global evaluation indicator
was measured based on a quantitative
sample of 1,200 personal and home
interviews distributed over 3 markets:
400 in São Paulo; 400, Recife; 400, Porto
Alegre.
3. The survey was conducted with men
and women of classes A, B, C and D
(using the Brazil Economic Classification
Criteria of the Brazilian Association
of Research Companies – ABEP1),
between 14 and 70 years of age, using a
minimum of three cosmetic or personal
hygiene products. The sample included
both Natura and non-Natura users.
The top box measure considers the
respondents who attributed the highest
score to the brand in a range of 0 to 5
points. The entire quantitative survey has
a margin of error that corresponds to a
confidence level of 95%.
2. BRAnD PREFEREnCE (%)
47
46
42
2007
2008
2009
naturaannualreport
56
3. PEnETRATIon
In BRAzILIAn
HoMES 1 2 3 4 (%)
52.4
43.3
46.3
2007
2008
2009
1. Source: LatinPanel.
2. The penetration is the percentage of
homes represented in the survey that
bought the brand in the specified period.
3. The survey represents 81% of the
domiciled population and 90% of the
potential consumption in Brazil (according to
the Target Index).
4. Due to updates in the population profile,
the information from Natura was adjusted
and the numbers for the previous years
were reviewed.
In 2009, we increased our penetration in Brazil, reaching 3.5 million new homes, which were add-
ed to the more than 20 million homes where the Natura brand is already present. (Graph 3)
CUSTOmER SERVICE
Customers have different ways to interact with Natura. One of the main communication
channels is the Natura Customer Service Center (NCS), which provides clarifications and
receives criticisms, compliments, and suggestions. In 2009, the NCS received 1.48 million
calls, 76% of which were answered within 30 seconds.
With respect to unanswered calls, they increased from 60,000 in 2008 to 109,000 in 2009.
This reflects an extra and unexpected demand for customer service resulting from an in-
crease in orders placed in February and march (49% and 48%, respectively, compared with
the same months of 2008), thus increasing the number of unanswered calls. After this period,
the unanswered call rate dropped by half in may 2009.
nCS – nATURA CUSToMER SERVICE (CALLS In THoUSAnDS)
Total
Answered
Unanswered
1. Calls related to the Brazilian operations
2. The sum was corrected and the data for 2008 changed.
2007
1,9841
1,8541
130
2008
1,5312
1,471
60
2009
1,484
1,375
109
In order to improve the service, in August 2009 we updated our customer service policy.
The main change was in the product complaint service. In some cases, we collect and
analyze the product about which there was a complaint, and, after verifying the defect,
we make an exchange. This change speeds innovation and contributes to the study and
continuous improvement of our products and services.
The cases of allergic reactions to products are analyzed, and solutions are adopted on a
case-by-case basis. This analysis further improves our formulations. In the second half of
2009, our indicator that measures customer complaints per items billed per million dropped
69% from the first half, and, at the end of 2009, it was 28% lower than in 2008.
The training of NCS employees is continuous, with programs staged in every cycle. In 2009,
we provided a special training course to all NCS employees to prepare them to serve
customers during the Christmas campaign, a period in which the demand for the service
channel increases.
As we are concerned with the privacy and confidentiality of customers, all customers who
contact us via the Internet or NCS are protected by policies and systems that ensure data
security. In 2009 we did not record any legal or administrative cases related to violation of
privacy or loss of data of our consumers.
CLEAN CITY
In July 2009 we were assessed by the city hall of São Paulo as it understood that
we had disrespected the Municipal Law no. 14,223, which is known as the Clean
City Law. This resulted from the fact that natura supported the “Concrete Poetry”
exhibit. As soon as we received the assessment, the agency responsible for the
campaign immediately removed the exhibit from the streets.
At the time, we clarified that natura did not act in bad faith or mean to disrespect
the law at any moment. natura has not made any billboard campaigns for over a
decade, even before this was made illegal, because it believed it was necessary to
reduce visual pollution in large urban centers. Although we regret the embar-
rassment, we believe that there is a need to discuss, with society as a whole, the
opportunities and limits for using and intervening in the urban area.
naturaannualreport
57
CONSUmER HEALTH AND SAFETY
The safety and health of our consumers guides all our processes, from the development of
product concepts to the final disposal of packaging, including research and development,
cer tification, manufacturing, marketing and promotion, storage, distribution, supply, and
product use itself. We have a Product Safety management Department that is responsible
for evaluating and ensuring the safety of all of our ingredients and finished products.
Before adopting a new ingredient or new formula, we use the precautionary principle as
a guideline. If there are any questions by international medical and scientific communities
with respect to a possible adverse effect on health, we choose not to use it. In the case of
raw materials that have some limitation with respect to the volume allowed, we adopt the
standards of the country in which sanitary legislation is strictest. We maintain our target
to eliminate parabens and phthalates as ingredients in our products by the end of 2010.
All new ingredients and formulas are rigorously tested by dermatologists.
We maintain a Cosmetic Vigilance System, which monitors possible adverse effects of pro-
ducts, protects the end consumer, and drives the innovation process. All communications
on health or safety effects received by the Natura Customer Service are investigated.
This care meant that in 2009, as in previous years, there were no convictions or questions
by the Brazilian National Agency of Sanitary Vigilance (Anvisa). Nor were there any fines
related to our products with respect to impacts on consumer health and safety or signifi-
cant fines related to product labeling.
We received in 2009 352 complaints to the Consumer Protection and Advisory Program
(Procon), most referring to requests to negotiate debts of consultants; third-party questions
related to undue inclusion on the list of customer credit protection agencies as a result of re-
gistration fraud; and complaints from consumers who were dissatisfied with an unperformed
product exchange or refund. All complaints are analyzed by the proper departments and the
resulting information is used to make improvements in our processes. Natura also works
in accordance with the rules of the Advertising Self-Regulation Council (CONAR), and the
codes of conduct of the Brazilian Association of Advertisers (ABA), Brazilian Association of
Consumer Protection (Pró-Teste), and Brazilian Direct Selling Association (ABEVD).
PRó-TESTE
A survey reported by the media in 2009, which was conducted by the nGo Pró-
Teste (Brazilian Association for Consumer Protection), had announced that the subs-
tance oxybenzone is prohibited in other countries, but this is not true. The use of
this substance was one of the criteria adopted by the nGo to “fail” a series of well-
known sunscreen brands, among which was natura’s Fotoequilíbrio Emulsão Prote-
tora Hidratante FPS30 (SPF30 Photoequilibrium Emulsion Moisturizing Sunscreen).
natura assures the public that none of the ingredients used in its products is harmful
to health or carcinogenic. The ingredient oxybenzone is safe and can be used in a
concentration approved by the strictest international control bodies, such as the
brazilian national Agency of Sanitary Vigilance (Anvisa), the United States Food and
Drug Administration, and the European Cosmetics Association. Together with trade
associations and other manufacturers, we challenged the reliability of the tests due
to a number of irregularities, including the use of a methodology that is not approved
by Anvisa. we consider this survey as harmful for the general population, as the use
of sunscreens decreases the risks of skin cancer.
naturaannualreport
58
CONTROVERSIAL INGREDIENTS
Parabens
Parabens are a group of preservatives made up of short-chain and long-chain com-
pounds. The long-chain parabens are claimed to be harmful to human health, althou-
gh there is no scientific consensus on the topic. Although natura does use the short-
chain parabens, which are not harmful to health, in some of its products, it chose
to replace them in its new creations, eliminating them from its entire portfolio by
December 31, 2010. In 2009, we made progress in the research of new preservatives
and continued with the gradual replacement of this ingredient.
Triclosan
The greatest concern about triclosan refers to the fact that it is widely used in the
world, increasing its concentration in nature with possible impacts on the environ-
ment, as the substance affects water microorganisms because it is a synthetic antimi-
crobe that acts against the proliferation and growth of microorganisms. Consistently
with natura’s sustainable stand, we have since July 2008 we have replaced the use of
this ingredient in new products with plant origin alternatives and constantly seek to
develop new less harmful antimicrobes.
Phthalates
Phthalates are a family of compounds used for many different purposes, including as
additives in the manufacture of plastics and in the cosmetic industry. natura used a
compound from this family, diethyl phthalate, as a solubilizer of fragrances, bittering
agent, and alcohol denaturizer. when used in low concentration, there are no indi-
cations that diethyl phthalate can damage health. nevertheless, this ingredient may
be mistaken for the controversial versions of phthalates and so we have eliminated
this substance from our new products since June 2008. At the end of 2009, natura
banned the use of phthalates in PVC packaging that is in contact with products.
naturaannualreport
59
SUPPLIERS
Efforts to maintain a sustainable company necessarily include a focus on the quality of
our relationships with suppliers. They are fundamental links in our value chain, providing
inputs, finished products, services, equipment, and indirect materials necessary to our
business processes. Our supplier base is located mainly in Brazil, although a few suppliers
are abroad.
In 2009, we had relationships with 4,500 suppliers. Of this total, 5% are suppliers of
finished products and production inputs (ingredients from biodiversity, raw materials, and
packaging materials). The remaining 95% are suppliers of services and indirect ingredients
or materials.
We work constantly to establish long-term partnerships because we understand that our
suppliers are an essential part in the accomplishment of our value proposal. In 2009 we
star ted to work to reverse the descending trend in the level of satisfaction of suppliers,
which had dropped from 84% in 2007 to 74% in 2008. To this end, we designed a two-year
action plan star ted in 2009, and we established five priority actions based on a detailed
analysis of the 2008 satisfaction survey with suppliers.
These actions are focused on: awareness by employees of the critical aspects that may
affect the relationship, based on the relationship principles and processes with these
stakeholders; a closer relationship with strategic suppliers of finished products and pro-
duction inputs; improvement of the product innovation funnel process; improvement in
the payment process, particularly to the suppliers of services; and the extension of the
Qlicar Program to other categories of service suppliers. (Qlicar is a corporate program
for the development of suppliers. See below for more details.)
We had a significant increase in the level of supplier satisfaction for the Brazilian opera-
tions from 74% in 2008 to 82% in 2009, although we have not yet achieved the target
of 85%. We obtained high levels of satisfaction from suppliers of finished products and
production inputs, to whom we have been closer in 2009 and among whom we recorded
a 90% satisfaction level. (Graph 1)
In the process of working more closely with the suppliers of production inputs and in-
house outsourced workers, we have established relationship processes that improve the
communication between Natura and partners at operating, tactical, and strategic levels.
We systematized the meetings of the Qlicar program, implemented the Cafés da Manhã
com Fornecedores (Breakfast with Suppliers) and Encontro da Aliança (Alliance meeting),
programs that ensure Natura’s contact with all the organizational levels of our partners.
Of the three dialogue panels held during the year involving suppliers, one was specifically
for suppliers and gathered around 30 partners, while in the other two suppliers exchanged
experiences with representatives from other Natura stakeholder groups. In the panel for
suppliers, important questions were raised, such as the challenge of decentralized relations;
the benefit of a dialogue on the action plan for improving the quality of relationships; and
the new environment for a lead role that may be generated by designing relationships
(learn more in Quality of Relationships, page 34). We also made progress in increasing
transparency in the processes for negotiating production inputs through the use and
improvement of cost models per category.
Some other initiatives that enhanced the collaboration from our suppliers are also worth
noting. Seven transportation companies, for example, were critical to the success of the
Trilhas (Trails) Project of the Crer para Ver (Believing is Seeing) Program. They are: Rapidão
Cometa; Dias Entregadora; TNT mercúrio; Patrus; Rodofly; Utilissimo; Expresso Araçatuba.
They voluntarily transported the teaching materials that were distributed to schools from
210 Brazilian municipalities. The in-house outsourced workers and suppliers of production
inputs engaged in the internal project for the improvement in the level of service to our
consultants.
Despite the progress, we know that we still have opportunities for improvements. For this
reason, in 2010 we will continue with the existing plan and will increase communications
with these stakeholders with respect to sustainability and further integration of the chain.
1. GEnERAL SATISFACTIon¹ -
By SUPPLIER CoMPAny (%)
84
82
74
2007
2008
2009
1. Percentage of satisfied and totally
satisfied suppliers (top 2 box).
naturaannualreport
60
QLICAR PROGRAm
Since 2004, Natura has Qlicar (acronym for Quality, Logistics, Innovation, Competitiveness,
Service, and Relationship in Portuguese), a corporate program for the development of
suppliers based on performance indicator management. In 2009 78 production input and
service suppliers participated in the program.
Last year, we focused on stabilizing the program with finished product and production
input suppliers, searching for a greater integration of the chain and inclusion of initiatives
for mutual value generation and the reduction of water consumption and GHG emissions.
We verified that the quality audit process needs to increase its scope of work. We cre-
ated new indicators to measure the level of logistics service and determined innovation
indicators for the fragrance, packaging, and raw material categories. We also re-evaluated
the order cycle supplier program to make it stronger in 2010.
Our suppliers are subject to self-evaluation and audit exams related to quality, environ-
ment, and social responsibility issues, the latter including aspects related to human rights,
such as risks involving child, forced, or the equivalent of slave labor. In 2009, the 78 sup-
pliers who participate in Qlicar went through audit exams and self-evaluations; 48% of
productive suppliers were subject to audit exams. No cases of human rights violations
were found.
The same human rights aspects are taken into consideration in the Natura Supplier Qua-
lification process. In 2009, we signed 2,500 such contracts, 30% more than in 2008. This
increase in the number of new contracts with suppliers is directly related to the increase
in business volume.
AUDITED oR SELF-EVALUATED SUPPLIERS wITH RESPECT To QUALITy, EnVIRonMEnT AnD
SoCIAL RESPonSIBILITy1
Self-evaluated productive suppliers (%)
Audited productive suppliers (%)
Qlicar audited suppliers (%)
2007
100
36
n.d.
2008
100
48
100
2009
100
48
100
1. The human rights aspects considered are child, forced, or the equivalent of slave labor.
HUMAn RIGHTS CLAUSES In ConTRACTS 1 2
Significant investment contracts
with clauses related to human rights (%)
Significant investment contracts
with clauses related to human rights (in thousands)
2007
2008
2009
100
2,2
100
2,0
100
2,5
1. Among the criteria to determine whether a certain contract is significant are: a) amount (contracts over R$ 5 million); b) whether
the contract is related to a strategic project; c) whether the contract is essential for Natura’s business; d) whether the replacement of
the contracted party by another supplier is difficult; e) whether the contract poses risks to the company’s image. 2. The clauses refer
to child, forced, or the equivalent of slave labor.
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61
SUPPLIER COmmUNITIES
The sustainable use of ingredients from the Brazilian biodiversity is the main technological
platform of Natura. We recognize that the communities that form our network of ingre-
dient suppliers play a key role in preserving environmental heritage. A priority for us, they
provide us with the genetic heritage and traditional knowledge used in the development of
our products.
We ended 2009 with relationships with 26 communities. These include a total of 2,084 families
located in the North, Northeast, Southeast, and South of Brazil, and also in Ecuador. This
group of communities is characterized by great diversity, both cultural and socioeconomic.
They are located in different ecosystems and have different forms of social and institutional
organization. These stakeholders range from an extractivist community in the North of
Brazil, comprising approximately 400 families, to a small group of five families of farmers in
the Vale da Ribeira region in the interior of the state of São Paulo.
SUPPLIER CoMMUnITIES
Communities with which natura relates
Benefited families from the supplier communities
2007
19
1,684
2008
23
1,895
2009
261
2,084
1. The increase is due to the inclusion of four communities that are under the responsibility of the team from the Industrial unit
of Benevides (Cart, Coomar, Unidos Venceremos (United We Stand) Association and Jauarí Association). We stopped including the
community of Maninaltepec (Mexico), which was establishing a project that did not continue.
In Benevides, state of Pará, our industrial unit of oils and soap mass receives inputs from eight
supplier communities with which we relate directly. Our supply chain also includes processing
companies, which transform the inputs arising from the communities into raw materials.
Establishing and maintaining this network of relationships and inserting them into the business
model are challenges that Natura assumed a few years ago to encourage environmental pre-
servation and appreciation of traditional knowledge. . Despite good progress, we know that
this is an ongoing learning process.
We have an internal team made up of a multidisciplinary group, as well as management and
governance mechanisms established to meet the complexity that involves supply logistics, the
group of laws that governs the many aspects of this relationship and the cultural and social di-
versity of the communities involved. This structure allows us to internalize the challenges, such
as those that involve costs, quality and traceability of inputs, and incorporate them into the
strategic and daily decisions of our innovation projects and processes. . Despite good progress,
we know that this is an ongoing learning process.
LOCAL DEVELOPmENT
In 2009, we started to implement three projects that contribute to sustainable local
development: Reflorestamento Econômico Consorciado e Adensado (Consortiated and Densed
Economic Reforestation, RECA), located on the border between the states of Rondônia and
Acre, which supports the operation of the Escola Família Agrícola Jean Pierre Mingan (Jean
Pierre mingan Agricultural Family School), Cooperativa de Produtos Agroecológicos, Artesanais e
Florestais de Turvo (Cooperative of Agro-Ecological, Handmade, and Forest Products of Turvo,
Copaflora), in the state of Paraná, which supports institutional development; and Cooperativa
Mista dos Produtores Extrativistas da Reserva de Desenvolvimento Sustentável do Rio Iratapuru
(mixed Cooperative of the Extractivist Producers of the Sustainable Development Reserve
of the Iratapuru River – Comaru), in the state of Amapá, to improve the infrastructure of the
village and Brazil nut extraction.
These represent a target for the year that we achieved. The projects strengthen the groups
socially, promoting goals such as environmental preservation and cultural appreciation, in addi-
tion to improving the communities’ production infrastructure. Prepared with the participation
of the communities, the projects demonstrate Natura’s desire to extend its relationships with
its partners beyond a strictly commercial level.
naturaannualreport
62
Comaru: Improvements in the Village of Iratapuru and in the production chain of
the Brazil nut.
The role of Natura in this project is to support the community in the decision on the use and
management of the communities’ own funds, which are provided in the agreement established
with the company in 2004. Since that time, the community has proposed actions for improve-
ments in their quality of life, which were agreed on a case-by-case basis with Natura. In 2009,
the following actions started to be implemented:
• Renewal of the Brazil nut oil plant
• Implementation of improvements in the village’s infrastructure
• Equipment and infrastructure for the collection of the Brazil nut
• Investments in the Cooperative’s management
In this project, we also made available consulting services to support the community in the
implementation of the Iratapuru Fund and prioritization of the use of funds for investments in
infrastructure and management.
Reca: Support to the Escola Família Agrícola Jean Pierre mingam (Jean Pierre min-
gam Agricultural Family School)
The role of Natura is to supplement the investments made by other organizations in the
school’s infrastructure and equipment, making available resources for the school’s operation
and training and mobilization of the students’ families. This is the beginning of a multi-institu-
tional partnership that aims to promote the autonomy of the school in the medium term.
This school is a 20-year long dream of RECA that will now allow the youngsters from the
community to use their technical education to remain in the community, advancing the social,
environmental and economic sustainability of these families.
Coopaflora: Support for the institutional strengthening of the Cooperative
Natura’s role in this project is to strengthen Coopaflora and the Instituto Agroflorestal Bernar-
do Hakvoort (Bernardo Hakvoort Agroforestry Institute – IAF), which work on the preserva-
tion of araucaria forests, which are typical in the state of Paraná. Natura’s efforts in the region
supplement partnerships established by the IAF and Coopaflora with many other different
state-owned organizations, companies and NGOs. The main actions focus on:
• Support for institutional planning
• Implementation of a business plan for the cooperative for its financial autonomy
• Mobilization of youngsters for the appreciation of family farming
• Training in good processing practices to improve the quality of products
• Promotion of environmental preservation actions
ASSOCIATED TRADITIONAL KNOWLEDGE
AND CULTURAL HERITAGE
In 2009, we signed agreements to share the benefits from access to traditional knowledge
associated with the Brazil nut and Buriti Palm. The first agreement was signed with Brazil nut
producers from the community of Iratapuru (state of Amapá), and the second with Buriti Palm
oil producers from Palmeira (state of Piauí). Natura is proud of these agreements because they
represent the consolidation of parts of our policy for the sustainable use of biodiversity and
cultural heritage (learn more on page 64). Both provide financial resources that will be invested
in projects in accordance with local priorities, which will help the communities to implement
their development strategies.
Also, as part of the efforts to value traditional knowledge and the Brazilian cultural heritage,
in 2009, we maintained a relationship established in the previous year to provide institutional
support to projects for the improvement of the Escola municipal Indígena Pamáali (Pamáali
Indian municipal School) of the Baniwa and Coripaco indigenous peoples. The school is atten-
ded by native Brazilian groups from the Alto Rio Negro (Upper Negro River) region in the
municipality of São Gabriel da Cachoeira in the state of Amazonas. The project directly bene-
fits 150 people and, indirectly, around 3,000 people, including students, teachers, employees
and leaders of the school communities. The funding allows for the continuity of the research
carried out by students; the publication of teaching and publicizing materials; the organization
of the network’s meetings, continued education workshops for teachers, and sustainability
activities in the field of food safety.
naturaannualreport
63
STRATEGIES AND PRIORITIES
We started to disseminate the Relationship Principles with Communities, described in the Policy
for the Sustainable Use of Biodiversity and Traditional Knowledge. As part of our dialogue process,
we gathered together in 2009 14 representatives from supplier communities, and mapped the
opportunities for improving the relationships and determined joint commitments. members of
the communities also participated in two other engagement panels of representatives from all our
stakeholders, and in a panel of specialists that discussed the challenges and the opportunities for
the sustainable use of Brazilian biodiversity.
We define work strategies and priorities based on the point of view of these supplier communities
and on the lessons learned over the past few years. The main highlights were:
• Improvement in the planning of demands and purchase of inputs;
• Sharing of information on projects in progress;
• Need to support administrative management;
• Incentive to establish networks for the exchange of experiences and technical
knowledge between communities;
• Reinforcement of the process for the collaborative establishment of input prices;
• Support to the structuring of productive chains and production and processing techniques.
In 2009, we planned and developed, with the communities, several training actions.
• Technical agreement for the development of the cocoa chain at the plantation;
• Training on Good Handling Practices of Sapucainha (Carpotroche brasiliensis) –
Cooprocam;
• Training of cooperative members in “basic understanding of accounting” – Iratapuru;
• Training of the cooperative’s officers in financial and administrative management –
Iratapuru;
• Training in administrative management – Middle Juruá River;
• Course in Good Processing Practices – Turvo;
• Program for the training of youngsters in the management of cooperatives in par-
tnership with the NGO FASE as part of the Valoração das Oleaginosas (Apprecia-
tion of Oil Trees) Program – surrounding communities of Benevides;
• Organization of four technical exchange programs, which included the sharing of
experiences and lessons learned between the communities on social organization,
establishment of partnerships, business management (Palmeira do Piauí, state of
Piauí, visited Coopaesp, state of maranhão; Boa Vista, state of Pará, went to Cotijuba,
state of Pará; and Campo Limpo, state of Pará, went to Boa Vista, state of Pará), in
addition to a visit to the agricultural family school of Amapá by youngsters from the
Iratapuru community, state of Amapá;
• Pernaculture course for representatives from different communities.
In 2010, we intend to make progress in the implementation of the relationship management
tools that were established in 2009. They include the improvement of action planning and pro-
jects developed with communities, the field measurement of sustainability and supply perfor-
mance indicators, and the conduction of a survey to evaluate the quality of the relationship.
RESOURCES AT THE COmmUNITIES
Our relationship with the 26 supplier communities involves the transfer of different types of
resources. They receive funds from the sale of the raw materials produced, through contracts
to share the benefits from access to the genetic heritage or associated traditional knowledge;
from use of image; and through direct investments in local sustainable development.
In 2009, we recorded a 30% increase in resources to supplier communities. The increase
in the resources allocated to suppliers has been growing due to, among other reasons, the
increased production in the communities that supply the Benevides Industrial Plant. The
launch of the Natura Ekos soap line, which contains a higher concentration of natural oils,
was the main reason for this increase.
naturaannualreport
64
The resources from the sharing of benefits remained practically stable compared to 2008.
In total, including the two agreements signed in 2009 related to the Brazil nut and Buriti
Palm, Natura has six agreements for sharing benefits from access to traditional knowledge
associated to native species in Brazil. There are another 28 contracts related to access to
genetic heritage entered into with communities. For 2010, our target is to increase by 44%
the resources to the supplier communities.
RESoURCES To THE SUPPLIER CoMMUnITIES (R$ THoUSAnDS)
Supply
Sharing of benefits from access to genetic
heritage or associated traditional knowledge¹
Funds and sponsorships²
Use of image
Training³
Certification and stewardship4
Studies and assistance5
Total
2007
863,6
324.7
755.1
38.4
49.9
41.7
396.1
2,469.6
2008
2,238.2
1,136.0
671.9
10.2
18.0
23.3
129.5
4,227.2
2009
2,756.1
1,056.3
1,137.7
14.5
151.8
27.8
371.9
5,516.1
1. Although the amount of the sharing of benefits is lower than in 2008, the amounts for 2009 refer to only 12 months, whereas
the amount for 2008 represents the cumulative payment of previous contracts. 2. Includes resources donated to the Escola
Municipal Indígena Pamáali (Pamáali Indian Municipal School). 3. Includes workshops and courses paid for by Natura for the
communities to improve their sustainable production techniques. 4. Includes the amounts invested in the certification of cultiva-
tion areas at the supplier communities. 5. Studies and assistance: Includes studies and consulting services provided by specialized
professionals and NGOs contracted by Natura to work at the supplier communities.
THE mURUmURU CASE
The Public Attorney’s office of the state of Acre filed, in 2007, an action in order to
investigate whether there was any irregular use of and access to the traditional kno-
wledge associated with the use of the murumuru palm plant developed by the native
Brazilian community Ashaninka, in the state of Acre. According to the case, a resear-
cher obtained this knowledge and unduly transferred it to other companies. we were
included in this proceeding because we use the murumuru palm in our products.
In addition to the fact that the use of this ingredient has been documented in scien-
tific bibliographies since 1941, we clarify that we never worked with the researcher
in question or with the knowledge of the Ashaninka community. Additionally, we
filed the request to access the genetic heritage of the murumuru palm with the
Management Council of Genetic Heritage (CGEn) by means of the Middle Juruá
Extractivist Reserve located in the municipality of Carauari, state of Amazonas. we
signed a previous agreement in november 2008.
we recognize the importance of the indigenous peoples and traditional commu-
nities as guardians of this knowledge. we were the first Brazilian company, even
without the existence of a law, to compensate Brazilian traditional communities
for their knowledge of biodiversity.
naturaannualreport
65
SURROUNDING COmmUNITIES
Natura believes that one of its roles is to pay special attention to and be effectively involved
with the communities surrounding its units. This relationship is most comprehensive and direct
with the people from Cajamar (state of São Paulo), Itapecerica da Serra (state of São Paulo),
and Benevides (state of Pará), where the main operating activities are carried out in Brazil.
We work on this relationship by seeking to encourage the community’s potentials and identify
its needs by conducting programs that may contribute to local development. However, we
believe that this should not be an isolated effort by Natura. We want to work more like an
agent in this process, in partnerships that involve other social players for the development of
projects that have lasting results and can change these communities.
In 2009, we discussed and approved the Principles of Relationships with the Surrounding
Communities, which were presented to the representatives of the communities in two engage-
ment panels. These principles better determine the scope of our work and result from the
lessons learned during these years of relationships.
In 2009, we invested more than R$ 410,000 in projects involving the surrounding communities
of Cajamar and Itapecerica da Serra, R$ 407,900 of which were the company’s own funds and
the remaining R$ 2,500 were funds from the Crer para Ver (Believing is Seeing) Program used
in the printing of newspapers for teachers associated with the municipal Board of Education.
The objective of the publication is to encourage the exchange of experiences between tea-
chers and maintain parents and the school community well-informed.
InVESTMEnT In InFRASTRUCTURE AnD SERVICES FoR PUBLIC BEnEFIT (R$ THoUSAnDS)1
Investments in the communities surrounding
natura’s plants – natura’s resources
Investments in the communities surrounding
natura’s plants – Resources from the
Crer para Ver (Believing is Seeing) Program
Total
2007
2008
391.5
342.8
n.a
391.5
249.2
592.0
2009
407.9
2.5
410.4
1. The investments refer to the municipalities of Itapecerica da Serra and Cajamar. 2. This amount does not include indirect resources,
which reached the communities by means of the Trilhas (Trails) Project in Cajamar, and the Encontros de Leitura (Reading Meeting)
Project in Itapecerica da Serra, both related to the Crer para Ver (Believing is Seeing) Program. As these projects are developed and
implemented in many municipalities of Brazil, they have not been calculated separately for the surrounding communities.
We are increasing the scope of our work to Santana do Parnaíba and working with a broader
surrounding community concept. This has already been reflected in the hiring of 297 employe-
es from the municipalities of Santana do Parnaíba, Várzea Paulista, and Campo Limpo, the equi-
valent of 9.1% of the 3,249 permanent employees at the Cajamar plant. We also have many
temporary workers and in-house outsourced workers who live close to the Cajamar and
Itapecerica da Serra plants. In Benevides, however, of the 51% directly contracted employees,
98% are from the state of Pará. (Graph 1 e 2)
In 2009 there was an increase in the business volume with partners from the surrounding com-
munities at the two plants that have production processes: Cajamar and Benevides. Expenses of
purchases from the surrounding communities of the Itapecerica da Serra unit remained stable.
PURCHASES FRoM SUPPLIERS FRoM THE SURRoUnDInG CoMMUnITIES (R$ MILLIonS)
Cajamar2
Itapecerica da Serra2
Benevides3
Total
2007
46.0
0.8
6.5
53.3
2008
52.0
1.2
34.4
87.6
2009
69.9
1.2
44.6
115.7
1. The method for consolidating this indicator was changed; this is why historical data have been restated. The amounts include taxes.
2. Purchases from suppliers in the municipalities of Cajamar and Itapecerica da Serra, metropolitan region of São Paulo.
3. Purchases from suppliers from the state of Pará made exclusively for the soap plant in Benevides, Pará.
1. EMPLoyEES FRoM
CAJAMAR(%)1
16,9
18,2
17,4
2007
2008
2009
1. In Itapecerica da Serra, only
administrative activities are carried out
and, therefore, the unit does not have
any employee from the surrounding
community
2. EMPLoyEES FRoM THE
REGIon oF BEnEVIDES (%)
96
96
98
2007
2008
2009
naturaannualreport
66
ITAPECERICA DA SERRA
In Itapecerica da Serra, our relationship is strongest with the district of Potuverá, where approxi-
mately 9,000 people live, but we have been working on projects that will be extended to a broa-
der area of the municipality. The program for the expansion of selective garbage collection in the
municipality is one example. Our work is carried out on two fronts: to support the work of the
municipal Environment Department (Green Division), which is co-responsible for implementing
the program; and to support the structuring of the Cooperativa de Recicladores de Itapecerica da
Serra (Cooperative of Recyclers of Itapecerica da Serra, CRIS). We believe that this project may be
used as a model for selective garbage collection campaigns in other Brazilian municipalities.
The first step was to better understand the dynamics of waste production in the city, which
has different districts, some highly populated and some with rural characteristics. In January
2009, the Socio-Environmental Diagnosis was completed. This was a study carried out in the
districts of Potuverá and Branca Flor by the Institute of Socio-Environmental Projects and
Research (Ipesa), with the support of Natura, the City Hall and the Cooperative of Recyclers.
Based on this study, it was possible to design a medium-term collection program taking into
consideration the differences between the districts. Our objective is to extend the selective
garbage collection program to the whole municipality by 2012.
The local cooperative increased the volume of collected recyclable materials to around 50
metric tons/month thanks to the systematization of collection in the district of Potuverá. In
2008, the monthly average collection was 16 metric tons of recyclable materials from schools,
public bodies and companies. In the second half of 2009, we also signed an agreement for sen-
ding the recyclable materials generated at our Itapecerica da Serra unit to CRIS. In total, 96.1
metric tons of materials were sent to CRIS over a period of six months.
In 2009 the municipality of Itapecerica da Serra started to benefit from the Encontros de Leitura
(Reading meetings) project of the Crer para Ver (Believing is Seeing) program carried out by
Natura in partnership with the Education and Documentation Center for Community Action
(Cedac). This program is aimed at raising the awareness of teachers who work with children
between four and six years old on the importance of actions that help the development of
children´s reading and writing capabilities. The project lasts two years and involves 50 teachers
from 29 schools and 37 technical professionals and directors of schools, benefiting 1,461 students.
CAJAmAR
In the municipality of Cajamar we followed a different process in 2009. After more than a
decade running and supporting projects such as the one to implement a master Plan in the
municipality and the one organizing discussions on Agenda 21, which involved over 4,000
participants in different activities between 2004 and 2009, we saw the public sector taking
over the lead role.
We see this as positive, but we admit that we did not progress the way we wanted to in
Cajamar in 2009. Some of the projects scheduled for the year, such as the one to establish
a sapling nursery in partnership with the NGO mata Nativa and local authorities, did not
materialize. The same happened with the review of the Decennial Education Plan to be con-
ducted with the municipal Education Board. Given our commitment to work with the local
community, Natura intends to resume discussing these projects with local players in 2010.
Last year, we continued to support the NGO mata Nativa in the implementation of Agenda
21. Within the project, we had 47 meetings in the districts, with an average of 32 participants
per meeting. For the third consecutive year, we sponsored the publication “Cajamar em
Verso e Prosa” (Cajamar in Verse and Prose) organized by the municipal Board of Education,
a project that involves the school community in writing activities that aim to celebrate the
memory and identity of the people from the city of Cajamar, as well as its local culture.
We were also involved in a discussion that we consider extremely important: the renewal of
the agreement for the supply of water and sewage services between the City Hall of Cajamar
and Sabesp, the São Paulo state water utility). We have participated in the meetings and public
hearings that aim to develop a sanitation plan that is more appropriate for the region.
In 2009, Cajamar participated in the Trilhas (Trails) Project, which involved all public scho-
ols and involved children between 4 and 6 years of age in Elementary and middle or Early
Education Schools. A total of 16 municipal schools, 125 teachers, and 2,863 students parti-
cipated in the project. .
naturaannualreport
67
BENEVIDES
The industrial plant of Benevides, in the state of Pará, has been operating since 2006. We
have been consistently strengthening our ties with the local communities over these years.
This has been happening mainly with the extractivist and small farming communities that
supply some of the ingredients used at the plant.
We work with 11 community ventures that involve 610 families, from which in 2009 we
bought 394 metric tons of inputs, a significant increase from the 152 metric tons acquired
in 2008. These producers are in many towns and cities in the state, and not limited to the
municipality of Benevides. At the moment, we do not intend to work with new producers,
but instead to strengthen links to those we already work with.
Despite the progress we have made, we know we have a long way to go. We are in a
region that has suffered for decades from environmental degradation and economic pres-
sure. Our challenge, in addition to overcoming socio-environmental and cultural barriers,
is to encourage more action by the local public authorities. In 2009, we conducted several
initiatives promoting local development and strengthening partnerships, such as tax con-
sulting and organizing meetings on harvest planning and evaluation.
Among these initiatives are: the organization of the First Forum of Agricultural and Extrac-
tivist Cooperativeness and its Insertion in the market, the development of programs for
training youngsters in the management of cooperatives; the announcement of results in
seminars for the exchange of experiences; the organization of workshops to raise aware-
ness on work safety and health; tax consulting; the promotion of knowledge of pernacul-
ture techniques; and the organization of meetings for harvest planning and evaluation.
With the continuity of these actions, we intend to strengthen the relationship with the
community of Benevides in 2010 and our challenge for the coming years will be to streng-
then our relationship with the local government.
naturaannualreport
68
SHAREHOLDERS
Since 2004, when we went public, we have been investing in the development of a transpa-
rent and first-class relationship with shareholders, investors, and market analysts. We try to
keep these stakeholders well informed, and we follow the recommendations of the Brazilian
Securities Commission (CVm), as well as the rules of the Bm&FBovespa, where the shares
issued by Natura are listed in the New market segment.
Tools of communication with these stakeholders include quarterly teleconferences for the
disclosure of results and regular updating of the Investor Relations website with information
on performance and results previously approved by our Audit Committee, Executive Com-
mittee (Comex), and by the Board of Directors.
The website contains accounts of events in which we participate, presentations we make,
and information on our capital structure and on the distribution of dividends, among other
things. The website provides for direct communications by means of the “Speak to Investor
Relations” channel.
Every year, we hold a public presentation, an event that is structured by the Association of
Investment Analysts and Professionals of Capital markets (Apimec – state of São Paulo),
with our CEO, Senior Vice President of Financial and Legal Affairs, and the Investor Relations
team all present.
In 2009 we also participated in 15 conferences for investors in Brazil and abroad, and in road
shows in Brazil, the United States, and Europe on the secondary offering of shares.
Another highlight was a first-ever meeting with Analysts and market Professionals (Natura’s Day)
held at our plant in Cajamar, state of São Paulo, in which presentations by our senior manage-
ment helped more than 60 Brazilian and foreign investors and analysts get to know Natura.
PROFILE OF SHAREHOLDERS
In 2009, the secondary offering of shares increased Natura’s free-float – available-for-trading
shares – from 26.2% to 39.5%, which positively affected the shares’ liquidity and, together with
the positive results for the year, the company’s value itself (learn more on page 17). (Graph 1)
At the end of 2009, we had 8,927 shareholders, 7,699 of which were individuals and 1,228
were Brazilian and foreign legal entities.
PRoFILE oF SHAREHoLDERS
Individuals
Brazilian legal entities
Foreign legal entities
Total
2007
19,813
633
352
20,798
2008
9,993
396
538
10,927
2009
7,699
560
668
8,927
With respect to the number of outstanding shares, at the end of 2009 foreign corporate
investors held 84.8% of the shares, while Brazilian corporate investors held 8%, and indi-
viduals, 6.3%.
CAPITAL STRUCTURE
SHAREHoLDERS
Majority shareholders
Treasury shares
Management shares
outstanding shares
Total shares
InTEREST
60.0%
0.0%
0.5%
39.5%
100.0%
nUMBER oF SHARES
258,017,219
655
2,323,878
169,932,709
430,274,561
1. ToTAL VoLUME oF SHARES
TRADED (R$ MILLIonS)1 2
6.894
6.392
4.506
2007
2008
2009
1. The 2007 and 2008 amounts were adjusted
because there was a change the historical price
of shares due to the distribution of dividends.
2. The information was updated in accordance
with the history of Economática.
naturaannualreport
69
CONTROL GROUP
Our capital stock is mainly composed of common shares. The table below shows the number
of shares of our capital stock held by shareholders that own 5% or more of our capital stock
and by the members of our Board in 2009.
Shareholder1
______________________________________
Lisis Participações S.A.
Controlled by Antonio Luiz da Cunha Seabra
Utopia Participações S.A.
Controlled by Guilherme Peirão Leal
Passos Participações S.A.
Controlled by Pedro Luiz Barreiros Passos
AnP Participações S.A.
Controlled by Anizio Pinotti
RM Futura Participações S.A.
Controlled by Ronuel macedo de mattos
Antonio Luiz da Cunha Seabra
Guilherme Peirão Leal
Pedro Luiz Barreiros Passos
Anizio Pinotti
Ronuel Macedo de Mattos
(1) They all participate in the shareholders’ agreement.
number of
common shares
_______________
(%)
_____
95,946,968
22.3%
91,557,964
21.3%
22,606,809
22,583,608
15,918,754
3,628,920
3,462,917
855,038
854,160
602,081
5.3%
5.2%
3.7%
0.8%
0.8%
0.2%
0.2%
0.1%
RESULTS
Natura’s shares (Natu3) have appreciated since the beginning of 2009, and their price at the
end of the year was R$ 36.31. Whereas the main index of the São Paulo Stock Exchange
(Ibovespa) appreciated 82.7%, Natura’s shares rose 101.6%. Since going public, Natura’s shares
have appreciated 444%, whereas the Ibovespa rose 248% in the same period.
450
350
250
150
NATU3
Ibovespa
50
444%
248%
2004 2005 2006 2007 2008 2009
We remained listed on the leading Brazilian share market indexes – Ibovespa, IbrX-50 (which
list the 50 most liquid shares on the stock exchange), the Special Tag Along Stock Index (Itag),
the Special Corporate Governance Stock Index (IGC) and the Corporate Sustainability Stock
Index (ISE), which uses sustainability criteria to select shares of listed companies. Natura is also
part of the morgan Stanley Composite Index (mSCI), a reference for foreign investors.
PAYmENT OF DIVIDENDS
On February 24, 2010, the proposal for the payment of R$ 554.5 million in dividends and
R$ 43.3 million as gross profit on capital (R$ 36.8 million net of income tax) related to the
results for 2009, was approved by Natura’s Board of Directors and submitted to the Annual
Shareholders’ meeting (ASm).
Of the amount above, dividends amounting to R$ 215.2 million and interest on capital amoun-
ting to R$ 21.3 million (net of withholding tax) related to the results accrued in the first half
of 2009 were paid on August 12, 2009. The remaining balance will be paid after the approval
of the ASm in April 2010. The aggregate of these dividends and interest on capital related to
the results for 2009 represent net earnings of R$ 1.37 per share (R$ 1.15 per share in 2008),
corresponding to 86.5% of net income1 for 2009.
1. Net income in accordance with Law No. 6,404/76.
naturaannualreport
70
GOVERNmENT
Natura’s relationship with the government is guided by open, transparent, and unbiased
dialogue with the three branches. We want to be recognized as an important party in
efforts to develop public policies to influence the direction of society on matters related
to our business and our vision of the world.
We also engage through trade associations, in particular the Association of Personal Hy-
giene, Perfumery, and Cosmetics Industry (Abihpec) and the Brazilian Direct Selling Asso-
ciation (ABEVD) to join forces and advance the collective needs of our industry.
This relationship has well-defined processes and information management tools. Over the
past few years we have formalized our positions and conduct in documents that we de-
livered to those attending our meetings. These documents are the Relationship Principles
with the Government, which contain the basic guidelines; the Integrity Policy against Cor-
ruption and Bribery, in which we condemn all illicit practices; and the Campaign Donation
Policy, in which we clarify the option of our company not to make donations to candidates
or political parties, in or out of election periods.
Also, since 2008, we have a Position on the Practice of Political Lobbying, a document in
which we align ourselves with those favorable to lobbying, provided it is done ethically and
transparently. We support the regulation of this activity, which is lawful and legitimate, but
which also needs established rules and limits. The following employees perform lobbying
activities on behalf of our company: Daniel Serra, Denis Oliveira, Kassia Reis, Rodolfo
Guttilla, and Thais Chueiri.
The main focus of our process for managing governmental relations, which includes
knowledge management tools and a program for approaching members of Congress,
is the Priority Agenda of Governmental Relations. Set annually, it establishes focus areas
linking the Brazilian political and institutional world and Natura’s Strategic Planning. In 2009,
our agenda was guided by discussion around four topics: tax reform; taxation in different
states; the regulatory environment of the personal hygiene, perfumery, and cosmetics
industry; and Brazilian legislation on access to resources from biodiversity and associated
traditional knowledge.
With respect to tax policies, we continue to work under the leadership of the main
entities that represent us: the Association of Cosmetics, Toiletry and Fragrance Industry
(Abihpec) and the Brazilian Direct Selling Association (ABEVD). In 2009, although the
progress we expected on tax reform was not made, we continue to make our position
clear and closely monitor discussions.
Particularly with respect to taxation in different states, we supported the efforts of
ABEVD with the São Paulo State Finance Department to determine a new methodology
for determining a Value Added margin (VAm) that reflects the difference between the
many different distribution channels for cosmetic and personal hygiene products. The
methodology was determined and a survey on the calculation of the margin in each state
was conducted by the Getúlio Vargas Foundation to determine the VAms in 2010. In the
states of Paraná and mato Grosso do Sul, as well as in the Federal District, where an
agreement regarding the methodology for determining the VAm was not reached, we are
trying to settle the matter in court. In all states, the parties in issues related to taxation
are state finance departments.
In the regulatory environment we collaborate with the efforts of the Council of Latin
American Cosmetic Industry Associations (Casic) to standardize sanitary laws in Latin
American countries. The Brazilian National Agency of Sanitary Vigilance (Anvisa),
sympathetic to the industry’s concerns, continues to negotiate alternatives with peer
institutions from other countries in the region.
We took steps to promote a new legal framework for access to biodiversity and associated
traditional knowledge that ensures sustainable conditions for the exploration of Brazilian
genetic heritage and the traditions associated with it. The cosmetics and personal hygiene
industry par ticipated in all formal public processes for the discussion of a new legislation,
trying to make contributions on environmental and sustainable development issues and
presenting these to members of Congress. In 2009, there were reports that some of the
main ministries involved had come to a consensus on a new draft bill whose wording
had been developed by the Chief of Staff of the Republic of Brazil to be submitted to
naturaannualreport
71
the National Congress. The industry established dialogues with many players to reaffirm
its interest in making contributions and to request that, given its importance, the text be
submitted to the Congress immediately (learn more about biodiversity on page 64). The
main par ties to this topic were the Environment and Science and Technology ministries,
the Chief of Staff of the Presidency of the Republic of Brazil, and the Office of the
Attorney General.
Our efforts brought results: we were the first company to obtain special authorization from
the Brazilian Institute of the Environment and Renewable Natural Resources (Ibama) to ac-
cess genetic resources for scientific research. This type of license, which simplifies the deve-
lopment of technologies based on biodiversity, represents important institutional progress.
Together with Abihpec, we intensified our dialogue with the municipal Administration of
São Paulo to discuss ways of improving the municipal Law on Solid Waste of São Paulo,
which was enacted last year. Natura and a number of other companies in 2009 received
notification from the municipal government about non-compliance with the waste law,
which requires the performance of reverse logistics for the post-consumption packaging
of our products in the city of São Paulo. We would like to collect all this material and give
it the proper treatment, but this would require creating a complex chain involving manu-
facturers, authorities, and consumers. We consider the current law unconstitutional and
advocate its improvement and the creation of a National Policy for Solid Waste, so that
reverse logistics can actually be implemented in Brazil.
Through Abihpec, Natura is part of the Dê a Mão para o Futuro (Give Your Hand to the
Future) project, which is working toward the implementation of reverse logistics projects
in several cities. In 2009 Abihpec signed an instrument for technical cooperation with the
Rio de Janeiro State Environment Department.
Natura is not a party to any litigation involving matters of competition law nor does it
have a history of significant fines or non-monetary sanctions arising from non-compliance
with laws and regulations. In the sphere of trade associations, such as Abihpec and ABEVD,
we have a harmonious relationship with competitors and an established openness for
discussions related to the business and to contributing to increasing competition in both
the industry and the sector.
In 2009, we received financial assistance from the government by means of tax incentives
in the total amount of R$ 19.2 million. An example was the deduction of taxes, totaling
R$ 10 million, by means of the federal government’s Lei do Bem (Law of Good), which
provides tax benefits to companies that develop technological innovations.
SIGnIFICAnT FInAnCIAL ASSISTAnCE RECEIVED FRoM THE GoVERnMEnT (R$ MILLIonS)
2007
6.6
Tax incentives for Support and Sponsorships¹
Lei do Bem (income tax deductions on up to twice
the spending on technological Research and Innovation)² 14.7
ICMS value-added tax subsidy in Itapecerica da Serra
2.8
Urban Real-Estate Tax (IPTU) exemption in Itapecerica
da Serra and Cajamar³
Total
0.1
24.2
2008
5.2
2009
6.1
15.6
1.8
0.0
22.7
10.0
3.1
0.0
19.2
1. Legal entity’s income tax (IRPJ) incentives granted through the Rouanet Law, the Audiovisual Law, the Children’s Rights Fund
and the Workers’ Meal Program, and ICMS value-added tax incentives in the state of Minas Gerais through the Natura Musical
(Musical Natura) program.
2. The tax benefit related to the Lei do Bem was changed in 2007 and 2008 due to the review/audit in the Technological Rese-
arch and Innovation projects that are eligible for the tax incentive.
3. Tax incentive referring to the reimbursement of IPTU tax paid in Itapecerica da Serra, as a result of investments made in the region.
LEADERSHIP AND SOCIAL INFLUENCE
Natura seeks to positively influence its stakeholders by means of open and transparent
dialogue. We want to take the lead in the transformation of our society. This is why we ac-
tively participate in socializing opportunities, discussions, and collaboration events in Brazil
and abroad. In 2009, we were formally represented in 47 trade associations, entities, and
organizations.
naturaannualreport
72
REPRESENTATION IN TRADE ORGANIZATIONS AND ASSOCIATIONS
Trade organization/Association
_____________________________________
natura Representative
__________________
Type of Representation
_____________________________
ABERJE - Associação Brasileira de Comunicação
Empresarial (Brazilian Association of Corporate
Communication) (www.aberje.com.br)
Rodolfo Guttilla
Chairman of the
Decision-making Council
ABEVD - Associação Brasileira de Empresas
de Vendas Diretas (Brazilian Association
of Direct Selling Companies)
(www.abevd.org.br)
1. Rodolfo Guttilla
2. Lucilene Prado
1.Vice-chairman
2. Coordinator of the Committee
of Legal Affairs and Government
Relations
3. Leandro machado
3. Chairman of the Ethics Committee
Sérgio Gallucci
Representative
ABIFRA – Associação Brasileira das Indústrias
de óleos Essenciais, Produtos Químicos
Aromáticos, Fragrâncias, Aromas e Afins
(Brazilian Association of Essential Oils,
Aromatic Chemical Products, Fragrances,
Aromas and Similar Industries)
ABIHPEC - Associação Brasileira das Indústrias
de Higiene Pessoal, Perfumarias e Cosméticos
(Brazilian Association of the Personal Hygiene,
Perfume and Cosmetic Industry)
1. Rodolfo Guttilla
2. Lucilene Prado
3. Oriana Rey
1. Vice Chairman
2. Director
3.Representative of the
Environment Committee
4. Elizabete Vicentini
5. Luiz Felipe moreira
4. Representative of the Technical
and Regulatory Committee
5. Representative of the Human
Resources Committee
ABNT - Associação Brasileira de Normas Técnicas Luciana Villa Nova
(Brazilian Association of Technical Standards)
(www.abnt.org.br)
ABRASCA - Associação Brasileira das Companhias Helmut Bossert
Abertas (Brazilian Association of Listed Companies)
(www.abrasca.org.br)
ABRH - Associação Brasileira de Recursos Humanos Denise Asnis
(Brazilian Association of Human Resources)
Representative
Representative
Representative
ABPI - Associação Brasileira da Propriedade
Intelectual (Brazilian Association of Intellectual
Property) (www.abpi.org.br)
AIPPI - Association Internationale pour la
Protection de la Propriété Intellectuelle (International
Association for the Protection of Intellectual
Property) (www.aippi.org)
AmVD - Asociación mexicana de Ventas
Directas (mexican Direct Selling Association)
ANPEI - Associação Nacional de Pesquisa,
Desenvolvimento e Engenharia das Empresas
Inovadoras (Brazilian Association of Research,
Development and Engineering of Innovative
Companies) (www.anpei.org.br)
Lucilene Prado
Representative
Lucilene Prado
Representative
maria Teresa Sterling
Representative
Luciana Hashiba
Director
naturaannualreport
73
Trade organization/Association
_____________________________________
natura Representative
__________________
Type of Representation
_____________________________
ASIPI - Asociación Interamericana de la Propiedad Lucilene Prado
Industrial (Interamerican Association of Industrial
Property) (www.asipi.org)
Asociacion Civil Argentina de Empresas Brasileñas Heriovaldo Silva
(Argentine Civil Association of Brazilian Companies)
(www.grupobrasil.com.ar)
ASPI - Associação Paulista da Propriedade Intelectual Lucilene Prado
(São Paulo Association of Intellectual Property)
(www.aspi.org.br)
Representative
Pro-treasurer
Representative
CAPA - Cámara Argentina de la Indústria
de Cosmética y Perfumería (Argentine
Chamber of the Cosmetics and
Perfumery Industry)
Cámara de Comercio de Lima
(Chamber of Commerce of Lima)
CANIPEC - Cámara Nacional de la Industria
de Perfumaria, Cosmetica y Articulos de Tocador
e Higiene (mexican National Chamber of the
Perfumery, Cosmetics and Beauty and Personal
Care Products Industry)
Heriovaldo Silva
Deputy member of the Comision
Revisora de Cuentas (Accounts
Review Commission)
José Ramon
Representative
maria Teresa Sterling
Representative
CAVEDI - Cámara de Venta Directa de Argentina Heriovaldo Silva
(Direct Selling Chamber of Argentina)
Pro-treasurer
Cámara de Venta Directa de Chile
(Direct Selling Chamber of Chile)
Cámara Peruana de Venta Directa
(Peruvian Chamber of Direct Selling)
CAmBRAS - Cámara de Comercio Argentino
Brasileña (Argentine Brazilian Chamber of
Commerce) (www.cambras.org.ar)
Axel moricz
Director
José Ramon
Representative
Heriovaldo Silva
Representative
CASIC - Consejo de Asociaciones de la Industria Rodolfo Guttilla
de Cosmeticos Latinoamericana (Council of the
Latin American Cosmetics Industry Association)
Representative
CEmEFI - Centro mexicano para la Filantropía
(mexican Center for Philanthropy)
CIESP - Centro das Indústrias do Estado de
São Paulo (Center of Industries of the State
of São Paulo) (www.ciesp.org.br)
ETHOS - Institutos Ethos de Empresas e
(Ethos Institute of Companies and Social
Responsibility) (www.ethos.org.br)
FNQ – Fundação Nacional da Qualidade
(Brazilian National Foundation on Quality)
(www.fnq.org.br)mas as
maria Teresa Sterling
Representative
Rodolfo Guttilla
Director
Guilherme Peirão Leal
member of the
Decision-making Council
Pedro Luiz Passos
Vice Chairman of the Board of Trustees
FUNBIO - Fundo Brasileiro para a Biodiversidade Guilherme Peirão Leal
(Brazilian Fund for Biodiversity)
(www.funbio.org.br)
member of the Advisory Board
naturaannualreport
74
Fundação SOS mata Atlância
(SOS Atlantic Forest Foundation)
Pedro Luiz Passos
member of the Board
GIFE - Grupo de Institutos Fudações e Empresas maria Lucia Guardia
(Group of Institutions, Foundations and Companies)
Representative
GRI - Global Reporting Initiative
(www.globalreporting.org)
Rodolfo Guttilla
member of the Stakeholder Council
and Co-chair of the Brazilian National
Annex
IBGC - Instituto Brasileiro de Governança
Corporativa (Brazilian Institute of Investor
Relations) (www.ibri.org.br)
IBRI - Instituto Brasileiro de Relações com
Investidores (www.ibri.org.br)
moacir Salztein
Representative
Helmut Bossert
Representative
IEDI - Instituto de Estudos para o Desenvolvimento Pedro Luiz Passos
Industrial (Institute of Studies for Industrial
Development) (www.iedi.org.br)
Chairman of the Board
Instituto Empreender Endeavor Brasil
(Endeavor Brazil Entrepreneur Institute)
(www.endeavor.org.br)
Instituto São Paulo Contra a Violência
(São Paulo Institute Against Violence)
(www.spcv.org.br)
Pedro Luiz Passos
member of the Board
Rodolfo Guttilla
Representative
INTA - International Trademark Association
Lucilene Prado
Representative
IPT - Instituto de Pesquisas Tecnológicas
(Institute of Technological Research)
(www.ipt.br)
mBC - movimento Brasil Competitivo
(Competitive Brazil movement)
(www.mbc.org.br)
movimento Nossa São Paulo
(Our São Paulo movement)
(www.nossasaopaulo.org.br)
Pedro Luiz Passos
member of the Board
Pedro Luiz Passos
member of the Board
Guilherme Peirão Leal
Chairman of the Decision-making
Council of the Sustainable São Paulo
Institute
PCPC Council - Personal Care Products Council Elizabete Vicentini
(www.personalcarecouncil.org)
Representative
Rede Social São Paulo
(São Paulo Social Network)
maria Lucia Guardia
member of the management
Committee
SIPATESP - Sindicato da Indústria de Perfumaria
e Artigos de Toucador do Estado de São Paulo
(Perfume and Beauty Products Industry Union
in the State of São Paulo)
The Arthur W. Page Society
(www.awpagesociety.com)
UEBT - Union For Ethical Biotrade
WBCSD - World Business Council for Sustainable
Development (www.wbcsd.org)
1. Rodolfo Guttilla
2. Lucilene Prado
1. Vice Chairman
2. Deputy Director
Rodolfo Guttilla
Representative
marcos Vaz
Julio moura
Vice-chairman
member of the Board
WFDSA - World Federation of Direct
Selling Associations
1. Alessandro Carlucci
2. Rodolfo Guttilla
1. Bursar
2. member of the Board
WWF Brasil (www.wwf.org.br)
Guilherme Peirão Leal
member of the Advisory Board
naturaannualreport
75
WHAT FOOTPRINT
WE LEAVE
CREATION OF SOCIAL VALUE
In 2009, we once again increased the creation and distribution of wealth to our stakeholders:
employees, suppliers, consultants, shareholders and government - to the latter by paying taxes.
The increase in the amounts distributed is the result of several factors that arise from the
strength of the market in which we operate, the consistent results due mainly to our strategy
of growth in Brazil, and the more robust development of our operations in Latin America.
DISTRIBUTIon oF wEALTH (R$ MILLIonS)¹
Shareholders2
Consultants
Employees
Suppliers
Government
2007
391.1
1,722.1
390.3
2,329.7
948.3
2008
425.9
2,023.8
556.4
2,357.2
1,276.7
2009
551,.9
2,302.5
643.0
2,687.6
1,547.3
1. Due to changes in many accounting practices by various bodies, we recalculated the amounts for government in 2007, and for
other stakeholders, except for consultants, in 2008.
2. The amounts reported correspond to dividends and interest on capital that were effectively paid to shareholders, that is, calcu-
lated on a cash basis. As a result, the historical data was changed.
According to a survey carried out by Ipsos Insight in 2009, 46% of the NCs belong to the
social-economic class B and 43% to the C social class. For 70% of the NCs, the activity of
Natura consultant represents an income supplement and, for 22%, it is the only source of
income. most of NCAs, however, most of them, 53%, are from the B social class. For 49% of
the Natura Consultant Advisers, the activity represents the only source of income.
INVESTmENT mATRIX
In 2009, we maintained the same proportion of 1.2% of investments in corporate res-
ponsibility in relation to Natura’s Net Revenues. Among the benefiting stakeholders who
recorded a more significant increase are consultants, with an increase in investments in educa-
tion and training (more information on page 41), and society, particularly due to the increase in
investments in sponsorships and projects of civil society partners (see the next page). In envi-
ronment, the highlights were once again the projects for offsetting greenhouse gas emissions
selected by the Carbon Neutral Program.
On the other hand, we saw a reduction in the resources used in management due to the restruc-
turing process Natura undergone in 2009.
MATRIX FoR InVESTMEnT In CoRPoRATE RESPonSIBILITy 1 (R$ THoUSAnDS)
Employees, families, and third parties
Consultants
Consumers
Suppliers
Supplier communities²
Surrounding communities
Society3
Environment
Total invested in stakeholders
Management expenses
Total Natura funds
2007
19,084.0
1,801.4
468.3
232.3
1,993.1
391.5
7,058.7
1,849.09
32,878.2
9,591.9
42,470.1
2008
18,729.3
2,566.8
270.9
212.8
647.0
342.8
8,777.4
5,467.2
37,014.2
7,148.3
44,162.5
2009
17,251.3
3,563.4
480.3
243.8
1,424.6
407.9
15,672.0
8,073.6
47,117.0
4,045.7
51,162.7
naturaannualreport
76
Percentage of net revenues
in the Crer para Ver (Believing is Seeing) program4
Invested tax incentives – Roaunet Law
Incentivos fiscais investidos Lei Roaunet
Audiovisual Law
ICMS (state Value-Added Tax) in Minas Gerais
ICMS (state Value-Added Tax) in São Paulo
1% Income Tax to CMDCA 5
1% Income Tax to Condeca 6
Grand total
2007
1.4%
2,484.8
2,059.5
1,098.0
2,101.6
814.3
227.0
445.0
51,700.3
2008
1.2%
2009
1.2%
3,767.0
2,852.8
400.0
2,000.0
540.7
0
1,015.0
54,738.0
3.768,2
2.422,2
920,0
645,0
0
938.0
0
59,856.0
1. The amounts invested in support and sponsorships are also taken into consideration in this matrix, but they are split among
the benefited stakeholders. The matrix includes investments in projects or actions that are not intrinsic to Natura’s business
and go beyond legal requirements.
2. The amount for 2007 was recalculated, excluding the amount related to the sharing of benefits, which is presented in the
table on page 50.
3. We verified that, in general, the end stakeholder benefiting from these investments is society. The amounts allocated to the
government are listed as tax investments in this table and also in the distribution of wealth table.
4. For further information, please see the text on the Crer para Ver (Believing is Seeing) Program.
5. CMDCA - Municipal Council for the Rights of Children and Adolescents of the municipalities of Cajamar, Itapecerica da
Serra, Matias Barbosa, Canoas, Benevides and Jaboatão dos Guararapes. Since 2008, 1% of income tax has been transferred
to Condeca.
6. Condeca - State Council for the Rights of Children and Adolescents of São Paulo..
CRER PARA VER (BELIEVING IS SEEING)
Considered one of our high priority sustainability topics, education is a decisive factor for the
development of a fairer society and one of the most effective mechanisms to change our world.
To improve the quality of public education, we created in 1995 the Crer para Ver program.
Our consultants actively participate in the program as they sell, without making any profit, exclu-
sive products of the Crer para Ver line. The total amount raised is invested in educational projects
developed in public schools that focus mainly on encouraging reading and writing.
In 2009 we reached our target for funds raised in Brazil, which was R$ 3.744 million, and we
added R$ 3.768 million that were allocated to the fund of the Crer para Ver program.
InVESTMEnT In EDUCATIon FoR PUBLIC BEnEFIT In BRAzIL (R$ THoUSAnDS)
net funds raised from the Crer para Ver¹
Total amount from the projects developed
and supported by the Crer para Ver2
Penetration of the Crer para Ver (% cycle)3
2007
2,487.8
4,330.0
8.2
2008
3,767.0
3,381.0
9.9
2009
3,768.2
4,075.6
7.1
1. Net funds raised refers to the net income of the program after deducting income tax.
2. The total amount from the projects refers to the total actually invested in the year (withdrawn from the fund and used in
the projects).
3. Penetration is the indicator of the percentage of consultants who participate in the program divided by total potential consul-
tants. Penetration data was considered until Cycle 18.
At the end of the year, our penetration was 7.1%. The drop in this rate led us to make some
adjustments. In order to mobilize consultants, we started in 2009 to implement a new strategy
to reposition the brand and develop products, making the Crer para Ver line more attractive,
which will bear fruit in 2010.
In 2009 we extended the Crer para Ver program to the other Latin American operations,
directing the focus of private social investment actions to education, and benefiting non-
governmental organizations and local institutions. The net funds raised from the sale of
products from the Crer para Ver line in Latin American operations totaled R$ 430,000.
In Argentina, where the program has been carried out since 2008, we expanded our work to 12
education institutions, 10 more than in the previous year. The countries that started to receive
the Crer para Ver (Believing is Seeing) Program’s portfolio of products and to support educational
causes include Peru, Colombia and mexico. The Chilean operations, which were initially focused
on the Consultora Natura Empreendedora Social (Social Entrepreneur Natura Consultant) pro-
gram, will start to prioritize education from 2010. We will maintain the investment in the Empre-
endedora Social program, but independently from the Crer para Ver program.
naturaannualreport
77
TRILHAS (TRAILS) PROJECT
In 2009 we launched the Trilhas Project, which for its scope is considered the boldest initiative
of the Crer para Ver Program since its creation. The project is an educational technology con-
sisting of a set of materials developed to support the work of teachers and directors of public
schools for children from 4 to 6 years of age.
The purpose of this project is to give teachers tools to train students to be readers and
writers. The materials include children’s books available in the Brazilian market. Indirectly, the
Trilhas Project helps to reduce functional illiteracy in Brazil.
We reached our target of taking the Trilhas Project to 210 Brazilian municipalities in 2009. The
project already serves 2,923 municipal schools, involves a group of 10,000 teachers and bene-
fits 207,000 students. Trilhas is the result of an investment of two years of development. In the
preparation of the materials and the development of the project methodology, we relied on
the participation of leading educators. Transportation companies that distribute our products
voluntarily distributed the materials to schools.
In a preliminary analysis, where we asked teachers to grade, from 0 to 10, the importance of the
material for their work, the average grade was 9.2. We are developing qualitative surveys regar-
ding the use of the material and the results of the project, which will be completed in 2010.
OTHER PROJECTS OF THE CRER PARA VER
(BELIEVE IS SEEING) PROGRAm
In addition to the 210 municipalities included in the Trilhas (Trails) project, the other
initiatives of the Crer para Ver program reach 40 Brazilian municipalities. The funds are
invested in projects such as the encontros de Leitura (Reading Meetings), Formar em
Rede (networking), and the Chapada Project. In 2009, we also supported the publi-
cation of newspapers of the Municipal Education Department of Cajamar, where our
head office is located, and the donation of /literature books to schools for youngs-
ters and adults in partnership with the Bahia State Education Department.
ENCONTROS DE LEITURA (READING mEETINGS)
In 2009 the encontros de Leitura project involved 226 schools from ten Brazilian mu-
nicipalities, 1,200 teachers and 14,000 students. Carried out in partnership with the
Education and Documentation Center for Community Action (Cedac), the initiative
consists of person-to-person meetings between teachers and specialists to discuss
and develop activities that provide the first contacts of children with reading. The
initiative seeks to develop quality readers. It is aimed at pre-school professionals who
work with children between four and six years old.
The project lasts two years and, in 2009, a new cycle for ten new cities was initiated.
The project serves all the schools from the cities chosen. In 2009, 27 person-to-
person meetings were held followed by the distribution of children’s and adult’s
literature books to schools and teachers. The project will continue to be developed
in the same cities through the end of 2010.
FORMAR EM REDE
The project is the result of a partnership with the Avisa Lá Institute and the Razão
Social Institute, and is made possible by means of the support of many companies. It
is present in 15 Brazilian cities. natura supports the Formar em Rede project in the
schools of six municipalities with funds from the Crer para Ver program.
The project consists of the establishment of a virtual community composed of spe-
cialists and professionals from the municipalities (directors, educational coordinators,
teachers and technicians), by means of in-person and remote actions to improve the
quality of education to children between zero and six years old.
At the beginning of 2009, an in-person seminar was held with the participation of
representatives from the municipal education departments of the cities and schools
served. At the time, the diagnoses were prepared that gave rise to the institutional
projects that are currently being implemented at the schools. In total, 486 school, 1,000
teachers and around 10,000 students benefit from the Formar em Rede project.
naturaannualreport
78
CHAPADA PROJECT
The Crer para Ver program has been supporting the Chapada Project, which is deve-
loped by the Chapada Institute of Education and Research, for 12 years. The project
aims at improving the quality of education by means of the training of elementary
and middle school teachers. The activities include training in the areas of reading, ma-
thematics and science to specific groups of directors, educational coordinators, te-
chnical supervisors and teachers, and also meetings with officials. The project serves
24 municipalities, 571 schools, 4,800 teachers and around 86,000 students from an
area that covers the interior of the state of Bahia, the region of Chapada Diamantina
and the semi-arid region of Bahia.
INITIATIVES OF THE CRER PARA VER PROGRAm IN 2009
Work front/
Project
Name of partner
organization
Municipali-
ties served
No of schools
served
No of
participating
teachers,
coordinators
and directors
Amount
invested by
the program in
2009 (R$)
No of students
benefited
Projects
developed
CE - Encontros
de Leitura
Project
Education and Documen-
tation center for Commu-
nity Action (Cedac)
EI - Trilhas
Project
Education and Documen
tation center for Commu
nity Action (Cedac)
10
226
1.201
14,236
933,498.33
210
2,923
10,115
207,702
2,537,168.32
Projects
supported
EmS - Chapada Chapada Institute of
Project
Education and Research
CE - Formar
Avisa Lá Institute and
em Rede Project Razão Social Institute
24
6
571
4.855
86.255
470,400.00
486
1.076
10.792
109,550.00
Other
sponsorships
EYA - Incentive
for reading in the Department
State of Bahia
Bahia State
Surrounding
Communities
municipal Education
Department of Cajamar
PS: Pre-School
EMS: Elementary and Middle School
EYA: Education of Youngsters and Adults
-
-
-
-
22,130.81
-
_____
250
-
_____
4,206
-
_____
17,247
-
_______
318,985
2,850.00
__________
4,075,597.46
SUPPORT AND SPONSORSHIPS
Natura supports and sponsors initiatives in three main areas: Brazilian culture, focused on mu-
sic; sustainable development, and the strengthening of civil society organizations. These topics
are an expression of our Reason for Being, well-being well, and reinforce the beliefs that guide
our corporate behavior.
Our main Brazilian culture initiative is the Natura Musical (musical Natura) Program. Created in
2005, the program supports efforts that represent the diversity and richness of Brazilian music
with projects from many artistic areas and from different levels of the production process. The
projects are chosen through invitations to bid (a national one and a regional one, in minas
Gerais) and funded through tax incentive laws and by Natura. Some projects are also directly
chosen by Natura.
In 2009 we supported 11 Natura Musical initiatives, which were added to the other 110
already supported since the beginning of the program. Among them were tours of the sin-
gers Arnaldo Antunes and Céu, the organization of the Dorival Caymmi Collection (www.
dorivalcaymmi.com.br) and support for the Grupo Ponto de Partida and Meninos de Araçaí and
Meninas de Sinhá projects, both from minas Gerais.
We also held the Natura Nós About Us festival to use music and other arts to awaken the
vision and raise the awareness of the audience on issues related to sustainability.
naturaannualreport
79
HIGHLIGHTS OF THE 2009 NATURA MUSICAL (mUSICAL NATURA)
Dorival Caymmi Collection
Consists of the documentation of the life and work of one of the most important
Brazilian musicians. The complete works and personal collection of this artist from
the state of Bahia were organized and made available for free consultation on
the Internet (www.dorivalcaymmi.com.br). Part of the collection was included in
an exhibition on Caymmi held in Sala Tom Jobim at the Botanical Gardens of Rio
de Janeiro. The project was selected by means of the national invitation to bid of
Natura Musical.
Concerts and tours
The singer from São Paulo, Céu, presented her album “Vagarosa” in a tour sponsored
by natura in the five regions of Brazil. The project, selected by means of the national
invitation to bid of Natura Musical, included 14 concerts in 12 cities. In total, 15,000
people saw the concerts, paying low-price tickets.
we also sponsored the musician Arnaldo Antunes for the tour of his new album
“Iê Iê Iê”. The work was inspired by the the 60s Brazilian beat music of the same
name), which gave rise to pop rock, but with contemporary lyrics, language and
arrangements. The project consisted of a tour around the five regions of Brazil,
totaling 16 concerts in 13 different cities.
Grupo Ponto de Partida and Meninos de Araçuaí
The People’s Center of Culture and Development (CPCD) and the Ponto de Partida
Theater jointly carry out education and musical initiation initiatives for the children
who live in the city of Araçuaí, located in the Jequitinhonha Valley, state of Minas Ge-
rais. The project grew and, in contact with the fantasy of the theater and the songs
from the region, the “Meninos do Araçuaí” choir was born. In 11 years of existence,
the group performed five times, launched two albums and a DVD and developed
community projects in the city. The most recent performance, “Pra Nhá Terra”, pays
homage to our Earth in a poetic and musical way and was sponsored by natura in
2009. In addition to the performance in four cities, the sponsorship included the
maintenance of the training activities, rehearsals and professional preparation and
the maintenance of the Casa da Morada, the headquarters of the project.
Meninas de Sinhá
The group is made up of women between 45 and 90 years and works on the preser-
vation of traditional cirandas and cantigas de roda folk songs from the state of Minas
Gerais. Selected by means of the regional invitation to bid in the state of Minas Ge-
rais, the project sponsored by natura involves a new print run of the album “Semean-
do e Colhendo” and the promotion of performances in seven cities of Minas Gerais.
Natura About Us
In 2009 we promoted the Natura About US festival for the purpose of providing ex-
periences that reveal the power we all have to build a better world through music.
with a two-day duration, the event gathered 18,500 people who watched concerts
and participated in workshops such as the ones that were provided by the Grupo
Cultural AfroReggae (AfroReggae Cultural Group). Among the Brazilian attractions,
the highlights were the groups Palavra Cantada, Grupo Ponto de Partida and Meninos do
Araçuaí, Arnaldo Antunes, Lenine and Carlinhos Brown. The international attraction
was Sting.
naturaannualreport
80
SUSTAINABLE DEVELOPmENT
In our efforts to promote sustainable development, we tried to have an enlarged view of the
issue. In 2009, we supported projects to raise awareness of the role of each of us in the deve-
lopment of a better world and in social entrepreneurship.
The main highlights were strengthening our partnership with the Grupo Cultural AfroReggae
(AfroReggae Cultural Group); the final stage of the sponsorship of the expansion of the DNA
Bank of Brazilian Flora Species conducted by the Botanical Gardens of Rio de Janeiro; and the
exhibition on mulheres do Planeta (Women of the Planet), of contemporary women from all
parts of the world, displaying their power, diversity, and beauty. We present below some of the
highlights of this initiative in 2009:
Grupo Cultural AfroReggae
Since 2006, natura has been the institutional sponsor of the nGo Grupo Cultural
AfroReggae headquartered in Rio de Janeiro. In 2009, natura’s sponsorship contributed
to the improvement in the quality and the expansion of the impact of the roughly 70
social projects carried out by the nGo with the communities where it works. Directly
and indirectly, over 10,000 people who live in the communities of Vigário Geral, Parada
de Lucas, Complexo do Alemão, Cantagalo-Pavão-Pavãozinho and nova Iguaçu were
benefited.
Estúdio Natura Musical no Centro Cultural Wally Salomão (Natura musical Studio at
the Wally Salomão Cultural Center)
we sponsored the installation of a professional recording studio in the wally Sa-
lomão Cultural center located in the community of Vigário Geral, Rio de Janeiro.
Called estúdio Natura Musical, the studio has state-of-the-art equipment that allows
for professional audio recording. The studio will make possible the training of poor
youngsters in the music recording business and, by selling its services, may also gene-
rate funds for the maintenance of the activities of the cultural center.
DNA Database of Species from Brazilian Flora
In 2009, we completed our support to the project that allowed for the inclusion of
2,000 new species in the DnA Database of Species from Brazilian Flora of the Bota-
nical Gardens of the city of Rio de Janeiro. The objective of this project is to gather
information on the genetics of the diversity of Brazilian flora. The DnA of relevant
species from Brazilian ecosystems, particularly from the Atlantic Forest biome, is
stored and preserved.
“Glaziou e os Jardins Sinuosos” (Glaziou and the Sinuous Gardens) Exhibition
Between november 2009 and January 2010, we sponsored the exhibition of the
French landscaper Auguste François Marie Glaziou, who lived in Brazil in the second
half of the 19th century and contributed to the urbanization of the city of Rio de
Janeiro. The exhibition, held in the historical building of the Museu do Meio Ambiente
(Environment Museum), at the Botanical Gardens of Rio de Janeiro, showed low
plants, 180º-degree digital film projections and models of landscaping projects that
value the relationship of man with his environment.
Mulheres do Planeta (Women of the Planet) Exhibition
Between May and July 2009, the French artist Titouan Lamazou presented his
Mulheres do Planeta exhibition sponsored by natura and held at oca, in São Paulo.
The exhibition was focused on a work on contemporary women presented by me-
ans of photography, painting, video, text and drawings made by the artist during seven
years of traveling around the five continents of the world. The exhibition also had
profiles of 19 Brazilian women. Titouan’s project was recognized by Unesco thanks
to his engagement with the protection of women’s rights.
naturaannualreport
81
ENTITIES AND ASSOCIATIONS
We seek to enhance dialogue with organizations that distinguish themselves by work on issues
relevant to our industry, aligned with our business models, and to contribute to the development
of our vision of the world and of a sustainable society.
Together with the Institute of Technological Research (IPE), for example, we have been contribu-
ting since 2006 to the project for the construction and development of the Escola Superior de
Conservação Ambiental e Sustentabilidade (Higher School of Environmental Preservation and
Sustainability) in Nazaré Paulista, state of São Paulo.
The school was created to offer a master’s degree in Preservation of Biodiversity and Sustainable
Development approved and recognized by the Federal Coordination Office for the Improve-
ment of Higher Education Personnel (CAPES). The course was created to make up for the lack
of professionals who are skilled to create and disseminate innovative preservation models of
biodiversity and sustainable development. The completion of the construction work is expected
for 2010 and the course, which is given in other locations, is already in its third year. In 2009 we
participated in the Global Entrepreneurship Week, organized in Brazil by the Endeavor Institute.
The event took place simultaneously in 60 countries, and Brazil’s participation stood out.
We also continued to support the Global Reporting Initiative (GRI), which works in the prepa-
ration of international guidelines and standards for the preparation of sustainability reports. We
sponsor the organization of the GRI Stakeholders Council in Brazil and the GRI certification
training processes for Latin America.
For the Instituto Ethos de Empresas e Responsabilidade Social (Ethos Institute of Companies and
Social Responsibility), with which we have been partners since its foundation in 1998, we granted
funding for activities related to the practice of corporate responsibility. We sponsored meetings
of chairmen of companies associated with the institute, who discussed the principles of the Earth
Letter for the construction of sustainable companies and societies
SUPPoRT AnD SPonSoRSHIP - FUnDS InVESTED By nATURA (R$ THoUSAnDS)
2007
2,519.80
780.79
1,270.78
2007
426.00
Sustainable development
Brazilian culture appreciation with focus on music
Strengthening of civil society organizations
Support and sponsorship – funds from
incentives (R$ thousands)
- Federal Cultural Incentive Law (Rouanet Law)
- Law on investment in production and
co-production of cinematographic and audiovisual
projects, and in infrastructure for production and
exhibition (Audiovisual Law)
- Federal Cultural Incentive Law (Rouanet Law)
- Federal Cultural Incentive Law (Rouanet Law)
- Minas Gerais State Cultural Incentive Law
- São Paulo State Cultural Incentive Law
- Law on investment in production and
co-production of cinematographic and
audiovisual projects, and in infrastructure for
production and exhibition (Audiovisual Law)
Support and sponsorship - funds from
incentives – summary (R$ thousands)
- Federal Cultural Incentive Law (Rouanet Law)
- Minas Gerais State Cultural Incentive Law
- São Paulo State Cultural Incentive Law
- Lei de investimento na produção e co-produção
de obras cinematográficas, audiovisuais e infraestrutura
de produção e exibição (Lei do Audiovisual)
643.00
546.00
1,087.52
2,101.62
814.27
455.00
2007
3,588.80
2,101.62
1,816.78
1,098.00
Support and sponsorship – investment
2007
by theme (R$ thousands)
- Sustainable development
3,588.80
- Brazilian culture appreciation with focus on music 5,239.20
- Strengthening of civil society organizations
and governmental organizations
1,816.78
2008
2,782.00
1,327.40
1,771.88
2009
1,500.00
4,844.00
2,102.07
2008
450.00
2009
474.00
100.00
475.27
2,227.54
1,600.00
540.74
100.00
623.50
1,524.00
645.00
0.0
300.00
820.00
2008
3,332.00
1,600.00
2,247.14
2009
2,621.50
645.00
0.0
400.00
920.00
2008
3,332.00
5,995.69
2009
2,074.00
7,833.00
2,247.14
2,725.57
naturaannualreport
82
CREATION OF ENVIRONmENTAL VALUE
Our commitment to environmental issues is based on the belief that the continuity of our
business necessarily involves reducing impacts along our entire value chain.
In 2009, we took important steps to improve our environmental performance: internally, we
disseminated our Policy for the Sustainable Use of Biodiversity and Traditional Knowledge;
we achieved a 5.2% reduction in our relative greenhouse gas (GHG) emissions; we increa-
sed to 79.2% the percentage of renewable raw materials in our formulas; and we progressed
in the development of lower impact packaging.
CARBON NEUTRAL
natura supports an urgent review of the current production and consumption pro-
cesses to manage climate change. This requires reducing greenhouse gas emissions.
our Carbon neutral Program, created in 2007, has different work fronts that en-
compass social, economic, and environmental approaches to minimize the impacts
of our activities.
we have set a target of reducing our relative emissions by 33% between 2007 and
2011, based on the inventory we carried out in 2006. Since 2007, we have been
offering products that are GHG neutral. This has been possible thanks to efforts on
three fronts: carrying out an inventory of our emissions in all stages of our value
chain, projects for reducing emissions, and investments in socio-environmental pro-
jects to offset the emissions that we are not able to avoid.
At the end of 2009, we achieved a reduction of 5.2% of relative emissions of Co2
equivalent per kilo of product billed, exceeding our target of 3% for the year. with
respect to the volume of total emissions, we recorded an increase of 22% in 2009, to
245,796 metric tons of Co2e compared to 2008, when our Co2e emissions totaled
201,493 metric tons. (Graph 1 e 2)
These calculations took into consideration the total volume of our emissions from
the extraction of raw materials to the final disposal of the product.
1. ToTAL Co2e EMISSIonS
(In METRIC TonS)1 2
245.795
195.154
201.493
2007
2008
2009
2. RELATIVE EMISSIonS
(KG oF Co2e/KG oF BILLED
PRoDUCT)1 2
4,02
3,82
3,63
2007
2008
2009
1. CO2e (or CO2 equivalent): measure used
to express greenhouse gas emissions, based
on the global warming potential of each one.
2. The model of inventory calculation was
improved in 2009. The bases for 2007 and
2008 were recalculated.
INVENTORY OF EmISSIONS
The revisions are a result of the implementation of the improvements that, every year, we
try to include in our inventory, which follows the standards of the Greenhouse Gas Protocol
(GHG Protocol) and the ABNT NBR ISO 14064-1 Standard. They both establish rules of con-
ception, development, management and preparation of GHG emission inventories. Our 2009
inventory was verified by the independent consulting firm PricewaterhouseCoopers.
We also tried to improve our knowledge and exchange experiences on the calculation of emis-
sions. We participated in a series of initiatives, such as the Brazilian GHG Protocol Program, of
which we are founding members, and the workgroup coordinated by the World Resources
Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). This
workgroup is developing international protocols for inventories of emissions for the supply
chain of companies.
In 2009 we made progress in the construction of methodologies that will allow us to identify
the carbon footprint of each of our products, that is, the GHG emissions of every item in
our portfolio.
Natura does not issue or use substances that deplete the ozone layer and, as emissions of the
NOx and SOx gases are not significant, we do not monitor these emissions.
REDUCTION INITIATIVES
We reduced our relative GHG emissions through a number of initiatives. In 2009, we
contracted a consulting company that helped those responsible for our internal processes
and the Natura Business Units identify new opportunities to reduce emissions. At the
same time, we tried to increase our management’s understanding of climate change.
naturaannualreport
83
In 2009 we joined the World Wildlife Fund’s (WWF) Climate Savers project, through
which we took on the target of reducing by 10% our absolute GHG emissions related to
the so-called scope 1 and 2, in the period between 2008 and 2012. Scope 1 is related
to the company’s direct emissions (fixed and mobile sources of energy), and scope 2
accounts for indirect emissions deriving from energy purchases. In 2009 we reduced
emissions in these two scopes by 3%.
Among the 2009 reduction projects, we highlight the optimization of resources from the
road network and delivery of products, based on a more productive use of our regional
distribution centers. This was possible due to developing new calendars with delivery
dates and frequencies at the different Regional Units. Accordingly, we were able to strea-
mline the transportation of products, eliminating trips with smaller loads. This generated
cost savings and a 9% relative reduction of GHG per kilo of transported product.
Another significant action to reduce the environmental impacts of product transportation was
the change from air to sea transport in the operations in mexico and Peru. Since 2007, coastal
shipping has also been used to supply the Distribution Center in Jaboatão dos Guararapes
(state of Pernambuco) with finished products, partially replacing road transportation.
OFFSETTING PROJECTS
The emissions that cannot be reduced by Natura are offset by projects that are selected
throughout Brazil by means of invitations to bid. The social effects of the projects also play
a role in their selection.
Last year, four were chosen: Carbono, Biodiversidade e Comunidade no Corredor Ecológico Pau-
Brasil (Carbon, Biodiversity and Community in the Pau-Brasil Ecological Corridor); Uso de
Biomassa Renovável em Indústrias Cerâmicas (Use of Renewable Biomass in Ceramic Industries);
Carbono Socioambiental do Xingu (Socio-environmental Carbon of Xingu); and Fogões Eficientes
no Recôncavo Baiano (Efficient Stoves in the Recôncavo Baiano).
For an analysis of the candidates and selection of the projects, we had the support of a con-
sulting firm that is specialized in climate change and of a panel of specialists including both
Natura employees and experts, such as Dr. José Goldemberg, professor of the University of
São Paulo (USP), member of the Science Academy, former minister of Science and Technology
and former São Paulo State Environment secretary; Thelma Krug, coordinator of the National
Institute of Space Research (INPE), member of the Board of the Intergovernmental Panel on
Climate Change (IPCC) and former secretary of Climate Change of the ministry of Environ-
ment; and marcos Buckeridge, professor of the Bioscience Institute of USP and member of the
IPCC. All projects work with the promotion of recovery of forests in devastated areas and
the replacement of fossil fuels with renewable energy.
Learn about the GHG emission offset projects that are supported by Natura.
Carbono, Biodiversidade e Comunidade no Corredor Ecológico Pau-Brasil
(Carbon, Biodiversity and Community in the Pau-Brasil Ecological Corridor)
BioAtlântica Institute (Ibio)
Forest recovery project that is carried out at the Pau-Brasil national Park and at the
Monte Pascoal national Park (Porto Seguro, state of Bahia). The target is to offset
79,050 metric tons of Co2e in 30 years.
Uso de Biomassa Renovável em Indústrias Cerâmicas (Use of Renewable Biomass in
Ceramic manufacturing Companies)
Carbono Social Consulting Firm
It aims to replace native wood in the burning process for firing roof tiles and bricks
with renewable biomass such as bamboo, sawdust, coconut shells and sugarcane ba-
gasse. The target is to offset 60,000 metric tons of Co2e in up to one year.
Carbono Socioambiental do Xingu (Socio-environmental Carbon of Xingu)
Socioambiental Institute (ISA) and Centro de Vida Institute (ICV)
It provides for the recovery of 116 hectares of devastated riverbank forests and
springs that form the Xingu River in the state of Mato Gosso. The target is to offset
40,000 metric tons of Co2e in 30 years.
naturaannualreport
84
Fogões Eficientes no Recôncavo Baiano (Efficient Stoves in the Recôncavo Baiano)
Ambiental PV Consulting Firm
It provides for the replacement of rudimentary wood stoves of the families that live
in rural communities in the region of the Recôncavo Baiano with more efficient sto-
ves, reducing the volume of burnt wood and improving the quality of people’s lives.
The target is to offset 18,880 metric tons of Co2e in eight years.
we also monitor projects from previous years by means of telephone contacts and
annual visits to check on their progress. Currently, there are two projects, started in
2007 that are still in progress.
Forest Carbon - Recovery and preservation of natural resources in rural settlements
Ecológica Institute
one hundred and seventy thousand seedlings of native species are being produced
in the region of Cantão, state of Tocantins. The Institute is also encouraging other
income generating activities, such as the production of handicrafts, honey, sweets,
liqueurs and vegetable oils. At the end, the project will have offset 60,000 metric tons
of Co2e in 20 years.
Recompositioning of landscape and agroforestry systems
Ecologic Research Institute
It aims at recovering the forest with native species. In 2009, the program recovered
55 hectares of forest and implemented 129 hectares in agroforestry systems. The
final offset will be 60,000 metric tons of Co2e in 30 years.
At the end of 2009, we invited new bids on projects that will offset, starting in 2010, emissions
for the 09-10 biennium. A total of 82 proposals were received and are being analyzed; the
results will be disclosed in the mid-2010.
Our Carbon Neutral Project helped strengthen our leading role in national and international
debates on voluntary programs on climate change. Among these programs, we highlight the
Carta Aberta ao Brazil (Open Letter to Brazil) on climate change, an initiative organized by the
Ethos Institute and the Sustainable Amazon Forum, and the Empresas pelo Clima (Companies
for Climate - EPC) project of the Center of Studies on Sustainability of the Getulio Vargas
Foundation. We signed the Position Paper of the Brazilian Business Council for Sustainable
Development (CEBDS). In the international sphere, we joined the Copenhagen Communiqué
of the Corporate Leaders Group on Climate Change (CLGCC), and Caring For Climate of
the Global Compact. Natura is also a member of the Climate Neutral Network of the United
Nations Environment Programme (UNEP).
To learn more about the details of the carbon offsetting projects we support,
please visit www.natura.net/carbononeutro
BIODIVERSITY
We have been working on a wide variety of fronts related to biodiversity. We are close to the
supplier communities of these inputs, and our Legal and Government Relations departments
strive to influence the development of a legal framework for access to traditional knowledge
and wild genetic resources. We have been responsible in our use of biodiversity, as shown in
Natura’s Policy for the Sustainable Use of Biodiversity and Traditional Knowledge, which was
approved at the end of 2008 and includes guidelines for the sharing of benefits and supply of
inputs from biodiversity. This is done through sustainable extraction, sustainable stewardship
and extractivist systems, and systems based on family farming (learn more on page 50).
The Policy results from our experience as part of a group that has tackled complex topics
and relatively unexplored principles of the Convention on Biological Diversity.
It brings together guidelines and parameters for action for all of the company areas involved
in the research and development of products based on genetic resources and/or their asso-
ciated traditional knowledge. Externally, especially for our network of relationships, it serves,
among other things, as an instrument of support for decision-making on the dissemination
of our values and the way we work.
naturaannualreport
85
The Policy contains six additional documents, which establish guidelines for the sharing of
benefits from access to the genetic heritage and associated traditional knowledge; supply
of inputs from biodiversity; relationships with the communities; technology development;
product development; and marketing and communication. Its implementation is regulated
and explained by means of the Natura management System.
In 2009, we disseminated the Policy internally in training courses to all areas and all employees
who work, directly or indirectly, in the process of the sustainable use of biodiversity.
In 2009, we carried out a person-to-person meeting with 22 experts on biodiversity and also
virtual debates on this topic. Natura’s process of engagement in biodiversity won first place
in the Eco Amcham Award, in the sustainable business model category. The success of this
model, as well as its continuous improvement, depends on the engagement and participation
of several partners with whom we work and on the quality of the relationships we establish
with them. None of the links in this chain can manage the challenges of sustainability alone. In
2010, the International Biodiversity Year, our objective is to disseminate the Policy externally,
especially to the supplier communities.
Natura is a founding member and a vice president of the board of the Union for Ethical
BioTrade (UEBT). This is an international association, created in 2007 in Geneva to promote
the ethical trade of products from biodiversity. Natura will host the 2010 meeting of UEBT.
In 2010 we will also support a project of the UN Conference on Trade and Development,
whose work includes issues related to trade in items harvested from nature.
CERTIFICATION OF INGREDIENTS
We work carefully with respect to the ecological limits of the production of inputs from
biodiversity that we purchase from our supplier communities. We seek to ensure that pro-
duction is within the capacity of the environment. When we need to increase the volumes
produced, we take care to look for new areas and other suppliers who will meet Natura’s
assumptions.
Natura does not use invasive or habitat conversion species, which would imply, for example,
the transformation of a natural environment to meet production interests. We search for
raw materials at places where they occur naturally, avoid monoculture and prefer produc-
tions that are pesticide-free, in accordance with the organic production models.
To ensure sustainable and proper stewardship practices in our processes of cultivation,
extraction and production of ingredients, we implemented, in 2008, the Program for the
Certification of Plant Raw materials. It covers family farmers and traditional communities
whose production is certified based on three different models: organic, forestry and sustai-
nable farming.
Except for the Frutífera (Fruitful) organic tea line, for which the final product is certified,
in our cosmetic items, the focus of the certification is on the origin of inputs and not on
finished products.
The organic certification takes place by means of four entities: Biodinâmico Institute (IBD),
Ecocert, International Agricultural and Farming Organization (OIA) and Ecological market
Institute (ImO). The forest stewardship certification is issued by the Forest Stewardship
Council (FSC). With respect to sustainable agriculture, the certifying body is the Sustainable
Agriculture Network (SAN). Among the many requirements for obtaining the certification
is the traceability of production, a process in which the producer documents and provides
accountability on the origin of all volumes produced to the certifying entity.
Currently 31 Natura ingredients are certified, eight of which were included in 2009, 19.2%
more than in 2008. Of the new certifications, four were obtained for raw materials for the
perfumery and cosmetics areas, among which were Lemon Basil (Ocimum americanum)
and Açaí berries (Euterape oleraceae). The other four – Lemon Balm (melissa officinalis),
Carqueja (Baccharis trimera), Peppermint (mentha piperita) and Fennel (Foeniculum vulga-
re) – are products used in our Frutífera (Fruitful) line.
Last year, we excluded three ingredients from the list of certified ingredients: Guarana and
Pariparoba, due to the discontinuation of the products that use them, and Buriti Palm (mau-
ritia flexuosa), which was no longer certified because of a change of supplier area.
We are on the lookout for other certified areas to meet the demand (learn more on page 50).
naturaannualreport
86
ToTAL nUMBER oF CERTIFIED InGREDIEnTS1
Total certified ingredients (unit)
Percentage of total certified species2 (%)
2007
24
51
2008
26
54
2009
31
58
1- Only inputs in the form of waxes, oils, extracts, and essential oils (cosmetics and teas) are considered natural inputs.
2- The calculation of the percentage of raw materials certified was readjusted on account of the changes in the scope of the
calculation basis used, which started to include, besides the raw materials obtained for the production of cosmetics, the inputs
acquired for the Frutífera line products.
Of all the inputs used by Natura, only two are developed from species that are on the list of
endangered species compiled by the Brazilian Institute of the Environment and Renewable
Natural Resources (Ibama) and the International Union for the Conservation of Nature and
Natural Resources (IUCN). They are Brazil’s nut (Bertholletia excelsa) and yerba mate (Ilex
paraguariensis). For this reason, we financed studies in partnership with Embrapa Genetic
Resources and Biotechnology for the preservation of these species. These raw materials are
acquired exclusively from areas certified by the FSC.
STATUS DO PROGRAmA DE CERTIFICAçãO DE ATIVOS - NATURA 20091 2
STAGE I3
FASE II4
FASE III5
Ingredients/Ekos
________________ ______________ _____ ______ _____ ______ _____ ______ ________
Begining End Begining End Begining End
Production
System
State
Certification*
__________
Amazonas
Rondônia / Pará
X
X
Paraná/ São Paulo X
Andiroba
Carapa guianensis
Açaí Berry
Euterpe precatoria
Lemongrass (F)
Cymbopogon citratus
Brasil Nut
Bertholletia excelsa
Cacao
Theobroma cacao
Breu
Protium pallidum
Amapá
Bahia
Amapá
Cupuaçu
Theobroma grandiflorum
Rondônia
Passion Fruit
Passiflora edulis
Yerba maté
Ilex paraguaiensis
minas Gerais
Rio Grande do Sul X
murumuru Palm
Astrocaryum murumuru
Amazonas
X
Surinam Cherry
Eugenia uniflora
São Paulo e Paraná X
Jointed Flatsedge
Cyperus articulatus
Pará
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Traditional stewardship
Agroforestry System
SAN
Cultivation
ECOCERT
Traditional stewardship
FSC
Agroforestry System
IBD
Traditional stewardship
FSC
Agroforestry System
SAN
Cultivation
X
X
X
Traditional stewardship
FSC
Traditional stewardship
X
X
X
X
X
X
Organic cultivation
and stewardship
ECOCERT
Cultivation
IBD
naturaannualreport
87
Ingredients/
other lines
________________ ___________
State
Açaí Berry
Euterpe oleracea
Arabian Coffee
Coffea arabica
Pará
minas Gerais
Fragrant Granadilla
Passiflora alata
São Paulo
Paramela
Adesmia buronioides Argentina
Patagônia /
Palo Santo
Bursera graveolens
Equador
Copaíba
Copaifera spp
Green Tea (F)
Camelia sinensis
Amazonas
Paraná
Candeia
Eremanthus erythropappus
minas Gerais
Lemon Balm (F)
Melissa officinalis
Paraná
Carqueja (F)
Bacharis genisteloides D.C.
Paraná
Peppermint (F)
Mentha piperita L.
Chamomile (F)
Chamomilla recutita
Paraná
Paraná
Fennel (F)
Foeniculum vulgare Miller
Paraná
Toothache Plant
Spilanthes oleracea
São Paulo
Lemon Brasil
Ocimum americanum
Pará
STAGE I
STAGE II
STAGE II
Begining End Begining End Begining End
______ ______ _____ ______ _____ ______
notes
___________
Certification*
__________
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Organic cultivation OIm/ImO
and stewardship
Cultivation
Cultivation
SAN
IBD
Stewardship
OIA/ImO
Stewardship
ECOCERT
Organic cultivation
ECOCERT
Stewardship
ECOCERT
Stewardship
FSC
Organic cultivation
ECOCERT
Organic cultivation
ECOCERT
Organic cultivation
ECOCERT
Cultivation
ECOCERT
Organic cultivation
ECOCERT
Organic cultivation
Organic cultivation
IBD
IBD
1. We have seven ingredients certified in phase III that are part of the portfolio of products that have not yet been launched in the market. Therefore, they are not listed in this table.
2. The raw materials followed by an (F) are part of the Frutífera (Fruitful) organic tea line.
3. Phase I: Internal process of identification and selection of a potential supplier area. This phase is characterized by the typology of producers, the organization of the community
and the existing type of stewardship (agricultural or forest).
4. Phase II: Preparation of certification strategies, with discussion of the processes with plant product suppliers, choice of the certifying body and preliminary analysis of the
supplier area by this body (when necessary).
5. Phase III: Inspection of certification in the supplier areas, implementation of the action plan to meet the compliance requirements of the certifying bodies and opinion of the
certifying body to obtain the seal.
* Forest Certification by the FSC (partner certifying entity – ImAFLORA)
Sustainable Agriculture Certification, SAN seal (partner certifying entity - ImAFLORA)
Organic Certification, IBD seal (partner certifying entity - IBD)
Organic Certification, Ecocert seal (partner certifying entity - ECOCERT)
Organic Certification, OIA/ImO seal (partner certifying entity in Argentina)
naturaannualreport
88
AREAS OF OPERATION
Natura has areas that supply inputs of species from biodiversity from all over Brazil. Some
of these raw material suppliers are located in areas protected by the National System of
Preservation Units (SNUC). They are the Extractivist Reserve of middle Juruá, in the state of
Amazonas, and the São Francisco Community, located in the Sustainable Development State
Reserve of Iratapuru, in the state of Amapá.
The Extractivist Reserve of middle Juruá covers an area of 253,000 hectares of protected area,
the stewardship of andiroba and murumuru palm takes place in an area of less than 1% of the
total reserve. The sustainable stewardship of Brazil´s nut, copaiba and breu branco takes place
in area of approximately 4,000 hectares of the 842,000 hectares of the Extractivist Reserve of
middle Juruá. All the work has the approval of these Preservation Units.
Natura’s headquarters, located at km 30.5 of the Anhanguera Highway, in the municipality of
Cajamar, state of São Paulo, is in an area of 646,000 sq. m in an Environmental Protection Area.
We have developed a project for the recovery of the native forest in Cajamar by means of
which, in 2009, 5,000 seedlings of 114 species from the Atlantic Forest biome were planted.
The Itapecerica da Serra Unit, on the other hand, is at Régis Bittencourt Highway in an area of
96,543 sq. m in the Protection and Recovery Area of the Springs of the Guarapiranga Water
Basin. In 2008 we completed a project for the recovery of the riverbank forest and, since 2009,
we have been handling the maintenance of the area.
The recovery projects developed in Cajamar and Itapecerica da Serra are monitored by the
State Department for the Protection of Natural Resources (DEPRN), a governmental body
that is responsible for this issue. Both units include permanent preservation reserves. We carry
out administrative activities, in both these units, but our production plant is located in Cajamar.
These operations are in compliance with the applicable legal requirements. Together, the two
units cover an area that is equivalent to 90 soccer fields.
ImPACT OF PRODUCTS
In order to monitor the impacts of the packaging of our products, we use the Life Cycle
Assessment (LCA) tool. This methodology, which has been applied since 2001, allows us to
quantify the environmental impacts of packaging within a complete cycle, from the extrac-
tion of raw materials through production and use, to final disposal.
In 2009, the indicator that measures the environmental impact of packaging was at 69.5 mPt/
KG (millipoints per kilo of product content), lower than in 2008, when this indicator was
71.3 mPt/kg. We attribute this primarily to the reduction of the mass of support materials
used by consultants, such as the Revista Natura (Natura magazine). (Graph 1)
We look for innovative technologies for the development of our packaging. We still use the
concepts of ecological design to guide for the design and choice of our new packaging; these
include reducing the mass of packaging and using raw materials that have a lower negative
impact.
Since 2007 we have been providing an environmental table for our products, giving con-
sumers information on the origin, processing and percentage of certified raw materials, in
addition to percentages on the use of recycled and recyclable materials and the number of
refills. The table has an educational purpose, contributing to our customers’ awareness of the
environmental impacts of our products.
We comply with all legal requirements to provide information on the ingredients used. Our
labels are in accordance with the legislation in effect and respect all resolutions related to
cosmetics determined by the National Agency of Sanitary Vigilance (Anvisa).
In 2009 the weight and the volume of the materials we use in our production process in-
creased for both packaging and raw materials. This growth was proportional to the increase
of our production, of around 23%.
1. EnVIRonMEnTAL IMPACT oF
PACKAGInG PER QUAnTITy oF
PRoDUCTS (MPT/KG)
73,4
71,3
69,5
2007
2008
2009
naturaannualreport
89
ToTAL USE oF MATERIALS PER TyPE (EXCEPT wATER) In THoUSAnDS ¹
Kilograms
Liters
1. Refers to the Cajamar unit.
2007
24,454.0
8,274.6
2008
22,434.4
8,792.0
2009
27,991.3
10,813.9
In 2009 we recorded a drop in the percentage of recycled materials, from 13% in 2008 and
to 10.4%. This result is related to the decision to use paper certified by the FSC instead of
recycled paper to manufacture the Natura magazine, which also resulted in an important re-
duction in the amount of GHG emissions. (Graph 1)
1. RECyCLED MATERIALS1(%)
13,0
10,7
10,4
In 2009, the share of products with refills in sales was below the target set for Brazil, which
was 19% of total items billed. At the end of the year, it stood at 18.4%, despite the fact that we
maintained our efforts to educate and raise awareness.
PERCEnTAGE oF REFILLS on BILLED ITEMS (%)¹
Brazil
Argentina
Chile
Colombia
France
Mexico
Peru
Venezuela2
2007
21.3
21.1
16.1
8.1
9.9
11.2
21.3
6.0
2008
19.9
20.7
16.1
12.1
9.3
11.6
21.4
8.1
2009
18.4
15.9
11.7
12.2
8.5
11.5
18.6
n.a
1. Corresponds to total refills billed divided by total items billed.
2. Operations in Venezuela were discontinued in August 2009.
We explain this result to the many launches of commemorative and perfume boxes that do
not have refills. However, we have noticed that refills are well accepted by our consumers.
Today, among the products that offer this option, the choice for the refill reaches 50 of sales
revenues%. Of the 685 products in our portfolio at the end of 2009, 114 – 15.4% of the total
– offered this choice.
In the foreign operations, we recorded a significant drop in the use of refills in Argentina, Chi-
le and Peru. In Colombia, France and mexico, on the other hand, the use of refills remained
stable in comparison with the previous year, and in France and mexico it declined slightly. This
is because we reduced the number of promotions that are focused on refills only, seeking to
increase the balance between promotions and the sale of regular products. As a result, we in-
creased the possibility of new users taking advantage of the special conditions of a promotion
as the channel is frequently renewed.
WATER AND EFFLUENTS
In order to make the data on our impacts more accurate and manage these impacts more
rigorously, we included the data of outsourced companies that manufacture our products in
our indicators. This explains the increase of 8.7% in the consumption of water per unit billed
in 2009 in relation to the previous year. In the same period that we had an increase of 14.4%
in the volume of units billed, our absolute consumption of water was 24.3% higher than
in 2008. In addition to the relative consumption by outsourced companies, which totaled
34.2%, the inclusion of new sites in the calculation, such as the Natura Houses and Advanced
Logistic Centers, also contributed to the increase in absolute consumption. (Graph 2)
All water used in the facilities in Cajamar and Itapecerica da Serra come from artesian wells
due to the lack of a public supply system for both plants. The underground water source is
the water table of a crystalline aquifer. The extraction of water meets the regulations of the
permits granted by the State Department of Water and Electric Energy (DAEE). In the mid
2009, we obtained a permit for a second well.
2007
2008
2009
1. The indicator takes into consideration
packaging materials and distribution
materials (magazines, distribution boxes,
and bags) recycled post consumption.
1.wATER ConSUMPTIon PER UnIT
BILLED (GRAMS/UnIT)1
0,51
0,48
0,52
2007
2008
2009
1. This year, the amounts generated by
outsourced companies that manufacture
our products were included to better
portray the reality of the indicator. As a
result, the historical data were changed.
naturaannualreport
90
wATER ConSUMPTIon PER woRK UnIT (CUBIC METER)
Cajamar and Itapecerica da Serra plants
other natura plants in Brazil²
natura’s outsourced manufacturing companies ³
Total water consumption4
2007
114,694
2,757
28,549
146,000
2008
112,342
11,894
37,090
161,326
2009
123,012
27,813
49,783
200,608
1. The water consumption in Cajamar and Itapecerica da Serra is measured by water meters.
2. The consumption of water in other Natura plants refers to the plants in Alphaville and Benevides, Natura Houses, and Advan-
ced Centers. This information started to be gathered in 2007. In 2009 we included in the calculations the water consumption of
another five Natura Houses, all of which were inaugurated last year.
3. With respect to the consumption by outsourced companies that manufacture our products, they are advised to apportion total
water consumption in proportion to the production volume for Natura.
4. Until 2008, the outsourced companies were not included. However, they are now included to better portray the reality of the
indicator. As a result, the historical data were changed.
At the end of last year, we carried out a study on the water sources at the Cajamar unit and its
surrounding areas to identify risks of contamination and find out the real supply capacity. The result
of this study, still incomplete, will direct preventive actions over the course of 2010.
We know that reducing water consumption is a challenge we have to face, and we are trying
to work on many fronts to streamline our production and reduce consumption. With a view to
understanding and adopting increasingly better water use practices, we joined in 2009 the Dutch
Water Footprint program, which involves a number of international companies and specialists from
around the world to determine a methodology that can help calculate the water footprint of our
products (it measures how much of the water available on our planet is necessary to meet the
production and consumption demand of a certain company or a certain product). The model
takes into consideration the complete analysis of the product lifecycle, from the extraction of the
raw material to the final disposal of the waste.
Our effluents go through the Effluent Treatment Station (ETE) before being discharged. The quality
after treatment fully meets the legal applicable requirements, respecting all discharge conditions and
standards provided for in the Brazilian legislation. In Cajamar, the effluents are discharged into the Ju-
queri river, which is considered a class III river, that is, its water can be used in household supply after
conventional treatment. The Effluent Treatment Station of Itapecerica da Serra, on the other hand,
since it is in an area for the protection of springs, infiltrates its effluents in the soil after treatment in
a conventional station, the organic load removal efficiency of which is, on average, 91%. (Graph 1)
PERMEATED CAJAMAR
DBo (mg/l)
DQo (mg/l)
oils and grease (mg/l)
Legal parameter
60
150
120
TREATED EFFLUEnT ITAPECERICA DA SERRA
DBo (mg/l)
DQo (mg/l)
oils and grease (mg/l)
Legal parameter
60
150
120
2007
3.0
40.0
5.0
2007
41.0
107.0
10.0
2008
5.5
43.6
7.8
2008
19.6
73.2
8.1
2009
6.0
43.0
7.1
2009
20.2
69.0
7.5
In 2009, we spilled liquid soap waste in the Juqueri River in April, which produced a large
amount of foam. The incident took place at the Prata River Basin plant in Cajamar. We notified
the state environmental control agency (Cetesb), which drew an assessment notice. After the
incident, we established more rigorous routines for unloading liquid materials, such as raw
materials and waste from the production process. We also conducted surveys of the entire
network of industrial and house effluents of Natura, and we found ways to improve the ins-
tallation of equipment in our plants.
The volume of recycled and reused water in 2009 was 35,800 cubic meters, remaining stable
in comparison with the previous year. However, we verified a reduction in the amount of
reused water as a percentage of all the water treated at our effluent treatment stations at the
Cajamar and Itapecerica da Serra units, from 38% in 2008 to 35% in 2009. There was a 7.42%
increase in the volume of effluents generated and treated last year in comparison with 2008.
1. SIGnIFICAnT DISCHARGES
To wATER (CUBIC METERS)¹
89.063
94.126
101.672
2007
2008
2009
1. Refers to the Cajamar and Itapecerica
da Serra units.
naturaannualreport
91
PERCEnTAGE AnD ToTAL VoLUME oF wATER RECyCLED AnD REUSED
Recycled and reused water (cubic meters) ¹
Reused water as a percentage of all the water
treated at the effluent treatment station¹ (%)
1. Refers to the Cajamar and Itapecerica da Serra units.
ENERGY
2007
29,773
2008
35,824
2009
35,838
36
38
35
In 2009, we were able to reduce the total consumption of energy of the operations in Caja-
mar and Itapecerica da Serra by 1.55%, even in an environment that recorded an increase in
average temperature of 0.4ºC and an increase of 14.4% in the volume of units billed. There
was a reduction of 19% in the consumption of energy per unit billed. This was possible
thanks to the work of the multidisciplinary energy committee and to a series of initiatives
and projects to reduce consumption and improve the quality of the energy used, with an
investment of approximately R$ 450,000. (Graph 1)
1. EnERGy ConSUMPTIon
– EnERGy MATRIX PER UnIT
BILLED (KJoULES/UnIT)1
598,9
552,1
447,3
ToTAL EnERGy ConSUMPTIon (JoULES X 1012)
Energy consumption in the Cajamar and
Itapecerica da Serra plants (joules)¹
other natura plants in Brazil²
Consumption of energy by natura’s
outsourced manufacturing companies³
Total energy matrix (joules)4
2007
2008
2009
135.9
8.2
27.7
171.8
126.4
13.4
45.3
185.0
124.4
14.5
32.5
171.5
2007
2008
2009
1. For 2009 calculations were adjusted,
and the numbers generated by outsourced
companies that manufacture our products
were included to better portray the reality
of the indicator. As a result, the historical
data were changed. .
1. The energy consumption in Cajamar and Itapecerica da Serra is measured by transducers and software monitors.
2. The consumption of energy in other Natura plants refers to the plants in Alphaville and Benevides, Natura Houses, and Advan-
ced Centers. This information started to be gathered in 2007. In 2009 we included in the calculations the energy consumption
of another five Natura Houses, all of which were inaugurated last year.
3. With respect to the consumption of outsourced companies that manufacture our products, they are advised to apportion total
energy consumption in proportion to the production volume for Natura.
4. Until 2008, the outsourced companies were not included. However, they are now included to better portray the reality of the
indicator. As a result, the historical data were changed.
One of the actions was to implement enthalpy wheels in the refrigeration system of the
plants in Cajamar. Through this mechanism, when the external temperature is lower than
the internal one, the system allows the cold air to be sucked back inside the unit, pro-
moting the cooling of the room. This technology, developed in India, is innovative among
Brazilian companies. Also, the roofs received thermal paint; hybrid filters were installed;
utility systems were automated; new luminotechnical technologies were implemented; and
more efficient equipment in the utility and plant processes was acquired.
We verified a drop of 41.3% in the consumption of diesel oil in generators, arising from
three factors: improvement in the quality of the electric network, resulting is less power
failures and, consequently reducing the need to use diesel-powered generators; greater
assertiveness in the preventive maintenance of generators; and diesel oil consumption
automation, reducing leakages and overflowing of tanks.
In contrast, we reported an increase of 3.8% in the consumption of liquefied petroleum
gas (LPG), a non-renewable energy. This was because, historically, the consumption of this
gas is propor tional to the growth in the volume of units billed. In 2010, we expect to re-
place a good part of the LPG by alcohol in the boilers.
DIRECT EnERGy ConSUMPTIon, By PRIMARy SoURCE SEGMEnT (JoULES X 1012)
Primary electricity source
Self-generated electricity (diesel-powered generator)
Diesel oil used in generators
Consumption of LPG
Total
2007
104.1
0.03
2.3
29.5
135.9
2008
95.9
0.03
2.7
27.8
126.4
2009
94.0
0.03
1.6
28.9
124.5
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92
In 2009 we also signed a three-year agreement with a new supplier to ensure that all the elec-
tric energy consumed at the Cajamar and Itapecerica da Serra plants comes from a renewable
source: small hydroelectric plants. The agreement, signed with Light Esco, became effective at
the beginning of 2010. In 2011, the Benevides unit will be included in this agreement.
1. 2009 EnERGy MATRIX
(CAJAMAR AnD
ITAPECERICA DA SERRA)
moreover, we are developing the largest private project in Brazil for the consumption of solar
energy. In 2009, new solar panels were acquired to increase Natura’s use of alternative energy.
The solar energy used in the lighting of the parking lot and heating the water in the changing
rooms and kitchen generates a savings of 19.96 x 109 joules. It corresponds to just 0.01% of
the company’s energy matrix, totaling 3 GWh/month, but it is equivalent to the consumption
of one of the four administrative floors of the Cajamar complex. We saved an additional 1.95
x 1012 joules of energy through the implementation of new technologies, procedures, and
policies. (Graph 1)
Diesel
1,0%
Solar Energy
0,01%
LPG 23,1%
Electric Energy
75,9%
WASTE
Natura manages the solid waste from its operations by means of processes that include sta-
ges of separation, classification, storage, collection, transportation, and final disposal, always
for the purpose of reducing the volume of waste generation, increasing the percentage of
recycled waste, and using extra care with hazardous waste.
In 2009, solid waste generation increased 16.1% compared to 2008, in line with the growth
in Natura’s activities. This calculation includes not only the waste from the production pro-
cess but also the waste generated in the administrative areas, laboratories, and service areas
(restaurant, outpatient clinic, etc.).
This increase relates to the fact that in 2009 we included in the calculations the weight of
the waste generated by the outsourced companies that manufacture our finished products.
In total, they generated 37.8% more solid waste compared to 2008. For 2010, our challen-
ge is to manage this data more accurately. In the Cajamar and Itapecerica da Serra plants,
the increase was 7%, and the total amount of waste per unit billed increased 1.5% to 31.5
grams/unit in 2009.
We reduced by 18.7% the volume of waste produced at the Cajamar and Itapecerica da
Serra plants that were disposed of in landfills compared to 2008. This means that last year
we avoided sending 117.5 metric tons (volume necessary to fill up 20 garbage trucks) to
landfills.
ToTAL wEIGHT oF wASTE PER UnIT BILLED (GRAMS/UnIT)1
Total weight of waste per unit billed
(grams/unit)
2007
34.9
2008
31.0
2009
31.5
1. This year, the amounts generated by outsourced companies that manufacture our products were included to better portray the
reality of the indicator. As a result, the historical data were changed.
ToTAL AMoUnT oF wASTE PER TyPE (METRIC Ton)1 2
Class I
Class II-A
Class II-B
waste related to the Cajamar
and Itapecerica da Serra plants
waste related to the other natura plants3
waste at natura’s outsourced
manufacturing companies4
Total weight of waste disposed of
2007
1,395.5
4,043.3
1,180.9
6,619.7
180.2
2008
1,348.3
4,330.7
1,444.6
7,123.6
224.5
2009
1,436.6
4,817.8
1,390.5
7,618.9
251.4
3,200.0
9,999.9
3,039.0
10,387.1
4,189.0
12,059.3
1. In accordance with the Brazilian Association of Technical Standards NBR standard No. 10,004/2004: Class I waste: hazardous
waste (obsolete cosmetic products, medical and laboratory waste, and alcohol); Class II-A waste: non-inert waste (physicochemical
and biological sediments from the Effluent Treatment Station (ETE), paper, cardboard); Class II-B waste: inert waste (metals, plastic).
2. Natura does not include in this indicator the waste generated in civil construction works carried out in its plants.
3. Refers to the generation of waste from its industrial plants in Benevides – state of Pará, inaugurated in May 2007, and the
Administrative Plant in Barueri (Alphaville).
4. Companies that manufacture (or that are involved in the last stage of production) items with the Natura brand.
naturaannualreport
93
This was possible thanks to recycling initiatives such as the program for the separation
of recycled materials from obsolete cosmetic products. An expired cream, for example,
is considered hazardous waste. But instead of also sending the packaging for hazardous
waste treatment, we have started to separate it and send it for recycling after subjecting it
to a crushing process to remove characteristics of the bottle’s original usage.
With this and other initiatives, we were able to increase by 10.1% the volume of waste
sent for recycling (638.8 metric tons more) in 2008 in relation to 2008, and achieved the
rate of 91.5% of waste sent for recycling last year.
DESTInATIon oF wASTE1¹
Incinerated
(%)
(metric tons)
Disposed in landfills
(%)
(metric tons)
Recycled
(%)
(metric tons)
2007
2008
2,8
186.9
9.2
605.5
2.5
176.3
8.8
627.8
2009
1.9
142.4
6.6
510.3
88.0
5,827.2
88.7
6,319.5
91.5
6,958.3
1. Refers to the Cajamar and Itapecerica da Serra plants.
The weight of the organic waste sent for composting, on the other hand, such as food lefto-
vers, for example, increased 36.3% last year.
Hazardous waste, meanwhile, is transported within the strictest safety standards and sent for
treatment and proper final disposal. The volume of hazardous waste transported and treated
in 2009 totaled 1,400 metric tons, 6.5% more than in 2008.
wEIGHT oF wASTE ConSIDERED HAzARDoUS UnDER THE TERMS oF THE BASEL
ConVEnTIon¹ ² ³ (METRIC TonS)
Transported
Imported
Exported
Treated
2007
1,395.5
0.0
0.0
1,395.5
2008
1,348.3
0.0
0.0
1,348.3
2009
1,436.6
0.0
0.0
1,436.6
1. In accordance with Brazilian Association of Technical Standards NBR standard No. 10,004/2004: Class I waste: hazardous
waste (obsolete cosmetic products, medical and laboratory waste, alcohol, lubricating oil and maintenance waste).
2. All waste not directly mentioned in the Basel Convention, such as hazardous waste, but which is classified as hazardous based
on local legislation, is also covered by the Convention.
3. Refers to the Cajamar and Itapecerica da Serra units.
RECyCLInG oF wASTE By DESTInATIon (METRIC TonS)1
Composting
Coprocessing
Transformation
1. Refers to the Cajamar and Itapecerica da Serra units.
2007
784.3
802.8
4,160.0
2008
942.5
727.8
4,649.2
2009
1,284.8
1,288.1
4,385.4
naturaannualreport
94
In our operations, we have developed, by means of the movimento Natura (Natura mo-
vement), the reverse logistics project Reciclagem de Produtos Natura (Natura Product
Recycling), through which we have mobilized our consultants to send the support materials
and packaging collected from their customers to collection centers. We also have an ex-
perience with the collection of products for recycling in our operations in Colombia, where
we support the Association of Recyclers of Bogotá. In 2009, 32 metric tons of recyclable
waste was collected in that country.
ImPACT OF mAIN SUPPLIERS
Estamos progredindo, ano a ano, para ampliar o monitoramento dos nossos consumos de
água e de energia, bem como da geração de resíduos, para além da nossa própria atuação.
Temos a ambição de integrar cada vez mais os cálculos de toda a nossa cadeia de valor. Em
2009, consideramos, ao todo, 62 empresas nos cálculos sobre os impactos ambientais dos
nossos principais fornecedores. No ano anterior, havíamos reportado os dados de um total
de 49 fornecedores. A inclusão dessas empresas explica, em grande parte, o incremento que
visualizamos nos números, na comparação com 2008.
LEADInG SUPPLIERS oF PACKAGInG AnD RAw MATERIALS oF nATURA
Number of suppliers analyzed
2007
57
2008
49
2009
62
Energy consumption (joules x 1012 )1
Primary electricity source – consumption
of electric energy
Self-generated electricity - diesel-powered generator
Consumption of LPG
other – natural gas
Total energy used
215.1
0.2
9.1
120.5
344.8
129.0
4.6
1.8
113.8
249.2
216.8
4.2
4.8
140.4
366.2
Water consumption (cubic meters)
Total water consumption
Generation of waste by the leading
suppliers of Natura (mt)¹
Total waste generated
251,093
124,667
166,528
2,846
1,752
2,947
1. The leading Natura suppliers of inputs belonging to other categories (accessories, packaging, printing services, fragrances,
chemicals and distribution centers). The data is obtained by means of estimates: Suppliers are instructed to apply apportion-
ments to their consumption of energy and water and waste generation, taking into consideration the production percentage
for Natura.
naturaannualreport
95
CREATION OF ECONOmIC VALUE
Consolidated net revenues totaled R$ 4.2 billion, 18.6% higher than in 2008. EBITDA totaled
R$ 1.0 billion, growing 17.3% in relation to 2008. The EBITDA margin of 23.8% was above
the guidance for a minimum of 23%, which remains in place for 2010.
At the end of 2009, our cash balance amounted to R$ 500.3 million and our net indebted-
ness corresponded to 0.2 times EBITDA for the year. (Graph 1)
COSTS AND EXPENSES
1. ConSoLIDATED nET
REVEnUES (R$ THoUSAnDS)
4.242,1
The operating efficiency initiatives continued to bring results and the Cost of Sales dro-
pped from 31.1% in 2008 to 30.5% in 2009.
3.072,7
3.576,2
Selling expenses were practically unchanged, in line with our strategy and consistent with
the competitive environment, increasing from 35.2% in 2008 to 35.3% in 2009. In the
expense mix we invested more in the implementation of the Natura Consultant Adviser
(NCA) model, which was mitigated by efficiency gains in logistics and distribution, as well
as in marketing expenses.
Administrative expenses dropped from 10.8% in 2008 to 10.6% in 2009. Over the year,
we invested in a number of projects for the development of leadership, strengthening the
organizational culture, and tax requirements, among other things.
EBITDA AND NET INCOmE
In 2009, EBITDA totaled R$ 1.0 billion, a growth of 17.2% in relation to the R$ 860.1
million seen in 2008, with a margin of 23.8% in the year, above the guidance of 23%
we established for the 2008-2010 triennium, and which will be maintained. In 2008, the
EBITDA margin was 24.1%. Excluding the extraordinary effect of the Social Integration
Program (PIS) and Social Contribution on Revenues (COFINS) tax credits in 2008, the
EBITDA margin would have been 23.2%. (Graph 2)
In 2009, consolidated net income was R$ 683.9 million compared with R$ 517.9 million in
2008, a growth of 32.1%. The net margin increased from 14.5% in 2008 to 16.1% in 2009.
The higher increase in net income in relation to the EBITDA is due to the lower income
tax rate in the year of 21.8% due to the acceleration of the goodwill amortization in 2009,
a fact that will not be repeated in 2010.
2007
2008
2009
2. ConSoLIDATED
EBITDA (R$ MILLIonS)
1.008,5
702,0
860,1
SUmmARY OF CASH FLOWS
2007
2008
2009
Free cash generation totaled R$ 430.6 million in 2009 compared with R$ 484.4 million
in 2008. Excluding the extraordinary effects of the sales credit policy in Christmas 2007
(in the amount of R$ 122 million) reflected in 2008, free cash generation in 2009 would
have increased by 18.9%.
SUMMARy oF ConSoLIDATED CASH FLowS1 (R$ MILLIonS)
net income for the year
(+) Depreciation and amortization
(+) non-cash items2
Internal cash generation
Changes in working capital
Cash provided by operating activities
Additions to intangible assets
Free cash generation3
2008
517.9
90.0
(65.7)
542.2
45.0
587.2
(102.8)
484.4
2009
683.9
92.4
28.0
804.4
(233.1)
571.2
(140.6)
430.6
Var %
32.0
2.7
(142.6)
48.3
(617.8)
(2.7)
36.7
(11.1)
1. This summary of cash flows was not prepared based on the indirect cash flow method as required by Brazilian accounting standards.
With respect to cash flows, we present free cash generation determined in accordance with the following description => (Internal cash
generation) +/- (changes in working capital and long-term liabilities) – (acquisition of property, plant and equipment).
2. Due mainly to the effects of foreign exchange variation and the marking to market of derivative instruments.
3. (Internal cash generation) +/- (changes in working capital and long-term liabilities) – (acquisitions of property, plant and equipment).
1(Lucro líquido do período + depreciações e amortizações)
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96
In 2009, internal cash generation was R$ 804.4 million, 48.4% higher than the R$ 542.2 million
recorded in 2008. The investment in operating working capital in 2009 was mainly due to a
higher investment in inventories in order to improve the service level of our consultants in
the second half of the year. This short-term policy generated good results, reducing the non-
service rate of the orders placed by our consultants at the end of the year. In addition to the
investments in inventories, there was an increase in taxes recoverable arising from the new
method for paying the State-Value Added (ICmS) tax substitution in the state of São Paulo.
Investments in property, plant, and equipment in 2009 totaled R$ 140.6 million and were
mainly concentrated in information technology, improvements, and expansion of production
capacity. Investments in property, plant and equipment in 2010 will total R$ 250 million. This
additional investment will be made mainly in the Brazilian operations to improve the informa-
tion technology that supports our commercial and logistics processes and to increase logistics
capacity (storage, separation and distribution).
PRO FORmA RESULTS PER OPERATION BLOCK
With respect to the pro forma results shown below, we present the profit margin accrued from
the exports from Brazil to foreign operations less the Cost of Sales of the respective operations,
showing the real impact of these foreign subsidiaries* on the company’s consolidated result. Accor-
dingly, the pro forma Statement of Income Brazil shows only total sales in the domestic market.
PRo FoRMA FInAnCIAL HIGHLIGHTS BRAzIL
Total number of consultants – end of period* (thousands)
Product units for resale (in thousands)
Gross revenues
net revenues
Gross profit
Selling expenses (%)
Selling expenses
Administrative and general expenses
Employee profit sharing
Management compensation
other operating income (expenses), net
Financial income (expenses)
Income before taxes on income
net income for the year
EBITDA
EBITDA margin (%)
2008
730.6
299.1
4,582.6
3,363.5
2,331.8
69.3%
(1,107.8)
(325.7)
(56.9)
(13.9)
28.4
(16.7)
839.2
616.2
942.3
28.0%
2009
875.2
345.1
5,418.5
3,949.5
2,761.4
69.9%
(1,300.5)
(376.5)
(55.8)
(14.1)
(15.8)
(40.9)
957.8
778.6
1,085.9
27.5%
In 2009, EBITDA from Brazilian operation totaled R$ 1,085.9 million compared with R$ 942.3
million in 2008, a growth of 15.2%. The margin was 27.5% in 2009 and 28.0% in 2008.
PRo FoRMA EBITDA PER oPERATIon BLoCK (R$ MILLIonS)
Brazil
Argentina, Chile e Peru
Mexico, Venezuela e Colombia
France e EUA
Total
In the operations under consolidation (Argentina, Chile, and Peru), net revenues in 2009 totaled
R$ 218.5 million, showing a growth of 32.9% (36.6% in weighted local currency) in relation to
2008. In 2009, we obtained a positive result measured by EBITDA of R$ 8.9 million.
2008
942.3
(1.4)
(37.9)
(42.8)
860.1
2009
1,085.9
8.9
(42.3)
(44.1)
1,008.5
In the operations under implementation (Colombia and mexico), net revenues for 2009 totaled
R4 66.5 million, an increase of 51.1% (62.2% in weighted local currency). Excluding Venezuela, the
growth in weighted local currency was 74.2% in 2009. In 2009, EBITDA was negative by R$ 42.3
million compared with R$ 38.9 million in 2008. We are developing a strategy to drive our activities
in these countries starting in 2010.
This group also included our operations in Venezuela. In the second half of 2009, in view of the
changes that took place in that country, we decided to discontinue our operations, started in 2007.
(*) This adjustment is made on a full basis since 100% of these subsidiaries’ capital is held by Natura Cosmeticos S.A.
naturaannualreport
97
This process was conducted with respect and care, reinforcing our gratitude to the receptivity of
the Venezuelan people to our products and the concepts that involve our brand. We developed
an important network of relationships in that country, and we expect to be able to cultivate them
again in the future.
PRo FoRMA FInAnCIAL HIGHLIGHTS – oPERATIonS UnDER ConSoLIDATIon (ARGEnTInA,
CHILE AnD PERU) - (R$ MILLIonS)
Total number of consultants - end of period* (in thousands)
Product units for resale (in thousands)
Gross revenues
net revenues
Gross profit
Selling expenses (%)
Selling expenses
Administrative and general expenses
Financial income (expenses)
Income (loss) before taxes on income
net income (loss) for the year
EBITDA
EBITDA margin (%)
2008
90,0
12,9
214,7
164,4
101,5
61,8%
(85,0)
(19,6)
(5,9)
(9,1)
(13,3)
(1,4)
-0,9%
2009
113,6
16,2
285,4
218,5
138,1
63,2%
(109,3)
(23,4)
0,3
7,1
(1,1)
8,9
4,1%
PRo FoRMA FInAnCIAL HIGHLIGHTS - oPERATIonS UnDER ConSoLIDATIon (MEXICo AnD
CoLoMBIA)1 – (R$ MILLIonS)
Total number of consultants - end of period* (in thousands)
Product units for resale (in thousands)
Gross revenues
net revenues
Gross profit
Selling expenses (%)
Selling expenses
Administrative and general expenses
Financial income (expenses)
Income (loss) before taxes on income
net income (loss) for the year
EBTIDA
EBITDA margin (%)
1 Operations in Venezuela were discontinued in the third quarter of 2009.
2008
28,2
3,6
50,4
44,0
26,5
60,3%
(50,4)
(14,7)
(0,3)
(38,8)
(40,8)
(37,9)
-86,2%
2009
44,2
5,9
76,3
66,5
41,8
62,8%
(69,7)
(16,1)
(1,3)
(45,5)
(48,0)
(42,3)
-63,6%
naturaannualreport
98
FInAncIAl
StAtementS
Natura Cosméticos S.A.
Financial Statements for the years ended December 31, 2009 and 2008 and Independent
Auditors’ Report.
In compliance with legal and statutory rules, we are submitting the balance sheets and
financial statements for the years ended December 31, 2009 and December 31, 2008 for
your review. In addition to the information contained in the notes to the financial statements,
the company management is available to provide any further clarifications.
Balance Sheets
Statements of Income
Statements of Comprehensive Incomee
Statements of Changes in Shareholders’ Equity
Statements of Cash Flows
Statements of Value Added
Notes to the Financial Statements
naturaannualreport
99
NATURA COSMÉTICOS S.A.
Balance sheets as of december 31, 2009 and 2008 and january 1, 2008
(In thousands of Brazilian reais - R$)
ASSETS
CURRENT
cash and equivalents
trade accounts receivable
Inventories
Recoverable taxes
Related parties
Unrealized gains on derivative transactions
Advances to employees and suppliers
Other receivables
Total current assets
NONCURRENTS
long-term assets:
Recoverable taxes
Deferred income tax and social contribution
escrow deposits
Advances to employees and suppliers
temporary cash investments
Advance for future capital increase
Investments
Property, plant and equipment
Intangible assets
Total noncurrent assets
TOTAL ASSETS
Company
Consolidated
Note 2009
2008
2008
2009
January 1
2008
January 1
2008
5
6
7
8
10
23
254,463
414,645
94,338
93,760
26,757
-
3,690
405,392
535,528
251,079
49,368
-
-
3,569
25,513
911,583 684,037 667,598 1,716,362 1,373,477 1,270,449
105,571
512,094
21,544
2,022
12,456
-
2,305
23,930 33,748 11,606 56,360 64,247
500,294
452,868
509,551
191,195
-
-
6,094
(Restated)
87,513
428,421
40,977
33,275
18,518
35,393
6,192
(Restated)
350,497
470,401
333,632
109,697
-
38,062
6,941
8
9.a
11
2,370
45,078
98,464
785
-
25
770,701
27,866
20,188
67,344
122,118
-
-
45
868,497
37,865
33,697
82,952
187,656
-
-
90
1,000,600
50,375
22,284
84,450
137,540
4,531
4,848
-
-
480,899
63,817
1,366,897 1,125,065 951,837 1,024,856 868,676 798,369
2,278,480 1,809,102 1,619,435 2,741,218 2,242,153 2,068,818
63,931
146,146
232,354
1,660
5,769
-
-
492,256
33,490
111,919
163,256
2,071
5,250
-
-
477,661
6,548 82,740 75,029
9,008
5 and 17,f
10
12
13
13 11,527
Note
10
17
23
15
16
10
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT
loans and financing
Domestic suppliers
Foreign suppliers
‘Suppliers - related parties
Payroll, profit sharing and related charges
taxes payable
Dividends and interest on capital payable
Accrued freight
‘Reserve for tax, civil and labor contingencies
Allowance for losses on derivative transactions
Other payables
Total current liabilities
NONCURRENT
loans and financing
‘Reserve for tax, civil and labor contingencies
Allowance for losses on subsidiaries
Other payables
Total noncurrent liabilities
SHAREHOLDERS’ EQUITY
capital
capital reserves
Profit reserves
treasury shares
Proposed additional dividend
Accumulated losses
Other comprehensive income
Total equity attributed to controlling shareholders
MINORITY INTEREST
Total shareholders’ equity
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
the accompanying notes are an integral part of these financial statements.
20.a
20.c
20.b
15
17
12
Company
Consolidated
2009
2008
2008
2009
2008
January
January
2008
(Restated)
5,293
51,066
148
250,555
55,062
131,552
174
24,963
15,791
-
469,590
60,379
497
211,591
56,750
190,620
174
23,595
1,465
6,869
26,165 23,364 20,291
288,959
173,574
2,076
-
87,068
165,541
146
18,044
13,420
6,351
30,045 29,085 22,324
1,047,695 557,968 516,490 1,337,082 823,047 777,503
120,785
43,092
148
145,037
33,776
132,171
146
17,231
-
3,813
569,366
227,278
4,409
-
130,792
341,306
174
23,595
1,465
8,652
(Restated)
190,550
182,617
3,571
-
130,706
244,993
174
25,560
15,791
-
25,707
62,308
565
2,384
259,992
102,928
-
7,342
90,964 237,025 181,893 264,314 404,996 370,262
177,972
51,332
701
7,020
289,480
106,192
-
9,324
116,847
49,585
10,060
134,992
119,980
-
5,401
9,342
404,261
142,993
253,693
(14)
357,611
-
391,423
138,654
167,560
(369)
311,680
-
5,161
390,618
154,403
170,318
(2,701)
237,752
(20,935)
404,261
142,993
253,693
(14)
357,611
-
391,423
138,654
167,560
(369)
311,680
-
5,161
390,618
154,403
170,318
(2,701)
237,752
(20,935)
(8,403)
921,052
(18,723)
1,139,821 1,014,109
- -
-
(8,403) (18,723)
921,052 1,139,821 1,014,109
1
1
1
1,139,821 1,014,109 921,052 1,139,822 1,014,110 921,053
2,278,480 1,809,102 1,619,435 2,741,218 2,242,153 2,068,818
naturaannualreport
100
NATURA COSMÉTICOS S.A.
Statements of income for the years ended december31, 2009 and 2008
(In thousands of Brazilian reais - R$, except for earnings per share)
CONTINUING OPERATIONS
NET OPERATING REVENUES
cost of sales
GROSS PROFIT
OPERATING (EXPENSES) INCOME
Selling
General and administrative
employee profit sharing
management compensation
equity in subsidiaries
Other operating income (expenses), net
Company
Note
2009
2008
(Restated)
2009
Consolidated
2008
(Restated)
28
4,593,165
(1,956,558)
2,636,607
3,830,939
(1,609,476)
2,221,463
4,242,057
(1,294,565)
2,947,492
3,576,201
(1,113,237)
2,462,964
(1,062,579)
(698,241)
(21,049)
(13,139)
(2,830)
(1,017,117)
(474,958)
(20,332)
(10,087)
(12,536)
(1,496,125)
(450,868)
(55,784)
(14,063)
-
961
30,738
(14,624)
18
19
12
25
(1,259,333)
(391,070)
(56,927)
(13,853)
-
28,354
INCOME FROM OPERATIONS BEFORE FINANCIAL EFFECTS
Financial income
Financial expenses
24
24
839,730
56,794
(83,805)
717,171
59,498
916,028
84,176
(85,023) (126,050)
770,135
99,017
(121,859)
INCOME BEFORE INCOME TAX
AND SOCIAL CONTRIBUTION
Income tax and social contribution - current
Income tax and social contribution - deferred
NET INCOME FOR THE YEAR FROM
CONTINUING OPERATIONS
Attributable to:
Owners of the company
minority interest
9.b
9.b
812,719
(144,403)
691,646
(196,055)
874,154
(224,457)
15,608
22,266
34,227
747,293
(256,905)
27,469
683,924
517,857 683,924
517,857
683,924
517,857
683,924
517,857
- -
-
-
EARNINGS PER SHARE - R$
1,5895
1,2069
1,5895
1,2069
the accompanying notes are an integral part of these financial statements,
Statements of Comprehensive Income
For the years ended december 31, 2009 and 2008
(In thousands of Brazilian reais - R$)
NET INCOME FOR THE YEAR FROM
CONTINUING OPERATIONS
Other comprehensive income:
Gains (losses) adjustment from translation of financial
Statements of foreign subsidiaries
Total comprehensive income on the year
total comprehensive income on the year attributable to:
Owners of the company
minority interest
the accompanying notes are an integral part of these financial statements.
Note
2009
2008
Company
2009
Consolidated
2008
683,924
517,857
683,924
517,857
12
(23,884)
660,040
13,564
(23,884)
531,421 660,040
13,564
531,421
660,040
531,421
660,040
531,421
- -
-
-
naturaannualreport
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naturaannualreport
102
Cash Flows from Operating Activities
For the years ended december 31, 2009 and 2008
(In thousands of Brazilian reais - R$, except for dividends per share)
CASH FLOW FROM OPERATING ACTIVITIES
net income
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization
Reserve for losses on swap and forward contracts
Reserve for tax, civil and labor contingencies
Deferred income tax and social contribution
loss (gain) on sale on property, plant and
equipment and intangible assets
Write-offs on property, plant and equipment, net
equity in subsidiaries
Interest and exchange rate change on loans
and financing and other liabilities
expenses on stock options plans
Allowance for doubtful accounts
Allowance for inventory losses
(INCREASE) DECREASE IN ASSETS
current:
trade accounts receivable
Inventories
Recoverable taxes
Other receivables
noncurrent:
escrow deposits
Recoverable taxes
Other receivables
Subtotal
INCREASE (DECREASE) IN LIABILITIES
current:
Domestic and foreign suppliers
Payroll, profit sharing and related charges, net
taxes payable, net
Other payables
noncurrent:
Reserve for tax, civil and labor contingencies
Other payables
Subtotal
Note
2009
2008
(Restated)
Company
2009
Consolidated
2008
(Restated)
683,924
517,857
683,924
517,857
92,426
(4,004)
9,090
(34,227)
9,265
10,569
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10,825
8,573
10,051
13
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12
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12,188
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9,564
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17,539
(22,266)
358
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6
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33,662
4,339
8,211
3,635
739,858
26,140
2,055
5,169
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9,650
531,710 806,142
5,565
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(60,485)
4,081
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(13,509)
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(186,927)
83,673
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(43,920)
14,555
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(81,498)
8,734
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764
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5,635
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46,886
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127,226
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OTHER CASH FLOWS FROM OPERATING ACTIVITIES
Payments of income tax and social contribution
Payments of derivative transactions
Dividends received from subsidiaries
Payments of interest on loans and financing
NET CASH PROVIDED BY OPERATING ACTIVITIES
CASH FLOW FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment and intangible assets
Proceeds from sale of property, plant
and equipmentand intangible asset
Investments
NET CASH USED IN INVESTING ACTIVITIES
12
13
12
(128,758)
(13,924)
-
(4,574)
(179,044)
(4,847)
34,800
(2,950)
(184,365)
(16,255)
-
(19,919)
(232,708)
9,376
-
(18,053)
532,901
673,428
536,837
625,165
(30,568)
(25,428)
(140,632)
(102,843)
4,323
(154,720)
2,919
(128,064)
6,066
-
9,496
-
CASH FLOW FROM FINANCING ACTIVITIES
Payments of loans and financing - principal
Fundings of loans and financing
Payment of dividends
Payment of interest on capital
capital increase though subscription of shares
Acquisition of treasury shares for maintenance
on treasury for stock option plans
Sale of treasury shares by exercise of stock options
(180,965)
(150,573) (134,566)
(93,347)
20.b
20.a
20.a
(634,274)
988,310
(469,367)
(82,493)
12,838
-
-
(380,801)
283,485
(425,898)
-
805
(21,124)
2,620
(827,121)
1,109,497
(469,367)
(82,493)
12,838
-
-
(556,421)
429,392
(425,898)
-
805
(21,124)
2,620
continue
naturaannualreport
103
Note
2009
2008
(Restated)
Company
2009
Consolidated
2008
(Restated)
NET CASH USED IN FINANCING ACTIVITIES
(184,986)
(540,913) (256,646)
(570,626)
effects of exchange rate changes on cash and cash equivalents
-
-
4,172
(16,087)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
166,950
(18,058)
149,797
(54,895)
cash and cash equivalents at beginning of year
cash and cash equivalents at end of year
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Additional statements of cash flows information:
cash with restricted use (notes 5 and 17)
Guaranteed accounts limits without utilization
the accompanying notes are an integral part of these financial statements.
87,513
254,463
105,571
87,513
350,497
500,294
405,392
350,497
166,950
(18,058)
149,797
(54,895)
-
197,720
-
162,900
5,769
242,145
5,250
172,500
Statements of Value Added
For the years ended Dedember 31, 2009 and 2008
(In thousands of Brazilian reais - R$, escept supplemental information)
REVENUES
Sales of goods, products and services
Other operating income (expenses), net
Recognition of allowance for doubtful accounts
INPUTS PURCHASED FROM THIRD PARTIES
cost of sales and services
materials, energy, outside services and other
GROSS VALUE ADDED
RETENTIONS
Depreciation and amortization
VALUE ADDED GENERATED
BY THE COMPANY
VALUE ADDED RECEIVED IN TRANSFER
equity in subsidiaries
Financial income - includes inflation
and exchange rate changes
TOTAL VALUE ADDED TO BE DISTRIBUTED
Company
2009
2008
Note 2009
5,402,269
961
(69,617)
Consolidated
2008
(Restated)
(Restated)
5,333,613 4,553,478 5,705,072 4,831,081
4,852,858
28,354
(50,131)
(2,687,639) (2,357,229)
(3,591,983) (3,063,630)
(2,135,472)
(1,291,466)
(1,557,212)
(1,456,511) (1,200,138) (1,130,427) (1,065,763)
2,473,852
1,741,630
(92,426) (89,995)
(89,995)
(92,426)
5,789,313
(14,624)
(69,617)
4,570,404
30,738
(47,664)
(9,564)
(9,564)
(11,918)
1,489,848
3,017,433
(1,863,492)
(11,918)
13
1,729,712
1,480,284
2,925,007
2,383,857
53,964
46,962
12
(2,830)
(12,536)
84,176
-
99,017
-
56,794
99,017
1,783,676 1,527,246 3,009,183 2,482,874
84,176
59,498
(1,783,676) 100%
(191,654) 11%
(816,887) 46%
(86,349) 5%
(199,660) 11%
(43,254) 2%
(445,872) 25%
DISTRIBUTION OF VALUE ADDED
Payroll and related charges
taxes and contributions
Financial expenses and rents
Dividends
Interest on capital
Retained earnings
Supplemental statements of value added information:
Of the amounts recorded under caption “taxes and contributions” in 2009 and 2008, the amounts of R$424,222 and R$407,250, respectively, refer
to State VAt under the taxpayers’ substitution regime (IcmS - St) levied on the estimated profit margin defined by the State Finance Secretariats
obtained from sales made by natura Beauty consultants to final consumers.
For the analysis of this tax impact on the statements of value added, these amounts should be deducted from those recorded under captions “Sales
of goods, products and services” and “taxes and contributions”, since sales revenues do not include the estimated profit attributable to natura Beauty
consultants on the sale of products, in the amounts of R$2,302,549 and R$2,023,795 in 2009 and 2008, respectively, considering an estimated profit
margin of 30%.
the accompanying notes are an integral part of these financial statements.
(1,527,246) 100% (3,009,183) 100% (2,482,874) 100%
(170,840) 11%
(556,371) 22%
(642,954) 21%
(744,927) 49% (1,547,256) 51% (1,276,657) 51%
5%
(130,187) 4%
(87,497) 6%
(125,864)
5%
(199,660) 7%
(130,535) 9%
(130,535)
(57,465)
(43,254) 1%
(57,465) 4%
2%
(335,982) 14%
(445,872) 15%
(335,982) 22%
naturaannualreport
104
NOTES TO THE FINANCIAL STATEMENTS
For the years ended December 31, 2009 and 2008
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
1.OPERATIONS
natura cosméticos S.A. (the “company”) is a publicly-traded company,
headquartered in Itapecerica da Serra, State of São Paulo, registered in
the São Paulo Stock exchange (BmF&BOVeSPA).
the company and its subsidiaries activities are the development,
production, distribution and sale, substantially through direct sales
by natura Beauty consultants, of cosmetics, fragrances, and hygiene
products. the company also holds equity interests in other companies
in Brazil and abroad.
2. PRESENTATION OF FINANCIAL STATEMENTS AND
SIGNIFICANT ACCOUNTING PRACTICES
the financial statements have been prepared and are being presented
in conformity with Brazilian accounting practices and the standards
established by the Brazilian Securities and exchange commission
(cVm), in accordance with corporate law, including the changes
introduced by law 11638/07 and Provisional Act 449/08, converted
into law 11941/09, and Pronouncements issued by the Accounting
Pronouncements committee (cPc).
In addition, in compliance with article 3 of cVm Resolution 603/09,
when preparing its financial statements for the year ended December
31, 2009, retrospectively to the financial statements for the year ended
December 31, 2008 and the balance sheet as of January 1, 2008, when
applicable, presented for comparative purposes, the company and its
subsidiaries opted for the early adoption of applicable Pronouncements,
Interpretations and Guidelines issued by cPc in 2009, as mentioned
in note 3.
the preparation of financial statements requires management to make
estimates and assumptions to report certain assets, liabilities and other
transactions, such as reserve for tax, civil and labor contingencies,
allowances for losses on receivables and inventories, and realization
of deferred income tax and social contribution, which represent
company’s and its subsidiaries’ management’s best estimates. Actual
results could differ from those estimates.
Significant accounting practices applied are as follows:
a) Functional and reporting currency
Items included in financial statements of the company and each one
of the subsidiaries included in the consolidated financial statements are
measured using the currency of the main economic environment in
which the companies operate (“functional currency”).
the consolidated financial statements are presented in Brazilian reais,
the company’s functional currency.
b) Foreign currency transactions and balances
Foreign currency-denominated transactions are translated into the
company’s functional currency - Brazilian reais - at exchange rates
prevailing on the dates of the transactions. Balance sheet accounts are
translated at the exchange rates prevailing at the balance sheet dates.
Foreign exchange gains and losses resulting from the settlement of
such transactions and the translation of monetary assets and monetary
liabilities denominated in foreign currency are recognized in income.
c) cash and cash equivalents
Include cash, demand deposits and short-term investments redeemable
in up to 90 days, highly liquid or convertible to a known cash amount
and subject to immaterial change in value, which are recorded at cost
plus income earned through the balance sheet dates and do not exceed
their market or realization value.
d) Financial instruments
(i) classification
the company and its subsidiaries classify their financial assets under the
following categories: (1) financial assets measured at fair value through
profit or loss; (2) financial assets held-to-maturity; (3) available-for-sale
financial assets; and (4) loans and receivables. the classification depends
on the purpose for which the financial assets and liabilities were acquired
or contracted.
(1) Financial assets measured at fair value through profit or loss
the financial assets measured at fair value through profit or loss assets
are the financial assets held for trading, when acquired for such purpose,
principally in the short term. Derivative financial instruments are also
classified as held for trading. Assets in this category are classified as
current assets.
In the case of the company and its subsidiaries, this category encompasses
only derivative financial instruments. the balances related to gains
or losses on unsettled transactions are classified in current assets or
current liabilities, and gains or losses arising from changes in fair value are
recorded under “Financial income” or “Financial expenses”, respectively.
(2) Financial assets held-to-maturity
comprise investments in certain financial assets classified by treasury
at their inception as held-to-maturity, which are measured at cost of
purchase plus income earned according to contractual terms and
conditions.
(3) Available-for-sale financial assets
Include non-derivative financial assets, such as equity securities traded
in active markets and not traded in active markets, but whose fair value
can be reasonably estimated. As of December 31, 2009 and 2008 and
January 1, 2008, the company and its subsidiaries do not have assets
recorded in the financial statements under this classification.
(4) loans and receivables
Includes non-derivative financial assets with fixed or determinable receipts
that are not quoted in an active market. they are included in current assets,
except for maturities greater than 12 months after the balance sheet date,
which are classified as noncurrent assets, when applicable. As of December
31, 2009 and 2008 and January 1, 2008, include cash and cash equivalents
(note 5), loans and receivables (note 15), the balances payable to domestic
and foreign suppliers and trade accounts receivable (note 6).
(ii) measurement
Regular purchases and sales of financial assets are recognized on
transactions, i.e., on the date the company and its subsidiaries agreed to
buy or sell the asset. Financial assets at fair value through profit or loss are
initially recognized at their fair value, and transaction costs are expenses.
loans and receivables are accounted for at the amortized cost.
Gains or losses resulting from changes in the fair value of financial assets
measured at fair value through profit or loss are recognized in the
statement of income in caption “Financial income” or “Finance expenses”,
respectively, in the period in which they occur. As regards financial assets
classified as “Available for sale”, these changes are recorded in caption
“Other comprehensive income” until they are settled, when finally they
are recorded in income for the year.
(iii) Derivative financial instruments and hedging activities
Derivative transactions contracted by the company and its subsidiaries
are limited to swaps and non Deliverable Forwards (nDFs) intended
exclusively to hedge against the currency risks related to the positions
in the balance sheet and the foreign currency denominated projected
cash flows.
they are measured at fair value, and changes in fair value are recognized
against income when they are not designated for hedge accounting.
the fair value of derivatives is measured by the company’s treasury
area based on the information on each contracted transaction and the
related market information at the balance sheet dates, such as interest
rate and foreign exchange coupon. When applicable, such information
is compared with the positions reported by the trading desks of each
involved financial institution.
even though the company and its subsidiaries use derivatives for hedging
purposes, it does not apply hedge accounting.
the fair value of derivatives is disclosed in note 23.
(iv) Offsetting financial instruments
A financial asset and a financial liability are offset and the net amount
presented in the balance sheet when an entity has a legally enforceable
right to set off the recognized amounts and intends either to settle on a
net basis or to realize the asset and settle the liability simultaneously.
naturaannualreport
105
e) trade accounts receivable and doubtful accounts
trade accounts receivable are stated at their present value, less the
allowance for doubtful accounts, which is recognized based on an analysis
of risks on collection of receivables, in an amount considered sufficient
to cover possible losses, as described in note 6.
As trade accounts receivable are usually settled within a period of less
than 30 days, the carrying amounts represent substantially their fair
values at the balance sheet dates.
f) Inventories
Stated at the average cost of acquisition or production, adjusted to
market value and for possible losses, when applicable. the details are
shown in note 7.
g) Investments
Investments in subsidiaries are accounted for under the equity method,
as shown in note 12.
exchange gains and losses on the translation of financial statements of
foreign subsidiaries, for equity accounting and consolidation of financial
statements purposes, are allocated to the caption “Other comprehensive
income”, in shareholders’ equity, and reclassified to the statement of
income upon the sale of the investment, if applicable.
Unrealized profits on inventories arising from the Group’s intercompany
sales are eliminated.
h) Foreign currency transactions
translated to Brazilian reais at the exchange rates prevailing on the
transaction dates. Balance sheet figures are translated at the exchange
rates prevailing at the balance sheet dates. exchange gains and losses
arising from the settlement of these transactions and the translation of
monetary assets and liabilities denominated in foreign currencies are
recognized in the statement of income.
i) Property, plant and equipment
Recorded at acquisition and/or construction cost, plus interest capitalized
during the construction period, when applicable. Depreciation is
calculated under the straight-line method, considering the rates shown
in note 13.
As described in item m) below, rights in tangible assets that are maintained
or used in the operations of the company and its subsidiaries, originated
from finance leases, are recorded as purchase financing, and a fixed
asset and a financing liability are recognized at the beginning of each
transaction, where assets are submitted to depreciation calculated at the
rates described in note 13.
As described in note 3, the company and its subsidiaries elected not
to the review the historical cost of property, plant and equipment and
use deemed cost, as established by paragraphs 20 to 29 of IcPc 10
- Interpretation of the First-time Application to Property, Plant and
equipment and Investment Property of cPcs 27, 28, 37 and 43, to record
the opening balance of property, plant and equipment on the first-time
adoption of cPc 27 - Property, Plant and equipment and IcPc 10.
Additionally, the effects of depreciation arising from the first periodic test
of the remaining economic useful lives of property, plant and equipment
and intangible assets, as regulated by IcPc 10, will be recorded at the
closing of the financial statements for the first quarter of 2010.
j) Intangible assets
Software and eRP systems licenses purchased are also capitalized and
amortized at the rates also described in note 13, and expenses on the
software maintenance are recognized as expenses when incurred.
expenses eRP systems purchase and implementation are capitalized
as intangible assets when it is probable that the future economic
benefits that they will generate will be higher that their cost, taking into
consideration their economic and technologic viability. expenses on
software development recognized as assets are amortized under the
straight-line method over its estimated useful life. the expenses related
to software maintenance are expensed when incurred.
Separately purchased trademarks and patents are stated at their historic
cost. trademarks and patents acquired in a business combination are
recognized at fair value on the acquisition date as they are a finite useful
life and are stated at cost less accumulated amortization. Amortization is
calculated under the straight-line method at the annual rates described
in note 13.
In addition, the company records as intangible assets the goodwill
arising from the merger of natura empreendimentos S.A. into natura
Participações S.A., which was deducted from the provision to preserve
the ability to pay future dividends, as described in note 14.
k) expenses on product research and development
In view of the high level of innovation and the turnover rate of the
products in the company’s sales portfolio, the company adopts the
accounting policy of recognizing product research and development
expenditure as expenses for the year, when incurred. Details are
disclosed in note 29.
l) Impairment assessment
Property, plant and equipment, intangible assets and, when applicable,
other noncurrent assets are annually tested to identify evidences
of impairment, or also significant events or changes in circumstances
that indicate that their carrying amounts cannot be recovered. When
applicable, when there is a loss, arising from situations where the carrying
amount of an asset exceeds its recoverable amount, defined as the
higher of value in use and net selling price, this loss is recognized in the
statement of income.
Assets are grouped in their lowest levels for which there are separately
identifiable cash flows - cash Generating Units (cGUs) - for recoverable
amount evaluation purposes.
m) leases
lease classification is made at the inception of the lease. leases where
the lessor retains substantially all the risks and rewards incidental to
ownership are classified as operating leases. lease payments under an
operating lease are recognized as an expense on a straight-line basis
over the lease term.
leases where the company and its subsidiaries retain substantially all the
risks and rewards incidental to ownership are classified as finance leases.
these leases are capitalized in balance sheet at the commencement
of the lease term at the lower fair value of the leased asset and the
minimum lease payments.
each lease payment is apportioned between liabilities and the finance
charge so as to permit obtaining a constant rate on the outstanding
liability. the corresponding obligations, less finance charge, are classified
in current liabilities and noncurrent liabilities, according to the lease
term. Property, plant and equipment items purchased through finance
leases are depreciated over the shorter of their economic useful lives, as
described in item i) or the lease term.
n) current and noncurrent liabilities
Stated at known or estimated amounts, plus, if applicable, interest and
monetary and exchange variations incurred through the balance sheet
dates.
o) Income tax and social contribution - current and deferred
current and deferred income tax and social contribution are recognized
in the statement of income, except, when applicable, in the proportion
related to items recognized directly in shareholders’ equity. In this
case, taxes are recognized directly in shareholders’ equity, in “Other
comprehensive income”.
except for the subsidiaries located abroad, which apply the tax rates
prevailing in the country where they are based, income tax and social
contribution of the company and its subsidiaries in Brazil are calculated
at the tax rates of 25% and 9%, respectively, to income tax and social
contribution.
current income tax and social contribution expense are calculated using
the law enacted at the balance sheet date, pursuant to Brazilian tax
regulations. management periodically measures the positions assumed
in the income tax return regarding the situations where applicable tax
regulations are subject to possibly different interpretation and, when
appropriate, recognizes provisions based on the amounts it expects to
pay tax authorities.
Deferred income tax and social contribution recorded in current and
noncurrent assets result from expenses recorded in income, although
temporarily nondeductible for tax purposes. Deferred income tax and
social contribution are calculated using the tax rates enacted as on the
balance sheet date and that must be applied when the corresponding
deferred income tax and social contribution assets are realized or
deferred income tax and social contribution liabilities are settled.
naturaannualreport
106
Deferred income tax assets are recognized only to the extent that there
is a reasonable certainty that future taxable income will be available and
against which temporary differences can be offset.
the amounts of deferred income tax and social contribution assets and
liabilities are only utilized when there is a legally enforceable right to
offset tax loss current tax assets against current tax liabilities and/or
when deferred income tax and social contribution assets and liabilities
are related to the income tax and social contribution levied by the same
tax authorities on the taxable entity or different taxable entities, where
there is intention to settle the net balances.
Details are disclosed in note 9.
p) loans and financings
Initially recognized at fair value of proceeds received less the costs of
transaction. they are subsequently carried at amortized cost, i.e., plus
charges, interest and inflation and exchange rate changes incurred
through the balance sheet dates, as shown in note 15.
q) Reserves for tax, civil and labor contingencies
the reserves for contingent liabilities are recognized when the company
and its subsidiaries have a legal or constructive obligation as a result of past
events, where it is probable that disbursements will be required to settle
the obligation, and its present value can be reliably estimated. Reserves
are quantified at the present value of the expected disbursement to
settle the obligation using the appropriate discount rate, according to
related risks.
Adjusted for inflation through the balance sheet dates to cover probable
losses, based on the nature of contingencies and the opinion of the
company’s and its subsidiaries’ legal counsel. For financial statement
presentation purposes, these reserves are stated net of related escrow
deposits. the basis and nature of the reserves for tax, civil and labor
contingencies are described in note 17.
r) Derivative financial instruments (swap and forward)
the nominal values of derivative financial instruments of swap and
forward transactions are not recorded in the balance sheets. Unrealized
net gains or losses on these transactions, measured at fair value, are
recorded on the accrual basis of accounting, as mentioned in note 23.
s) Financial income and expenses
Refer to interest, inflation adjustment and exchange rate fluctuations on
short-term investments, escrow deposits, loans and financing and derivative
transactions, such as swaps and forwards, as shown in note 24.
t) Dividends and interest on capital
the proposed dividends and interest on capital made by the company’s
management included in the portion equivalent to minimum dividends
is recorded in caption “Dividends and interest on capital payable”
in liabilities, as it is considered as a legal liability provided for by the
company’s bylaws. However, the portion of dividends exceeding
minimum dividends declared by management after the reporting
period but before the authorization date for issuance of these financial
statements is recorded in caption “Proposed additional dividend”, and its
effects are presented in note 20.b).
For corporate and accounting purposes, interest on capital is stated as
allocation of income directly in shareholders’ equity.
u) earnings per share
calculated based on the number of shares at the balance sheet dates,
excluding treasury shares.
v) Stock option plans
the company and its subsidiaries offer to its employees and executives
share-based compensation plans, settled with company’s and its
subsidiaries’ shares, under which the company receives services in
return for stock options.
the fair value of the options granted is recognized as an expense in the
statement of income during the vesting period, and options are vested
after certain specific conditions are fulfilled. At the balance sheet dates,
the company’s management reviews its estimates on the number of
options vested based on the conditions fulfilled and, when applicable,
recognizes in the statement of income as a contra entry to shareholders’
equity the effect arising from the revision of the initial estimates.
w) Actuarial gains and losses of healthcare plan and other costs related
to employees’ benefit plans
the costs related to the contributions made by the company and its
subsidiaries to defined contribution retirement plans are recognized
on the accrual basis. Actuarial gains and losses recorded in the retirees’
healthcare expansion plan are recorded in the statement of income in
accordance with cPc 33, based on the actuarial calculation prepared by
an independent actuary, as detailed in note 22.
x) Results of operations
Income and expenses are recorded on the accrual basis. Revenue from
sales is recognized in income when all risks and rewards incidental to
product ownership are transferred to the customer.
Income from tax incentives, received in the form of a monetary asset,
is recognized in the statement of income when received as a contra
account to costs and investment already incurred by the company in the
jurisdiction where the tax incentive is granted. there are no established
conditions to be met by the company that might affect the recognition
of tax incentives.
y) Business segment report
Reporting on operating segments is consistent with the internal report
provided to the chief operating decision maker. the chief operating
decision maker, responsible for allocating resources to the operating
segments and assessing their performance, is represented by the
company’s executive committee.
3. FIRST-TIME ADOPTION OF THE CHANGES IN BRAZILIAN
ACCOUNTING PRACTICES
the enacted law 11638/07 and Provisional Act 449/08, converted
into law 11941/09, altered, revoked and added new provisions to the
Brazilian corporate law (law 6404/76), especially with respect to
chapter XV. Said law and Provisional Act are effective for fiscal years
ended on or after December 31, 2008, and applicable to all corporations,
including publicly-trade and large companies.
these changes were designed primarily to update the Brazilian corporate
law, so as to enable the convergence of Brazilian accounting practices
with International Financial Reporting Standards - IFRS and allow
regulatory agencies to issue new accounting standards and procedures,
in conformity with such international accounting standards.
Adoption of Accounting Pronouncements issued in 2009
As part of convergence process of the accounting practices established
by law 11638/07 with the international financial reporting standards,
new Pronouncements, Guidelines and technical Interpretations were
issued in 2009 by the cPc. By the date of these financial statements,
26 new technical Pronouncements, 12 Interpretations and 3 technical
Guidelines had been issued by cPc and approved by cVm Resolutions
for mandatory adoption beginning 2010.
However, as described in note 2, for compliance with article 3 of cVm
Resolution 603/09, in preparing the financial statements for the year
ended December 31, 2009, the financial statements for the year ended
December 31, 2008 and the balance sheet as of January 1, 2008, presented
for comparative purposes, the company and its subsidiaries opted for
the early adoption of applicable Pronouncements, Interpretations and
Guidelines.
the Pronouncements, Interpretations and technical Guidelines applicable
to the company and its subsidiaries are as follows:
naturaannualreport
107
a) Recognition of proposed minimum dividends under cPc 24 -
Subsequent event and IcPc 08 - Accounting for Proposed Dividend
Payments. After the financial statements for the year ended December
31, 2009, with comparative effects in the balance sheets as of January 1
and December 31, 2008, the portion of dividends exceeding minimum
dividends declared by management after the reporting period, but before
these financial statements are authorized for issuance, is not recorded as
a liability, and dividends that exceed the minimum mandatory dividends
are recorded in “Proposed additional dividend” and disclosed in the
notes to the financial statements.
the effects of the adoption of this accounting practice are disclosed
in note 20.b) and are being restated in the statement of changes in
shareholders’ equity.
b) Recognition of the costs of capitalizable loans under cPc 20 - costs
of loans. the company and its subsidiaries recorded borrowing costs
directly attributable to the development of eligible assets during the
development period.
the effects of the adoption of this accounting practice are disclosed in
note 13.
c) elimination of profits not realized in intercompany sales under IcPc
09 - Individual Financial Statements, Separate Financial Statements,
consolidated Financial Statements and Application of the equity method
of Accounting. the company has been eliminating profits not realized
in inventories arising from sales to foreign subsidiaries to present the
consolidated financial statements. Under paragraphs 48 to 54 of IcPc
09, since the closure of the financial statements for the year ended
December 31, 2009, with comparative effects in the financial statements
as of December 31, 2008 and the balance sheet as of January 1, 2008,
the company has also eliminated these unrealized profits from the
individual financial statements, whose net effects were recorded as a
credit to equity in subsidiaries in the statement of income.
the effects of the adoption of this accounting practice are disclosed in
note 4.
d) classification of deferred income tax and social contribution tax
credits in noncurrent assets under cPc 26 - Presentation of Financial
Statements. Under paragraph 56 of cPc 26, since the closure of the
financial statements for the year ended December 31, 2009, with
comparative effects in the balance sheet as of January 1 and December
31, 2008, the company and its subsidiaries have reclassified the balances
of deferred income tax and social contribution tax credits to noncurrent
assets.
As a result of the effects of the adoption of this accounting practice, the
balances of deferred income tax and social contribution recorded in the
balance sheets as of January 1 and December 31, 2008 were reclassified
from current to noncurrent assets as stated below:
Company
Consolidated
January, 1
January, 1
2008 2008 2008 2008
Deferred income tax and social
contribution - noncurrent assets:
Previously stated
currently stated
17,407 16,647
36,958 34,318
67,344 45,078 111,919 84,450
e) classification of escrow deposits in noncurrent assets under cPc
39 - Financial Instruments: Presentation. As prescribed by cPc 39, since
the closure of the financial statements for the year ended December 31,
2009, with comparative effects in the balance sheets as of January 1 and
December 31, 2008, the company and its subsidiaries reclassified the
balances of escrow deposits to noncurrent assets.
As a result of the effects of the adoption of this accounting practice,
the balances of escrow deposits charged to the balance sheets as of
January 1 and December 31, 2008 were reclassified from noncurrent
liabilities, when there was a reserve for contingencies linked to the
deposit, to noncurrent assets, as stated below:
Company
Consolidated
January,1
January,1
2008 2008 2008 2008
escrow deposits - noncurrent assets:
Previously stated
currently stated
37,187 35,119
41,017 38,603
122,118 98,464 163,256 137,540
f) Disclosure of segment reporting under cPc 22 - Segment Reporting.
As prescribed by cPc 22, since the closure of the financial statements
for the year ended December 31, 2009, with comparative effects in
the financial statements as of December 31, 2008, the company has
adopted segment reporting by geography, as shown in note 27.
g) Presentation and disclosure of financial instruments and other
related information under cPcs 38, 39 and 40 - Financial Instruments:
Presentation, measurement and Disclosures. Although the company
and its subsidiaries complied with the requirements of presentation,
measurement and disclosures previously set out in cPc 14 - Financial
Instruments, in the preparation of the financial statements for the year
ended December 31, 2008, as prescribed by the new regulation of said
cPcs 38, 39 and 40, in the preparation of the financial statements for
the year ended December 31, 2009 the company and its subsidiaries
complied with the presentation and disclosure requirements set out
in the new standards, as disclosed in note 23, and the new financial
instruments presentations in the financial statements for the reporting
annual periods presented.
h) Recognition of the effects of transactions involving share-based
payment agreements related to the company’s stock option plans
granted to subsidiaries’ employees under IcPc 05 - Share-based
Payment - transactions with Group and treasury Shares. Since the
closure of the financial statements for the year ended December 31,
2009, with comparative effects in the company’s statement of income
for the year ended December 31, 2008, the company has recorded the
stock options granted to subsidiaries’ employees, which will be settled
with company’s shares. the expenses related to these stock options,
whose contra entry is a capital contribution to the respective subsidiaries’
shareholders’ equity, will be recorded as incurred during the period in
which the service is provided by the employee.
the adoption of this accounting practice did not impact prior years’
income, resulting only in reclassifications between administrative
expense and equity in subsidiaries accounts in the company’s statement
of income for the year ended December 31, 2008.
the effects of the adoption of this accounting practice are disclosed in
note 12.
i) Accounting for the effects resulting of hyperinflation calculated for
the first-time adoption of IFRS, as part of the cost of property, plant
and equipment. Pursuant to paragraphs IG 33 and IG 34 of cPc 37
- First-time Adoption of International Financial Reporting Standards -
convergence with International Financial Reporting Standards - IFRS 1,
on the first-time adoption of IFRS to recognize the opening balance of
property, plant and equipment, the recognition of the effects of inflation
adjustment of property, plant and equipment items of subsidiary Indústria
e comércio de cosméticos natura ltda. during the hyperinflationary
period, in order to fully conform to the accounting convergence
adjustments between the IFRS and the new cPc Pronouncements, the
company’s management decided to account for the inflation adjustments
generated upon the application of IAS 29, whose effects in the year
ended December 31, 2008 and prior years are as follows:
naturaannualreport
108
January 1,
2008
and prior
years
Total
2008
Inflation adjustment of property,
plantand equipment during the
hyperinflationary period
(26) 1,583 1,557
considering the application of the new cPc Pronouncements,
Interpretations and technical Guidelines applicable to the company
and its subsidiaries, the effects on the statement of income for the year
ended December 31, 2008 and prior years, classified in “Accumulated
losses” in shareholders’ equity, which were previously recorded without
the application of these new Pronouncements, are as follows:
Company
January 1,
2008
and prior
years
Total
2008
Under laws 11638/07 and 11941/09
accounting practices (before new
cPc Pronouncements issued in 2009) 525,781
Ajustes por adoção inicial dos
novos pronunciamentos contábeis
emitidos em 2009:
elimination of unrealized profits
on inventories (ii)
equity in subsidies (i)
total adjustments, net of taxes
Under laws 11638/07 and 11941/09
accounting practices (after adoption
of new cPc Pronouncements issued
in 2009)
517,857
- 525,781
(7,670) (5,083) (12,753)
(254) 4,262 4,008
(821) (8,745)
(7,924)
(821) 517,036
Consolidated
January 1,
2008
and prior
years
Total
2008
518,111
- 518,111
(26)
(361)
1,583
4,874
1,557
4,513
133 (2,195) (2,062)
(254) 4,262 4,008
Under laws 11638/07 and 11941/09
accounting practices (before new cPc
Pronouncements issued in 2009)
Adjustments for changes in
accounting practices:
Deemed cost of property,
plant and equipment
capitalized interest
Deferred income tax and
social contribution
total adjustments, net of taxes
Under laws 11638/07 and
11941/09 accounting practices
(after adoption of new cPc
Pronouncements issued in 2009)
517,857 4,262 522,119
(i) Refers to the adjustments, net of taxes, resulting from changes in
accounting practices, arising on the equity in direct subsidiary Indústria e
comércio de cosméticos natura ltda. related to interest on capitalized
loans on eligible assets pursuant to cPc 20 and the deemed cost of
the inflation adjustment of property, plant and equipment during the
hyperinflationary period pursuant to cPc 37.
(ii) Amounts recorded net of taxes and eliminated only in the company
as, for purposes of presentation of the consolidated financial statements,
the company already eliminated these unrealized profits.
4. CONSOLIDATION CRITERIA OF ACCOUNTING STATEMENTS
a) Definition of subsidiaries for consolidation purposes
Subsidiaries are all the entities whose financial and operating policies are
controlled and conducted by the company and the parent company owns
half or more of the interest. In the applicable cases, the existence and the
effect of potential voting right, currently exercisable or convertible, are
taken into consideration to determine if the company controls or not
another entity. Subsidiaries are fully consolidated from the date when
control is transferred to the company and cease to be consolidated,
when applicable, when control is not longer exercised.
In the cases control is jointly held, the consolidation of the financial
statements is made proportionally to the interest percentage.
b) consolidation criteria and subsidiaries included in the consolidated
financial statementsthe consolidated financial statements have been
prepared in accordance with the consolidation criteria established
by Brazilian accounting practices and cVm standards, and include
the financial statements of the company and its direct and indirect
subsidiaries, as follows:
Direct interest:
Indústria e comércio de
cosméticos natura ltda.
natura cosméticos S.A. - chile
natura cosméticos S.A. - Peru
natura cosméticos S.A. - Argentina
natura Brasil cosmética ltda. - Portugal
natura Inovação e tecnologia
de Produtos ltda.
natura europa SAS - França
natura cosméticos y Servicios de
mexico, S.A. de c.V.
natura cosméticos de mexico, S.A.
de c.V.
natura Distribuidora de mexico, S.A.
de c.V.
natura cosméticos c.A. - Venezuela
natura cosméticos ltda. - colômbia
natura cosmetics USA co.
Flora medicinal J. monteiro da Silva ltda.
natura cosméticos españa S.l.
- espanha
natura (Brasil) International B.V.
- Holanda
natura cosméticos y Vestimentas S.A.
- Uruguai
Interest holding -%
January 1
2009 2008 2008
99.99
99.99
99.94
99.97
98.00
99.99
99.99
99.94
99.96
98.00
99.99
99.99
99.94
99.94
98.00
99.99
99.99
- 100.00
99.99
100.00
99.99
99.99
99.99
99.99
99.99
99.99
99.99
99.99
99.99
99.99
99.99
99.99
- 100.00
99.99
99.99
100.00
99.99
99.99
99.99
99.99
100.00 100.00
100.00
100.00 100.00
100.00
99.99
99.99
99.99
Interest holding -%
January 1
2009 2008 de 2008
99.99
33.33
99.99
99.99
33.33
Indirect interest:
By Indústria e comércio de cosméticos
natura ltda.
natura logística e Serviços ltda.
By natura Inovação e tecnologia de
Produtos ltda.
Ybios S.A. (consolidação proporcional -
controle conjunto)
natura Innovation et technologie de
Produits SAS - França
By natura (Brasil) International B.V. - Holanda
natura Brasil Inc. - eUA - Delaware
100.00 100.00
natura International Inc. - eUA - nova York 100.00 100.00
natura Worldwide trading company
- costa Rica
natura Brasil SAS - France
natura Brasil Inc. - eUA - nevada
natura europa SAS - France
the consolidated financial statements have been prepared based on the
financial statements as of the same date and consistent with the accounting
practices described in note 2. Investments in subsidiaries were
100.00 100.00
100.00 100.00
-
100.00
-
100.00
100.00 100.00
33.33
-
-
-
-
-
-
-
naturaannualreport
109
proportionally eliminated against shareholders’ equity and net income of
the respective subsidiaries. Intercompany balances and transactions and
unrealized profits were also eliminated. the non-controlling interests in
the company’s subsidiaries are shown separately.
translation of the financial statements of foreign subsidiaries
nIn preparing the consolidated financial statements, the statements of
income, cash flows and value added and all other changes in assets and
liabilities are translated into Brazilian reais at the average annual foreign
exchange rate, considering an amount close to the foreign exchange
rate prevailing at the date of the related transactions. Balance sheet is
translated into Brazilian reais at the foreign exchange rate prevailing at
the balance sheet dates.
the effects of changes in foreign exchange rates during the year on
shareholders’ equity at the beginning of year are recognized as a change
in shareholders’ equity, as the difference between retained earnings or
accumulated losses is recognized at the average foreign exchange rates
prevailing at yearend. the cumulative amount of the exchange differences
is presented in the shareholders’ equity, in caption “Other comprehensive
income”. In case of disposal or partial disposal of a foreign subsidiary, the
cumulative exchange difference is recognized in the statement of income
as part of the gain or loss on the disposal of investment, pursuant to
cPc 02.
Purchases and sales of non-controlling interests
the company has the policy of treating transactions with non-controlling
shareholders as transactions with unrelated parties. In the applicable
cases, the write-offs of non-
-controlling interests result in gains and losses for the company and
are recognized in the statement of income. the acquisitions of non-
controlling interests result in goodwill, which is the difference between
any consideration paid and the material interest acquired of the fair
value of a subsidiary’s net assets.
elimination of unrealized profits
Unrealized profits on inventories as a result of sales made by the
company to its subsidiaries were eliminated and, as of December 31,
2009 and 2008 and January 1, 2008, the effect of the elimination of these
unrealized profits, net of taxes, is as follows:
January 1
2009 2008 2008
-
7,670
4,623
17,376 12,753 5,083
Accumulated shareholders’ equity
as of December 31
Recorded in net income for the year
ended December 31
the operations of the direct and indirect subsidiaries are as follows:
a) Indústria e comércio de cosméticos natura ltda.: engaged principally
in the production and sale of natura products to natura cosméticos
S.A. - Brazil, natura cosméticos S.A. - chile, natura cosméticos S.A.
- Peru, natura cosméticos S.A. - Argentina, natura cosméticos ltda. -
colombia, natura europa SAS - France, natura cosméticos de mexico,
S.A. de c.V., and natura cosméticos c.A. - Venezuela, whose amounts
are mentioned in note 10.
b) natura cosméticos S.A. - chile, natura cosméticos S.A. - Peru, natura
cosméticos S.A. - Argentina, natura cosméticos c.A. - Venezuela, natura
cosméticos ltda. - colombia and natura Distribuidora de mexico, S.A.
de c.V.: their activities are an extension of the activities conducted by
the parent company natura cosméticos S.A. - Brazil.
c) natura Inovação e tecnologia de Produtos ltda.: its activities consist of
product and technology development and market research. It is the only
owner of natura Innovation et technologie de Products SAS - France, a
research and technology satellite center opened in 2007 in Paris.
d) natura europa SAS - France and natura Brasil SAS - France: engaged
in the purchase, sale, import, export and distribution of cosmetics,
fragrances in general, and hygiene products.
e) natura cosméticos de mexico, S.A. de c.V.: imports and sells cosmetics,
fragrances in general and hygiene products to natura Distribuidora de
mexico, S.A. de c.V.
f) natura cosméticos y Servicios de mexico, S.A. de c.V.: provides
administrative and logistics services to natura cosméticos de mexico,
S.A. de c.V. and natura Distribuidora de mexico, S.A. de c.V.
g) natura cosméticos españa S.l. - Spain: company in preoperating
stage and its activities will be an extension of the activities developed by
the parent company natura cosméticos S.A. - Brazil.
h) Flora medicinal J. monteiro da Silva ltda.: used to be engaged in the
sale of phytotherapic and phytocosmetic products of its own brand.
Since 2005 this company has had no activities. On march 31, 2008, after
the merger of nova Flora Participações ltda., Flora medicinal J. monteiro
da Silva ltda. became a direct subsidiary of natura cosméticos S.A. -
Brazil.
i) natura logística e Serviços ltda.: engaged in the provision of
administrative and logistics services to natura Group companies based
in Brazil.
j) Ybios S.A.: engaged in research, management and development of
projects, products and services in the biotechnology area, and may also
enter into agreements and/or partnerships with universities, foundations,
companies, cooperatives, associations and other public and private
entities, provision of services in the biotechnology area, and holding of
equity interest in other companies.
As Ybios S.A. is a jointly-owned subsidiary whose financial statements
were proportionally included in the company’s consolidated financial
statements, the main assets, liabilities and statement of income accounts,
which were included in the consolidated financial statements at the ratio
of 33.33% of interest after ownership elimination adjustments, are stated
below:
current assets
Property, plant and equipment
current liabilities
net losses
January 1
2009 2008 2008
482
181
71
(741)
413
193
66
(607)
409
197
282
(630)
k) natura Innovation et technologie de Produits SAS - France:
engaged mainly in research activities developed for in vitro tests, an
alternative to tests in animals, for safety and efficacy testing of active
compounds, skin care and new packaging materials.
l) natura europa SAS - France and natura cosmetics USA co.: in
January 2009, the shares in these subsidiaries’ capital stock were
assigned as a capital contribution to the holding company natura
(Brasil) International B.V. - the netherlands, and the company
became the indirect holder of such interests through this holding
company in the netherlands.
Discontinuation of subsidiaries’ operations
the Board of Directors’ meetings held in July and October 2009
approved the discontinuation of the operations of subsidiaries
natura cosméticos c.A. - Venezuela, natura Brasil cosmética ltda.
- Portugal and natura cosméticos y Vestimentas S.A. - Uruguay. As
of December 31, 2009, these companies’ winding up is in progress,
except for the subsidiaries in Uruguay and Portugal, which were still
in preoperating stage when the discontinuation of their operations
was decided. the operations of the subsidiary in Venezuela were
discontinued in the third quarter of 2009, and thus the recognition of
an allowance for impairment losses was required.
On December 31, 2009, the net assets balance of natura cosméticos
c.A. - Venezuela, recorded in the company’s consolidated financial
statements, less allowances for asset impairment losses and collection
of liabilities during the operation termination process, was R$511. For
further details on total shareholders’ equity and net loss recorded by
the subsidiary for year ended December 31, 2009, refer to note 12.
On march 31, 2008 it was decided for the transfer to the company
of the negative net assets of subsidiary nova Flora Participações
ltda. based on an independent appraisers’ report.
naturaannualreport
110
5. CASH AND CASH EQUIVALENTS
cash and banks
Short-term investments:
Bank certificates of deposit (cDBs)
Investment funds
current
noncurrent - short-term investments (note 17.(f) - tax contingencies) -
Company
Consolidated
January 1
2009 2008 2008 2009 2008 2008
49,398
12,010
January 1
54,123
61,242
15,347
19,785
67,728
89,316
242,453
348,004
-
- 908 - - 12,838
254,463 87,513 105,571 506,063 355,747 410,240
405,392
4,848
410,240
500,294
- - 5,769
506,063
350,497
5,250
355,747
87,513
105,571
105,571
254,463
301,624
444,821
254,463
87,513
As of December 31, 2009, cDBs carry interest at rates ranging from 100.0% to 103.1% (100.0% to 103.7% as of December 31, 2008 and 100.0% to
102,0% as of January 1, 2008) of the Interbank Deposit Rate (cDI). In the year ended December 31, 2008, the weighted-
-average yield of mutual fund investments was 94.8% of cDI for the year.
cDBs are classified by the company and its subsidiaries as “cash and cash equivalents” as they may be redeemed immediately.
6. TRADE ACCOUNTS RECEIVABLE
Company
Consolidated
trade accounts receivable
Allowance for doubtful accounts
Below is the aging of the trade accounts receivable:
current
Up to 30 days past due
31 to 60 days past due
61 to 90 days past due
91 to 180 days past due
January
January 1
2009 2008 2008 2009 2008 2008
575,552
(40,024)
535,528
516,865
(46,464)
470,401
509,383
(56,515)
452,868
546,372
(34,278)
512,094
467,868
(39,447)
428,421
462,303
(47,658)
414,645
Company
Consolidated
January 1
January 1
2009 2008 2008 2009 2008 de 2008
522,409
26,654
7,390
4,965
14,134
575,552
434,061
56,175
8,437
5,736
12,456
516,865
402,482
73,330
9,757
6,655
17,159
509,383
390,196
51,043
8,437
5,736
12,456
467,868
496,701
23,182
7,390
4,965
14,134
546,372
355,402
73,330
9,757
6,655
17,159
462,303
the balance of trade accounts receivable in consolidated is basically denominated in Brazilian reais, and approximately 95% of the outstanding balance
as of December 31, 2009 refers to real-denominated transactions (94% as of December 31, 2008 and 97% as of January 1, 2008). the remaining
balance is denominated in several currencies and refers to sales of foreign subsidiaries.
the changes in the allowance for doubtful accounts for the year ended December 31, 2009 are as follows:
Company
Balance at
Balance at
2008 Additions (a)
Reversals (b) 2009
(39,447) (12,087)
3,876 (47,658)
Consolidated
Balance at
Balance at
2008 Additions (a)
Reversals (b)
2009
(46,464) (13,165)
3,114 (56,515)
(a) Allowance recognized according to note 2.e).
(b) Refers to accounts over 180 days past due, written off due to
noncollection.
the expense on the recognition of the allowance for doubtful accounts
was recorded in “Selling expenses” in the statement of income. When
recovery of additional cash is less than probable, the amounts debited
from the allowance for doubtful accounts are in general reversed against
the definite write-off of the receivable against income.
maximum exposure to credit risk at the reporting date is the carrying
amount of each aging range, as shown in the aging list above. the
company and its subsidiaries do not have any guarantee for past-due
receivables.
7. INVENTORIES
Finished products
Raw materials and packaging
Promotional material
Work in process
Allowance for losses
Company
Consolidated
January 1
January 1
2009 2008 2008 2009 2008 2008
198,890
95,202
52,850
-
21,257
5,634
7,944
-
(29,862)
(6,498)
251,079
20,011
40,094
-
-
2,677
3,746
-
-
(1,144)
(2,863)
94,338 40,977 21,544
254,643
84,131
19,651
11,098
(35,891)
333,632
397,783
126,479
16,503
14,327
(45,541)
509,551
naturaannualreport
111
the increase recorded in the finished product balance in 2009 is chiefly
due to the expansion of the logistics capacity of the company’s several
distribution centers, as well as the resizing of the production capacity
of subsidiary Indústria e comércio de cosmésticos natura ltda., based
on demand planning in order to monitor the growth of the company’s
operations recorded in recent years and also in 2009, as well as the
decline in the indices of failure to meet point-of-sale orders; therefore,
raw materials and packaging balances followed such increase.
the changes in the allowance for inventory losses for the year ended
December 31, 2009 are as follows:
8. RECOVERABLE TAXES
Company
Balance at
Balance at
2008
Write offs (b) 2009
(2,863) (5,446) 1,811 (6,498)
Additions,
Net (a)
Consolidated
Balance at
2008
(35,891) (18,524) 8,874
Balance at
Write offs (b) 2009
(45,541)
Additions,
Net (a)
(a) Refers mainly to the recognition of the reserve for discontinuance,
expiration and quality losses, according to actual need to cover expected
losses on the realization of inventories and the policy established by the
company and its subsidiaries.
(b) Refers to write-offs of products discarded by the company and its
subsidiaries.
Company
Consolidated
IcmS on purchases of goods
Refundable IcmS - St on interstate sales - RS
Refundable IcmS - St on interstate sales - SP (a)
IcmS (state VAt) - St (tax substitution) (b) - Santa catarina State
Refundable IcmS - St - voluntary reporting proceeding - SP (c)
taxes - foreign subsidiaries
IcmS on purchases of fixed assets
cOFInS on purchases of fixed assets
PIS on purchases of fixed assets
PIS and cOFInS on purchase of goods
IRPJ (withholding income tax) and cSll (social contribution tax)
PIS/cOFInS/cSll - withheld at source
Others
(-) Provision for discount on sale of IcmS credits
-
current
noncurrent
January 1,
-
20,967
89,767
3,335
-
-
3,836
-
-
8,448
-
-
1,104
-
10,467
29,620
8,792
-
-
2,727
-
-
1,857
-
-
-
January 1,
2009 2008 2008 2009 2008 de 2008
14,584
25,152
-
10,467
-
29,620
-
8,792
-
15,200
14,418
20,482
18,811
13,118
16,193
9,217
3,516
1,955
576
4,214
1,589
2,660
1,568
2,302
397
8
- -
127,457 53,463 4,392 255,126 143,187 71,652
93,760
49,368
33,697 20,188 2,370 63,931 33,490 22,284
68,556
20,967
89,767
3,335
15,200
17,070
11,891
11,632
1,913
8,448
2,176
3,436
3,149
1,037
-
-
-
-
-
3,170
-
-
185
-
-
-
- - (2,414)
191,195
109,697
33,275
2,022
(a) Refers to the State tax Substitution System VAt (IcmS - St) amount that has been separately disclosed and withheld on a monthly basis on the
company’s and its subsidiary Indústria e comércio de cosméticos natura ltda.’s products sold and shipped to customers located in the Federal
District and States other than the São Paulo State, pursuant to São Paulo State tax legislation in effect since February 2008.
Under the Special Regime granted to the company by São Paulo State tax Authorities in January 2009, when determining monthly company’s IcmS,
since February 2008, it is allowed to offset an amount equivalent to 75% of the IcmS - St, arising from subsequent transactions not carried out in
the São Paulo State. the remaining IcmS - St balance recoverable, equivalent to 25%, will only be utilized by the company after an administrative
inspection by tax authorities. this Special Regime is suspended since April 2009 so that the company files with tax authorities its accessory obligations
in the format required by the Special Regime and tax Administration coordinator (cAt) Administrative Rule 17/99.
Refundable credits broken down by month are as follows:
75%
2009
25%
75%
2008
25%
Calculation period
February to march 2008
April to June 2008
June to September 2008
October to December 2008
January to march 2009
April to June 2009
June to September 2009
October to December 2009
Subtotal
credits recorded through the process of voluntary
payment (calculated between February and may 2008)
total IcmS - St - SP credits
portion portion (*) Total portion portion (*) Total
679
2.603
3.906
5.479
-
-
-
- -
12.667 12.667
506
506
2.603
2.603
3.906
3.906
5.479
5.479
3.774
3.774
4.105 16.419
5.002 20.007
5.030 20.120 -
30.405 72.814
-
-
-
-
-
12.314
15.005
679
2.603
3.906
5.479
-
-
-
15.090
-
-
-
-
-
-
-
42.409
-
- - 16.953
-
42.409 30.405 89.767 -
- 16.953
12.667 29.620
(*) classificada no ativo não circulante.
the IcmS - St credits recorded as of December 31, 2009 will be regularly offset under the system described in the previous paragraph after
complying with the aforementioned accessory obligations, and management classified risk of non-refund as remote based on the assessment of
the company’s legal counsel.
Based on the company’s management best assessment and judgment, it is estimated that the amount of the 75% installment of the credits
generated in the monthly calculations for February 2008 to December 2009, as shown in the table above, will be refunded within 12 months, after
the reinstatement of the suspended Special Regime, and thus the company maintains the recognition of these credits in current assets. the refund
112
naturaannualreport
of the 25% installment amount of the IcmS - St credits depends on
ratification by State tax authorities and is recognized in noncurrent
assets due to the lack of a reasonable time estimate for the completion
of said tax verification.
(b) Refers to IcmS - St Santa catarina State subject to a matter of a
lawsuit and deposited in escrow in the period from march to December
2007. In January 2008, the company entered into an Agreement with
the Santa catarina State Government for the application of the 30%
Value Added margin (mVA) to calculate the IcmS - St on sales made
by the company in that State.
As a result of this Agreement, the escrow deposit totaling R$29,938
made through December 2007 was converted into revenue to the
State, and, out of this amount, R$11,436 is being refunded by the Santa
catarina State Government in 24 monthly installments adjusted for
inflation, through its offset against IcmS - St falling due from April 2008.
Under said Agreement, the company has to comply with certain
commitments, including the following terms and conditions to be
applied for transactions conducted by natura’s Beauty consultants
in the Santa catarina State: (i) a mVA of 30% in the period from
January 1, 2007 to June 30, 2008; (ii) starting October 2008, after the
approval by the Santa catarina State tax Authorities, a mVA of 35%, as
determined in the study conducted by Fundação Getúlio Vargas - FGV;
and (iii) an increase of at least 5% in IcmS paid in 2009 as compared
to 2008, a commitment that the company has complied with.
On December 10, 2008, the Santa catarina State published Decree
1985, which required the application of the 35% mVA calculated
pursuant to the study conducted by Fundação Getúlio Vargas - FGV,
commissioned by the Brazilian Association of Direct Selling companies
(ABeVD) in the period from July 2008 to September 2009. Decree
2530, which renews the effectiveness of mVA of 35% until December
31, 2010, was enacted in August 2009.
(c) On September 24, 2008, the tax Administration coordinator of the
São Paulo State Finance Department accepted the voluntary reporting
request filed by subsidiary Indústria e comércio de cosméticos natura
ltda. where, after internal verifications made by its management, this
company evidenced undue withholdings of IcmS - St in the period
February-may 2008 due to a different interpretation of the provisions
of article 264, IV, 313-e and 313-G of IcmS Regulation (RIcmS/2000).
Said voluntary reporting request is also intended to clarify and
permit the application of the procedures necessary to regularize the
transactions carried out by this subsidiary during the referred period.
As a result of this regularization, IcmS - St credits were calculated at
R$15,200, consolidated, as of December 31, 2009 and 2008.
the credit will be offset by the subsidiary after verification by tax
authorities; however, based on the subsidiary’s legal counsel’s and
management’s assessment, the risk of not offsetting the amounts
recognized as of December 31, 2009 is remote.
9. INCOME TAX AND SOCIAL CONTRIBUTION
a) Deferred
Deferred income tax (IRPJ) and social contribution (cSll) result from temporary differences in the company and consolidated. these credits are
recorded in noncurrent assets, in view of cPc 26. the amounts are as follows
Company
Consolidated
January 1,
2009 2008 2008 2009 2008 de 2008
January 1,
temporary differences
Allowance for doubtful accounts (note 6)
Allowance for inventory losses (note 7)
Reserves for tax, civil and labor contingencies (note 17)
non-inclusion of IcmS in the PIS and cOFInS basis (note 16)c
Actuarial liability - healthcare plan (note 22,b)
effects of unrealized profits on inventories
Allowance for losses on swap and forward contracts (note 23)
Provision for IcmS - St - Paraná State and Federal District (note 16)
Allowances for losses on advances to suppliers
Accrued contractual obligations
Provision for discount on the assignment of IcmS credits
Accrued royalties and partnerships
Provision for international operations
Other temporary taxable differences
16,204
2,209
20,224
534
811
9,420
2,335
10,970
4,483
733
-
4,553
-
11,655
389
15,398
701
-
3,087
1,297
1,931
-
-
-
-
-
10,476 4,772 10,620
82,952 67,344 45,078
13,412
973
21,362
431
-
7,038
5,305
5,216
4,283
-
-
4,552
-
13,412
11,173
39,166
11,344
-
7,038
5,151
5,216
4,997
-
-
4,552
1,687
11,655
16,204
9,382
12,591
37,421
38,940
4,780
19,668
-
3,176
3,087
9,420
2,160
2,941
1,931
10,970
-
4,997
-
1,419
-
821
-
4,553
-
4,420
16,026
8,183 14,034
146,146 111,919 84,450
changes in deferred income tax and social contribution assets in consolidated for the reported annual periods are stated as follows::
January 1,
2008
temporary differences
Allowance for doubtful accounts
Allowance for inventory losses
Reserves for tax, civil and labor contingencies
non-inclusion of IcmS in the PIS and cOFInS basis
effects of unrealized profits on inventories
Allowance for losses on swap and forward contracts
Provision for IcmS - St - Paraná State and Federal District
Allowances for losses on advances to suppliers
Accrued royalties and partnerships
Provision for international operations
Other temporary taxable differences
11,655
9,382
37,421
4,780
3,087
2,160
1,931
-
-
-
14,034
84,450
Debited from
(credited to)
the statement of income 2008
1,757
1,791
1,745
6,564
3,951
2,991
3,285
4,997
4,552
1,687
(5,851)
27,469
13,412
11,173
39,166
11,344
7,038
5,151
5,216
4,997
4,552
1,687
8,183
111,919
naturaannualreport
113
the tax credits on tax loss carryforwards generated by the
subsidiaries do not have an expiry date for offset, except for the
subsidiaries in Argentina and mexico, which expire as follows:
Debited from
(credited to)
the statement
of income
2008
2009
13,412
11,173
2,792
1,418
16,204
12,591
39,166
(226)
38,940
11,344
8,324
19,668
7,038
2,382
9,420
2010
2011
2012
2013
2014
5,151
(2,210)
2,941
2015 and thereafter
5,216
5,754
10,970
b) current
temporary differences
Allowance for doubtful accounts
Allowance for inventory losses
Reserves for tax, civil and labor
contingencies
non-inclusion of IcmS in the PIS
and cOFInS basis
effects of unrealized profits
on inventories
Allowance for losses on swap
and forward contracts
Provision for IcmS - St -
Paraná State and Federal District
Argentina Mexico
504
1,224
1,124
1,677
-
-
-
-
-
3
- 20,664
4,529 20,667
Allowances for losses on advances
to suppliers
Accrued royalties and partnerships
4,997
4,552
Provision for international operations 1,687
Actuarial liability - healthcare plan
Accrued contractual obligations
Provision for discount on the
assignment of IcmS credits
-
-
-
-
1
2,733
3,176
1,419
4,997
4,553
4,420
3,176
1,419
821
821
Other temporary taxable differences 8,183
7,843
16,026
111,919
34,227
146,146
management, based on projections of future taxable income, estimates
that the recorded tax credits will be fully realized within five years.
the amounts recorded in noncurrent assets will be realized as follows:
2008 and 2009
2009 and 2010
2010 and 2011
2012
2013 and thereafter
Consolidated
2009
-
-
109,838
27,136
January 1,
2008 de 2008
-
71,689
75,490
8,768
24,539
3,690
303
8,695
9,172
3,195 -
146,146 111,919 84,450
In addition, as of December 31, 2009, the company had unrecognized tax
loss carryforwards and temporary differences from foreign subsidiaries
not recorded in the financial statements due to the lack of a history
of taxable income and taxable income projections for coming years, as
shown below:
total temporary differences
tax loss carryforwards:
Argentina
chile
mexico
colombia
France
27,610
4,529
9,072
20,667
33,138
29,929
97,335
Reconciliation of income tax and social contribution:
Company
Consolidated
2009 2008 2009 2008
Income before income tax
and social contribution
812,719 691,646 874,154 747,293
Income tax and social
contribution at the rate of 34% (276,324) (235,160) (297,212) (254,080)
Reversal of provision for
maintenance of dividend
payment capacity (note 14)
technological research and
innovation benefit -
law 11196/05 (*)
49,933
49,933
9,956 14,021
9,956 14,021
tax incentives - donations
2,868 2,516
5,278 3,495
equity in subsidiaries (note 12)
(962) (3,231)
-
-
tax losses generated by
foreign subsidiaries
-
- (37,739) (43,314)
Interest on capital
28,048
- 28,048
-
Other adjustments due to law
11638/07 and Provisional
Act 449/08
tax utilization of negative
goodwill (note 14)
(1,037) (4,774)
(2,035) (5,482)
108,189
- 108,189
-
Other permanent differences
467 2,906 (4,715) 5,991
Income tax and social
contribution expenses
Income tax and social
contribution - current
Income tax and social
contribution - deferred
(128,795) (173,789) (190,230) (229,436)
(144,403) (196,055) (224,457) (256,905)
15,608 22,266 34,227 27,469
effective rate - %
15,8 25,1 21,8 30,7
(*) Refers to the tax benefit established by law 11196/05, which allows
for the direct deduction from the calculation of taxable income and the
social contribution tax basis of the amount corresponding to 60% of the
total expenses on technological research and innovation, observing the
rules established in said law.
naturaannualreport
114
10. RELATED PARTIES
Receivables from and payables to related parties are as follows:
current assets:
natura Inovação e tecnologia de Produtos ltda. (a)
natura logística e Serviços ltda. (b)
nova Flora Participações ltda.
Advance for future capital increase-
Flora medicinal J. monteiro da Silva ltda. (c)
current liabilities:
Suppliers:
Indústria e comércio de cosméticos natura ltda. (d)
natura logística e Serviços ltda. (e)
natura Inovação e tecnologia de Produtos ltda. (f)
Dividends and interest on capital payable
Company
Product
sales
2009 2008 2009
Product
purchases
2008
-
-
-
-
34,151
31,477
22,290
46,970
25,300
2,611,231 2,075,190
-
-
-
-
- 2,465,453 1,965,413
32,824
-
Indústria e comércio de
cosméticos natura ltda.
natura cosméticos S.A.- Brazil
natura cosméticos S.A - Peru
natura cosméticos S.A.
- Argentina
natura cosméticos S.A.- chile
natura cosméticos S.A.
- mexico
natura cosméticos ltda.
- colombia
natura cosméticos c.A.
- Venezuela
natura europa SAS - France
natura Inovação e tecnologia
de Produtos ltda.
natura logística e Serviços
ltda.
81
natura cosmetics USA co. - - 1 10
2,611,231 2,075,190 2,611,231 2,075,190
1,417
3,885
2,023
1,423
10,846
22,353
14,727
4,645
799
277
-
-
-
-
56
-
-
-
-
-
-
-
-
Service
sales
Service
purchases
2008
2009 2008 2009
Administrative structure: (g)
natura logística e Serviços ltda. 333,652
natura cosméticos S.A. - Brazil
-
Indústria e comércio de
cosméticos natura ltda.
natura Inovação e tecnologia
de Produtos ltda.
-
287,278
-
- 252,015
-
217,255
-
52,176
45,812
- - 29,461 24,211
333,652 287,278 333,652 287,278
Product and technology
research and development: (h)
natura Inovação e tecnologia
de Produtos ltda.
-
220,354
natura cosméticos S.A. - Brazil - - 220,354 164,021
220,354 164,021 220,354 164,021
164,021
-
“In vitro” research and tests: (i)
natura Innovation et
technologie de Produits SAS
- France
natura Inovação e tecnologia
de Produtos ltda.
3,066
3,606
-
-
- - 3,066 3,606
3,066 3,606 3,066 3,606
Company
Consolidated
January 1,
2009 2008 2008 2009 2008 de 2008
January 1,
5,909
12,171
5,714
14,586
833
-
26,757 18,518 12,456
7,542
10,976
-
-
-
-
-
-
-
-
-
- -
-
-
90
90
45
45
25
25
-
-
-
-
-
-
153,509
27,627
30,455
211,591
174
213,940
21,153
110,913
17,411
15,462 16,713
145,037
250,555
146
174
-
-
-
-
174
-
-
-
-
174
-
-
-
-
146
Product
sales
Product
purchases
2008
2009 2008 2009
lease of properties and
common charges: (j)
Indústria e comércio de
cosméticos natura ltda.
natura logística e Serviços ltda.
natura Inovação e tecnologia
de Produtos ltda.
1,430
natura cosméticos S.A. - Brazil - - 1,245 1,137
6,632 6,126 6,632 6,126
6,632
-
6,126
-
-
3,843
-
3,559
1,544
-
-
total of service sales
and purchases
3,174,935 2,536,221 3,174,935 2,536,221
(a) Refers to advances granted for provision of product and technology
development and market research services.
(b) Refers to advances granted for provision of logistics and general
administrative services.
(c) Refers to remittances to Flora medicinal J. monteiro da Silva ltda.
(d) Payables for the purchase of products.
(e) Payables for services described in item (g).
(f) Payables for services described in item (h).
(g) logistics and general administrative services.
(h) Product and technology development and market research services.
(i) Provision of “in vitro” research and tests.
(j) Rental of part of the industrial complex located in cajamar - SP and
buildings located in the municipality of Itapecerica da Serra - SP.
the main intercompany balances as of December 31, 2009 and 2008,
as well as the intercompany transactions that affected the years then
ended, refer to transactions between the company and its subsidiaries.
Because of the company’s and subsidiaries’ operational model, as well as
the channel chosen to distribute products, direct sales via natura Beauty
consultants, a substantial portion of sales is made by the subsidiary
Indústria e comércio de cosméticos natura ltda. to the parent company
natura cosméticos S.A. in Brazil and to its foreign subsidiaries.
Sales to unrelated parties amounted to R$6,628 for the year ended
December 31, 2009 (R$3,638 for the year ended December 31, 2008).
there is no allowance for doubtful accounts recognized for intercompany
receivables on December 31, 2009 and 2008 since there are no past-
due receivables with risk of default.
According to note 15, the Group companies usually grant each other
pledges and collaterals to guarantee bank loans and financing.
For the compensation paid to the company’s management in 2009 and
2008 refer to note 19.
naturaannualreport
115
11. ESCROW DEPOSITS
Represent restricted assets of the company and its subsidiaries and are related to amounts deposited and held by the courts until the litigation to
which they are linked is resolved.
the company’s and its subsidiaries’ escrow deposits on December 31, 2009 and 2008 and January 1, 2008 are as follows
Company
Consolidated
IcmS - St (*)
IcmS - St suspended collection (*) (note 16.(b)
Unaccrued tax lawsuits
Accrued tax lawsuits (note 17)
Unaccrued civil lawsuits
Accrued civil lawsuits (note 17)
Unaccrued labor lawsuits
Accrued labor lawsuits (note 17)
January 1,
January 1,
2009 2008 2008 2009 2008 2008
20,679
29,162
47,030
110,640
16,449
25,581
47,608
17,039
313
321
3,202
231
1,154
2,994
1,097
137,540
14,670
20,679
67,191
47,030
20,274
13,408
16,196
15,296
64
-
206
202
1,032
2,179
1,338 817
98,464
122,118
29,162
110,640
29,103
55,361
636
1,878
3,381
2,193
232,354
14,670
67,191
23,577
51,745
390
1,668
2,380
1,635
163,256
187,656
1,696
(*) As of December 31, 2009 refers to the IcmS - St Declaratory Action filed by the Paraná State and the Federal District, as discussed in note 17 -
“contingent tax liabilities - possible risk”, items (a) and (b) (as of December 31, 2008 refers only to a lawsuit filed by the Paraná State).
12. INVESTMENTS
Investments in subsidiaries
changes for the year ended December 31, 2009
2009
1,000,600 868,497
Company
january 1, 2008
770,701
2008
Natura
Natura
Natura
Indústria e
Comércio de
Cosméticos
C.A. -
Natura Ltda. S.A. - Chile S.A. - Peru S.A.- Argentina Venezuela
526,155 90,213 10,066
99.99% 99.99% 99.94% 99.97% 99.99% 99.99% 99.99% 100.00% 98.00% 99.99% 100.00% 99.99% 100.00% 100.00%
Cosmética Cosméticos
de México
Ltda. -
S.A. (*)
Portugal
96,262 51,090 22,514 52,830
105
Natura
Cosméticos
Ltda. -
International Cosméticos
Colômbia B.V. - Holanda España Sl
Natura
Inovação e
Tecnologia
Monteiro da de Produtos
Ltda. (*)
Silva Ltda.
5,008
63,017 11,923 33,503
Natura
Europa
SAS -
França
23,058
Natura
Cosmetics
USA Co.
Natura
Cosméticos
Cosméticos Medicinal J.
Cosméticos Cosméticos
Natura
(Brasil)
Natura
Brasil
Natura
Natura
Flora
9
Total
985,753
836,908 24,076 3,771
836,851 24,074 3,769
30,917
511
(564)
61,719
8,251
(1)
25,318
2,446
6,536
167
51
1,000,106
30,908
511
(564)
61,713
8,251
(1)
25,315
2,446
6,535
167
51
1,000,026
(2,122) (2,121)
(10,110) (10,005)
136
31,846 (18,984)
-
(26,299) (26,638) (16,221)
(96)
-
(2,813)
755,892 15,810 (4,372)
(2,122) (2,120)
77,777
26,067
(10,107) (10,004)
2,908
-
136
28,819 16,783
31,843 (18,984)
-
-
26,489
(3,273)
(26,296) (26,638) (16,219)
3,314
51
(96)
9
-
868,497
(2,830)
(1,912) (1,583)
(10,375)
(442)
-
(762)
-
(6,568)
(870)
(1,372)
-
-
(23,884)
-
- 12,298 11,844
-
-
25,323
-
1,051
-
-
-
-
-
8,049 - - 11,214 - 31,690 33,227 20,812
-
212
-
51
4,231
154,720
836,851 24,074 3,769
30,908
511 - 61,713
8,251 - 25,315
2,446
6,535
167
60
1,000,600
-
-
capital
Ownership interest
Shareholders’ equity
of subsidiaries
Interest in shareholders’
equity
net income (losses) of
subsidiaries, net of exchange
variation on translation of
77,801
foreign investments
Book value of company’s investment
-
Balances as of
December 31, 2008
equity in subsidiaries
exchange rate change and
other adjustments in the
translation of investments in
foreign subsidiaries
company’s contribution to
the stock options plan
subsidiaries’ employees
capital increase
Balances as of
December 31, 2009
Provision for losses
Balances as of
December 31, 2008
Decrease in provision
for losses
Balances as of
December 31, 2009 - -
3,182
-
-
-
-
-
(700)
-
-
(1)
-
-
-
-
-
(701)
- - - - - 136 - - - - - - - -
136
- - - (564) - - (1)
- -
- - -
(565)
(*) consolidated information on the following companies:
natura cosméticos - mexico: natura cosméticos y Servicios de mexico, S.A. de c.V.; natura cosméticos de mexico, S.A. de c.V.; and natura Distribuidora
de mexico, S.A. de c.V.
natura europa SAS: natura (Brasil) International BV (the netherlands), natura Brasil Inc. (USA - Delaware), natura International Inc. (USA - new York),
natura International Inc. (USA - nevada) and natura Worldwide trading company (costa Rica), natura europa SAS (France) and natura Brasil SAS
(France).
naturaannualreport
116
capital
Ownership interest
Shareholders’ equity of
subsidiaries
Interest in shareholders’
equity
net income (losses) of
subsidiaries, net of exchange
variation on translation of
foreign investments
Book value of
company’s investment
Balances as of
January 1, 2008
Resultado da
equity in subsidiaries
exchange rate change and
other adjustments in the
translation of investments
in foreign subsidiaries
Dividends paid
company’s contribution
to the stock options plan
subsidiaries’ employees
Aumentos de capital
Balances as of
December 31, 2008
Provision for losses
Balances as of
January 1, 2008
merger of nova Flora
Participações ltda..
Provision for losses
Balances as of
December 31, 2008
Changes for the year ended December 31, 2008
Natura
Natura
Cosméticos
Natura
Cosméticos Cosméticos Cosméticos
Indústria e
Comércio de
Cosméticos
Natura Ltda. S.A. - Chile S.A. - Peru S.A.- Argentina Venezuela Ltda
526,155 83,509 2,532 60,632 6,654
99.99% 99.99% 99.94% 99.96% 99.99% 100.00% 99.99% 99.99% 100.00% 99.99% 98.00% 100.00% 99.99% 100,00% 100,00%
C.A. - Participações Monteiro da de Produtos Europa Cosméticos
SAS (*) México (*)
Ltda.
5,008 34,567 87,066
Natura
Ltda. - International Cosméticos
Colômbia B.V. - Holanda Espanha
Silva Ltda.
- 33,503
105 32,755 17,011
Natura
Cosméticos
Nova
Flora
Natura
Natura
Natura
-
Total
- 889,497
Natura
Brasil
Natura
Cosméticos
Ltda. -
Cosmetics
Portugal USA Co.
Natura
Inovação e
Medicinal J. Tecnologia Natura
Flora
753,185 15,812 (4,374) 26,077 2,908
753,110 15,810 (4,371) 26,067 2,908
-
-
(700) 27,597 16,783 26,492
(1) (2,289)
3,314
(700) 27,594 16,783 26,489
(1) (2,289)
3,314
-
-
- 864,804
- 864,714
95,219 (9,519) (5,392) (10,726) (10,343)
-
(348)
6,040 (21,497) (23,793)
- (32,850) (13,697)
-
- (26,906)
-
-
-
-
- 770,701
- (12,536)
- 13,564
- (34,800)
696,261
5,835 1,206 14,193 3,552
-
- 19,934 12,074 15,738
-
526
1,382
92,500 (9,188) (4,567)
(8,683) (7,289)
-
(348)
7,660 (17,891) (24,349)
- (27,664) (12,717)
-
(34,800)
992 (1,011)
-
-
4,847
-
105
-
-
-
-
-
- 3,711 1,027
-
-
-
- 3,630
-
-
263
-
1,931
3,156
- 18,171 - 15,710 6,540 - - - 18,889 34,073 - 20,235 14,386 51 9 128,064
1,225
-
-
-
-
-
-
-
-
-
-
-
-
-
755,892 15,810 (4,372) 26,067 2,908 - - 28,819 16,783 26,489 - (3,273)
3,314 51 9 868,497
-
-
-
-
- (10,059)
-
-
-
-
(1)
-
-
-
- (10,060)
-
(352)
- - - - - - (348)
- 10,059
-
-
-
- - - - - - (700)
-
9,707
- - - - - - - - (348)
-
-
-
-
-
-
-
- - - (1) - - - - (701)
13. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
Company
Average rate
2009
2008
2008
January 1,
PROPERTY, PLANT
AND EQUIPMENT
Vehicles
weighted annual
depreciation - %
30
leasehold improvements (b)
machinery and equipment
Furniture and fixtures
It equipment
Projects in progress
20
9
9
20
-
Adjusted Accumulated Net book Adjusted Accumulated Net book Net book
cost
27,686
depreciation value
18,099
depreciation value
cost
31,358
value
13,223
16,369
11,317
13,259
19,246
13,478
5,676
6,507
1,212
5,627
2,039
2,479
4,337
-
13,619
11,439
3,197
2,170
1,212
9,726
4,963
4,258
5,768
2,765
3,860
1,119
2,178
3,823
-
5,866
3,844
2,080
1,945
2,765
Advances to suppliers
-
639 -
639 4,996 -
4,996
78,116 27,741 50,375 60,162 22,297 37,865 27,866
Company
Average rate
2009
2008
2008
weighted annual
Adjusted Accumulated Net book Adjusted Accumulated Net book Net book
INTANGIBLE ASSETS
depreciation - %
cost
acumulada value
cost
acumulada value
value
Softwares
20 19,441
7,914 11,527 14,923 5,915 9,008 6,548
January 1,
naturaannualreport
117
7,148
3,459
2,122
1,874
-
40
Consolidated
Average rate
2009
2008
2008
January 1,
PROPERTY, PLANT
AND EQUIPMENT
machinery and equipment
weighted annual
depreciation - %
10
Adjusted Accumulated Net book Adjusted Accumulated Net book Net book
cost
246,849
depreciation value
156,182
depreciation value
cost
278,805
value
146,712
147,657
122,623
99,192
Buildings
Installations
land
molds
Vehicles
It equipment
Furniture and fixtures
leasehold improvements (b)
Projects in progress
Advances to suppliers
Other
5
10
-
30
30
20
10
30
-
-
151,142
110,476
33,662
85,698
48,312
65,469
27,732
36,106
16,269
25,213
48,210
59,339
-
68,283
18,581
44,714
12,557
14,363
-
-
102,932
151,142
51,137
33,662
17,415
29,731
20,755
15,175
21,743
16,269
25,213
97,903
33,662
76,911
45,010
62,674
25,760
25,134
23,517
9,564
42,114
50,630
-
56,841
16,744
37,955
10,559
9,917
-
-
109,028
115,124
47,273
33,662
20,070
28,266
24,719
15,201
15,217
23,517
9,564
50,483
33,662
26,643
22,245
25,204
15,072
11,452
9,824
21,263
-
6,660
4,618 2,042
7,970
4,483 3,487 3,215
885,544 393,288 492,256 806,096 328, 435 477,661 480,899
Consolidated
Average rate
2009
2008
2008
January 1,
INTANGIBLE ASSETS
Business lease - natura
europa SAS - France (a)
Softwares
weighted annual
depreciation - %
Adjusted Accumulated Net book Adjusted Accumulated Net book Net book
cost
depreciation value
depreciation value
cost
value
-
20
5,250
-
5,250
6,732
-
6,732
5,420
131,429
54,546
76,883
107,086
39,475
67,611
57,662
trademarks and patents
10
1,951
1,344
607
2,233
1,547
686
735
138,630 55,890 82,740 116,051
41,022 75,029 63,817
(a) the business lease generated on the purchase of a commercial location where natura europa SAS - France operates is supported by an appraisal
report issued by independent appraisers, attributable to the fact that it is an intangible, marketable asset, which does not suffer any decrease in value
over time. the change in the balance between December 31, 2008 and December 31, 2009 is basically due to the effects of the exchange variation
for the period..
(b) the amortization rates consider the terms of the property lease agreements, which range from three to five years.
Consolidated
2008
2009
1,557
1,531
Consolidated
2009
2008
16,880 10,358
Additional information on property, plant and equipment
a) Assets pledged as collateral
As of December 31, 2009, the company and its subsidiaries have property,
plant and equipment items pledged as collateral in bank financing and loan
transactions, as well as items attached to the defense of lawsuits, as shown
below:
d) Balance of capitalized interest
Buildings
Additional information on intangible assets
machinery and equipment
Buildings
It equipment
Vehicles
Balances at end of year
Company Consolidated
3,179
99,997
4,082
5,125
112,383
3,179
-
3,495
4,733
11,407
b) Inactive assets
As of December 31, 2009, except for the net assets of R$211 of the
subsidiary natura cosméticos c.A. - Venezuela, whose operations were
discontinued in the fourth quarter of 2009 (see note 4), the company
and its other subsidiaries did not have inactive property, plant and
equipment items.
c) expenses on operating leases
Company
Consolidated
2009 2008 2009 2008
8,453
1,217
1,148
8,960
leases
Amortization of intangible assets (*)
(*)Recorded in “General and administrative expenses”.
consolidated amortization expenses of intangible assets estimated for
the next years
2010
2011
2012
2013 and thereafter
Amount
14,868
14,868
14,868
38,136
82,740
naturaannualreport
118
PROPERTY, PLANT
AND EQUIPMENT
Balances at beginning of year
Additions (less transfers from
projects in progress - when
terminated):
machinery and equipment
Projects in progress/advances
to suppliers
Buildings
Vehicles
molds
Facilities
It equipment
Furniture and fixtures
Other
(-) Write-offs, net
(-) Depreciation
Balances at end of year
Company
Consolidated
2009 2008 2009 2008
37,865 27,866 477,661 480,899
5,061
832 21,468 15,032
-
-
-
-
980
432
7,787 7,134 49,058 6,216
- 4,874
11,094 11,759 18,099 19,072
8,787 10,158
-
3,414 10,387
-
5,825 6,018
703
1,578 2,255
284
2,896 6,118
627 464
25,981 21,176 111,125 80,130
(3,552) (3,277) (20,984) (3,731)
(9,919) (7,900) (75,546) (79,637)
50,375 37,865 492,256 477,661
CHANGES IN INTANGIBLE ASSETS
Company
Consolidated
2009 2008 2009 2008
9,008 6,548 75,029 63,817
(69)
4,587 4,252 29,507 30,010
(4,916) (8,440)
(1,999) (1,664) (16,880) (10,358)
11,527 9,008 82,740 75,029
(128)
Balances at beginning of year
Additions:
-Softwares
(including implementation costs)
(-) Write-offs and others, net
(-) Amortization
Balances at end of year
15. LOANS AND FINANCINGS
14. INTANGIBLE ASSETS - GOODWILL ON INVESTMENTS
On march 5, 2004, natura Participações S.A. was merged into the
company. natura Participações S.A. had recorded goodwill on the
investment in natura empreendimentos S.A., amounting to R$1,028,041,
and a corresponding provision for maintenance of future dividend
payment capacity in the same amount. this goodwill arose from the
merger of the shares of natura empreendimentos S.A. into natura
Participações S.A. on December 27, 2000. this merger was approved
by the extraordinary Shareholders’ meeting held on that date, and the
amounts are supported by a valuation report issued by independent
appraisers. the amounts are as follows:
Goodwill on investments
Provision for maintenance
of future dividend payment capacity
Company
2008
318,203 318,203
2009
(318,203) (318,203)
-
-
the provision for maintenance of future dividend payment capacity,
as it is in the full amount, will result in the recognition of the goodwill
amortization tax benefits for all of the company’s shareholders.
As mentioned in note 3, considering the changes in accounting practices
introduced by law 11638/07 and Provisional Act 449/08, converted
into law 11941/09, since January 1, 2009 the existing goodwill balance
as of December 31, 2008 has no longer been amortized, and the
provision for future dividends, covering the full dividend amount,
has no longer been reversed. Accordingly, as of January 1, 2009, the
goodwill tax benefit has been used in monthly calculations of income
tax and social contribution based on the transitional tax Regime (Rtt),
in accordance with the provisions of Provisional Act 449/08 and the
effects mentioned in note 9.b).
Company
Consolidated Reference
Local currency
BnDeS - eXIm (a)
FIneP (Financing Agency for Studies and Projects)
Agribusiness credit note
Promissory notes
BnDeS (a)
Guaranteed account
BnDeS - FInAme
Banco do Brasil - FAt Fomentar (Workers’ Assistance Fund)
Arrendamentos mercantis - financeiros
FIneP - grant
compror
export notes (nce)
total local currency
Foreign currency
BnDeS - eXIm (a)
BnDeS (a)
Advances on exchange contracts (Acc) (a)
Resolution 2770 (a)
International operation - Peru
total foreign currency
Grand total
current
noncurrent
January 1,
-
-
-
350,856
29,549
180
-
-
-
2009 2008 2008
-
-
-
-
26,282
-
-
-
-
-
-
-
-
27,906
-
-
-
-
- - -
- 118,482
- - -
380,585 26,282 146,388
-
-
January 1,
2009 2008 de 2008
41,707 109,570 88,140
50,156 51,915
39,985
54,173 48,787
-
350,856
-
36,211 41,444
100,949
-
355
11,126 14,246
6,168
6,682
5,890
4,970
4,252
3,880
1,660
1,211 618 -
- 137,677
- - 41,190
547,861 271,624 434,333
-
-
-
2,922
-
-
-
2,760
2,599
-
-
111,790 154,384
88,484
- - -
114,712 156,983 91,244
495,297 183,265 237,632
10,427
9,984
10,447
27,392 22,035
4,099
3,581
-
-
111,791 154,384 88,484
13,848 23,049 - O
156,497 208,406 114,618
704,358 480,030 548,951
469,590 5,293 120,785
25,707 177,972 116,847
569,366 190,550 288,959
134,992 289,480 259,992
A
B
c
D
e
F
G
H
I
J
K
l
A
e
m
n
naturaannualreport
119
Reference Currency Maturity
Charges
Collaterals
A
Real
January and may 2010
and February 2011
Interest of 2.39% p.a. + tJlP (b) for 80% of the Guarantee of natura cosméticos S.A.
financing and interest of 8.44% p.a. + exchange
variation (U.S. dollar) for 20% of the financing
maturing in January 2010; interest of 2.60% p.a. +
tJlP (b) for 80% of the financing and interest
of 8.98% p.a. + exchange variation (U.S. dollar)
for 20% of the financing maturing in may 2010;
and interest of 2.43% p.a. + tJlP (b) for 80% of
the financing and interest of 8.31% p.a. + exchange
variation (U.S. dollar) for 20% of the financing
maturing in February 2011
tJlP (b)
Guarantee of natura cosméticos S.A. and
bank guarantee
Real
march 2013
Real
-
Interest of 8.66% p.a. + tR (e)
Guarantee of natura cosméticos S.A.
Real
June 2010
Interest of 106% of cDI (c)
n/A
Real
April 2010 and
February 2017
For financing maturing in April 2010:
Interest of 4.5% p.a. + tJlP (b) + UmBnDeS (f)
mortgage (g)
For financing maturing in February 2017:
(i) tJlP (b) + interest of 2.8% p.a. for 85%
of financing; (ii) exchange rate change (dollar) +
interest of 8.54% a.a. for 9% of financing; and (iii)
tJlP (b) + interest of 2.3% p.a. for 6% of financing
Bank guarantee
Real
may 2010
cDI (c) + 2.54% a.a.+ IOF (d)
Real
September 2012
Interest of 4.5% p.a.+ tJlP (b)
Real
February 2014
Interest of 4.4% p.a. + tJlP (b)
Real
through
September 2012
Interest of 99.5% p.a. for
102.99% of DI - cetIP (h)
Guarantee of Indústria e comércio
cosméticos natura ltda. e flow receivables
chattel mortgage, guarantee of
natura cosméticos S.A. and promissory notes
chattel mortgage, guarantee of
natura cosméticos S.A. and promissory notes
collateralization of leased assets
Real
January 2011
n/A
n/A
Real
January 2008
Interest of 102.8% of cDI (c)
Guarantee of natura cosméticos S.A.
Real
April 2008
Interest of 104.7% of cDI (c)
Promissory notes and guarantee of
natura cosméticos S.A.
U.S.dollar march 2010
exchange variation + 0.52% p.a.
Guarantee of natura cosméticos S.A.
Yen
January 2010
exchange variation + 2.11% p.a.
Guarantee of Indústria e comércio de
cosméticos natura ltda.
new sol november 2010
Interest of 2.4% p.a.
Bank guarantee
B
c
D
e
F
G
H
I
J
K
l
m
n
O
(a) loans and financing for which swap contracts (cDI) were entered into.
(b) tJlP - long-term Interest Rate.
(c) cDI - Interbank Deposit Rate.
(d) IOF - tax on Financial transactions.
(e) tR - managed Prime rate.
(f) UmBnDeS - monetary Unit of national Bank for economic and Social Development (BnDeS). local currency financing from the BnDeS is
collateralized by the cajamar unit of subsidiary Indústria e comércio de cosméticos natura ltda.
(g) mortgages - relate to real estate of the cajamar unit of the subsidiary Indústria e comércio de cosméticos natura ltda.
(h) DI - cetIP - daily index calculated based on the average DI, disclosed by the clearinghouse for the custody and Financial Settlement of
Securities (cetIP).
naturaannualreport
120
maturities of noncurrentliabilities are as follows:
2009
2010
2011
2012
2013
2014
2015 and thereafter
Consolidated
2009
-
-
42,695
33,799
23,728
16,991
17,779
134,992
-
January 1,
2008 2008
100,831
225,226 109,583
18,541
29,837
17,543
20,384
9,543
10,351
3,682
3,951
- -
289,480 259,992
a) Description of the main current bank loan and financing agreements:
1. BnDeS - eXIm Pré-embarque and BnDeS - eXIm Pré-embarque
especial Programs
the subsidiary Indústria e comércio de cosméticos natura ltda.
benefits from the financing programs of the BnDeS in the pre-shipment
stage for the export of goods and services. As a rule, the requirements
for participation in said programs are: (i) to have credit approved by the
financial institution that will enter into the financing agreement; and (ii)
to manufacture products with a using at least 60% locally.
2. Financing agreements with the BnDeS
the company and its subsidiaries Indústria e comércio de cosméticos
natura ltda. and natura Inovação e tecnologia de Produtos ltda. have
credit facility agreements with the BnDeS to facilitate direct investments
in the company and its subsidiaries in order to improve certain product
lines, train research and development employees, optimize operation
product separation lines in the cajamar - SP industrial facilities, set up
of a vertical warehouse also in the cajamar - SP industrial facilities,
hire consultancy firms for the new distribution centers, build two new
distribution centers, one in matias Barbosa - mG and another in Jaboatão
dos Guararapes - Pe, as well as restructure the administration of the
Itapecerica da Serra - SP unit and purchase the equipment necessary
for these purposes.
3. Financing agreement with the FIneP
the subsidiary natura Inovação e tecnologia de Produtos ltda. has
innovation programs aimed at the development and acquisition of new
technologies by means of partnerships with universities and research
centers in Brazil and abroad. these innovation programs have the
support of research and technological development incentive programs
of the FIneP, which facilitates and/or co-finances equipment, scientific
grants and research material for the participating universities.
these funds were used to partially finance investments incurred in the
drafting of the “technology Platforms for new cosmetics and nutritional
Supplements” project.
4. machinery and equipment Financing - FInAme
the company benefits from a credit facility with the BnDeS, related to
16. TAXES PAYABLE
FInAme onlendings, intended to finance the purchase of new machinery
and equipment manufactured in Brazil. Said onlending is carried out by
granting credit to Indústria e comércio de cosméticos natura ltda.,
granting rights to receivables to the financial institution accredited as a
financing agent, usually Banco Votorantim S.A., Banco Itaú Unibanco S.A.,
Banco do Brasil S.A., HSBc Bank Brasil S.A. and Banco Santander Brasil
S.A., which enter into such said financing with Indústria e comércio de
cosméticos natura ltda.
these agreements are collateralized by the financed assets. Indústria e
comércio de cosméticos natura ltda. is the trustee and the company
is the guarantor of these assets. In addition, the company and its
subsidiaries are obliged to meet the Provisions Applicable to BnDeS
Agreements and General Regulatory conditions of FInAme-related
transactions.
5. Resolution 2770
Bank credit note - Onlending of Funds Raised Abroad - Resolution 2770,
raised with Banco Real ABn AmRO on August 9, 2007 and maturing on
January 26, 2010, whose principal totals Yen$5,681,787 thousand.
6. Promissory notes
First issue of promissory notes totaling R$350,000, single series,
unguaranteed, with nominal unit value of R$1,000, issued under cVm
Instruction 476, on December 17, 2009. the promissory notes will
mature within 180 days and can be fully or partially redeemed in advance
after 90 days from the issuance date, without premium.
b) Finance lease transactions
lease obligations are effectively guaranteed, since the leased asset is
reversed to the lessor in case of default.
Financial obligations are broken down as follows:
Gross finance lease obligations -
minimum lease payments:
less than one year
more than one year and less
than five years
Future financing charges
on finance leases
Financial lease obligations -
accounting balance
2009
January 1,
2008
2008
844
2,481
3,479
950
1,794
1,988
4,469
1,454
4,933
(134)
(589)
(681)
1,660
3,880
4,252
c) contract covenants
As of December 31, 2009 and 2008 and January 1, 2008, financing and
loan agreements entered into by the company and its subsidiaries do
not contain restrictive clauses that establish obligations regarding the
maintenance of financial indices by the company and its subsidiaries.
Company
Consolidated
IcmS company and tax substitution payable (b)
PIS/cOFInS payable (injunction) (a)
IRPJ and cSll payable
IRPJ and cSll (injunction) (c)
IRPJ and cSll (injunction - PAt)
IRRF
PIS/cOFInS/cSll
PIS/cOFInS payable
taxes - foreign subsidiaries
IPI payable
ISS payable
Other
escrow deposits (b) (note 11)
January 1
January 1
2009 2008 de 2008 2009 2008 de 2008
109,892
14,060
15,012
-
-
7,335
4,784
5,405
5,313
2,285
983
472
165,541
(47,030)
213,860
57,848
25,786
13,624
965
9,574
5,557
5,284
7,220
-
1,588
-
341,306
(110,640)
109,959
2,061
12,233
-
-
3,863
3,696
145
-
-
214
-
132,171
(47,030)
108,738
1,268
13,062
-
-
5,269
2,842
156
-
-
217
-
131,552
(67,191)
164,774
33,365
23,254
-
-
8,861
3,821
3,866
5,072
903
1,077
-
244,993
(67,191)
150,095
1,570
15,520
13,624
-
5,436
4,100
-
-
-
275
-
190,620
(110,640)
naturaannualreport
121
(a) the company and its subsidiary Indústria e comércio de cosméticos
natura ltda. are challenging in court the inclusion of IcmS in the tax
basis of PIS and cOFInS (taxes on revenue). In June 2007, the company
and its subsidiary were authorized by the court to pay PIS and cOFInS
without the inclusion of IcmS in the tax basis, starting April 2007. the
reserve recognized as of December 31, 2009 refers to the unpaid
amounts of PIS and cOFInS, from April 2007 to December 2009
adjusted based on the SelIc (central Bank overnight rate). Part of the
balance, in the adjusted amount of R$2,606, is deposited in escrow.
(b) As of December 31, 2009 for the company and consolidated, the
amount of R$95,834 refers to the IcmS - St for the Paraná State and
R$14,806 for the Federal District (R$67,191 for the Paraná State as of
December 31, 2008 and R$40,542 for the Paraná State and R$6,488 for
the Santa catarina State as of January 1, 2008), which is being challenged
in court, as also mentioned in note 17.(a) and (b) - “contingent liabilities
- possible losses”. the company has made monthly escrow deposits for
the unpaid amounts.
(c) On February 4, 2009, the company was granted an injunction,
subsequently confirmed by court decision, that suspended the collection
of income tax and social contribution on any amounts received as arrears
interest, paid on late payment of contractual obligations receivables. the
appeal filed by the Federal Government is awaiting judgment.
17. RESERVES FOR TAX, CIVIL AND LABOR CONTINGENCIES
the company and its subsidiaries are parties to tax, labor and civil lawsuits and administrative tax proceedings. management believes, supported by the
opinion and estimates of its legal counsel, that the reserve for tax, civil and labor contingencies are sufficient to cover possible losses. these reserves,
net of escrow deposits, are as follows:
Company
Consolidated
tax
civil
labor
current
noncurrent
January 1,
January 1,
2009 2008 2008 2009 2008 2008
87,920
41,856
21,105
8,469
7,323
13,448
116,348
63,773
89,457
23,968
8,558
121,983
93,624
10,750
17,071
121,445
39,265
21,418
6,440
67,123
38,350
5,631
5,604
49,585
1,465
62,308
15,791
51,332
-
49,585
1,465
119,980
15,791
106,192
13,420
102,928
tax contingencies
changes in the reserves for tax contingencies are as follows:
changes between January 1 and December 31, 2008
Company
January 1
de 2008 Addiction Reversals
Deductibility of cSll (law 9316/96) (c)
late payment fines on Federal taxes paid in arrears (b)
Inflation adjustment of Federal taxes (IRPJ/cSll/Ill) according
to the UFIR (fiscal reference unit) (d)
Federal VAt (IPI) - tax collection lawsuit (f)
tax notification - InSS (social security contribution) (g)
tax notification - IRPJ 1990 (corporate income tax) (i)
IRPJ and cSll tax assessment - legal fees (h)
legal fees and other
total reserve for tax contingencies
tax escrow deposits
6,670
6,065
5,001
4,423
3,862
2,862
2,860
6,607
38,350
(15,296)
-
-
-
-
-
-
-
16
16
-
-
(2,348)
-
-
-
-
-
(11)
(2,359)
-
Payments
-
-
Inflation
adjustments
337
786
2008
7,007
4,503
-
-
-
-
-
-
-
-
5,077
76
4,708
285
4,113
251
3,043
181
2,947
87
1,255
7,867
3,258 39,265
(900) (16,196)
Consolidated
January 1,
2008
31,034
7,207
6,670
Addictions Reversals
-
(3,024)
-
-
1,176
-
IPI - zero rate (a)
late payment fines on Federal taxes paid in arrears (b)
Deductibility of cSll (law 9316/96) (c)
Inflation adjustment of Federal taxes (IRPJ/cSll/Ill)
5,127
according to the UFIR (fiscal reference unit) (d)
4,792
tax notification IPI - legal fees (e)
4,433
IPI credit on purchases of fixed asset and consumption material (e)
4,423
Federal VAt (IPI) - tax collection lawsuit (f)
3,862
tax notification - InSS (social security contribution) (g)
2,866
IRPJ and cSll tax assessment - legal fees (h)
tax notification - IRPJ 1990 (i)
2,862
Failure to include IcmS in tax bases for PIS and cOFInS - legal fees (j) 2,291
1,836
Semiannual PIS - Decree laws 2445/88 and 2449/88 (k)
10,517
legal fees and other
87,920
total reserve for tax contingencies
escrow deposits
(47,608)
-
-
-
-
-
-
-
10
-
6
1,192
-
-
(4,846)
-
-
-
-
-
(33)
-
(80)
(7,983)
-
Payments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Inflation
adjustments
3,158
884
337
2008
34,192
6,243
7,007
76
54
289
285
251
94
181
185
134
2,400
8,328
5,203
-
4,722
4,708
4,113
2,960
3,043
2,453
1,970
12,843
89,457
(4,137) (51,745)
naturaannualreport
122
changes for the years ended December 31, 2008 and 2009
Deductibility of cSll (law 9316/96) (c)
late payment fines on Federal taxes paid in arrears (b)
Inflation adjustment of Federal taxes (IRPJ/cSll/Ill) according
to the UFIR (fiscal reference unit) (d)
Federal VAt (IPI) - tax collection lawsuit (f)
tax notification - InSS (social security contribution) (g)
tax notification - IRPJ 1990 (corporate income tax) (i)
IRPJ and cSll tax assessment - legal fees (h)
legal fees and other (l)
total reserve for tax contingencies
escrow deposits (note 11)
Company
2008 Addictions Reversals
7,007
4,503
5,077
4,708
4,113
3,043
2,947
7,867
39,265
(16,196)
-
-
-
-
-
-
2,618
4,013
6,631
(943)
-
(3,647)
-
-
(1,586)
-
-
(982)
(6,215)
1,495
Payments
-
-
Inflation
adjustments
288
168
2009
7,295
1,024
-
-
-
-
-
-
-
-
104
244
216
155
234
5,181
4,952
2,743
3,198
5,799
766 11,664
2,175 41,856
(1,395) (17,039)
Consolidated
IPI - zero rate (a)
late payment fines on Federal taxes paid in arrears (b)
Deductibility of cSll (law 9316/96) (c)
Inflation adjustment of Federal taxes (IRPJ/cSll/Ill) according
5,203
to the UFIR (fiscal reference unit) (d)
4,722
IPI credit on purchases of fixed asset and consumption material (e)
4,708
Federal VAt (IPI) - tax collection lawsuit (f)
4,113
tax notification - InSS (social security contribution) (g)
2,960
IRPJ and cSll tax assessment - legal fees (h)
tax notification - IRPJ 1990 (i)
3,043
Failure to include IcmS in tax bases for PIS and cOFInS - legal fees (j) 2,453
1,970
Semiannual PIS - Decree laws 2445/88 and 2449/88 (k)
12,843
legal fees and other (l)
89,457
total reserve for tax contingencies
(51,745)
escrow deposits (note 11)
2008 Addictions Reversals
34,192
6,243
7,007
-
(4,872)
-
-
-
-
Payments
-
-
-
Inflation
adjustments
2009
2,705 36,897
1,511
7,295
140
288
-
-
-
-
2,618
-
-
-
4,132
6,750
(943)
-
(1,375)
-
(1,586)
-
-
-
-
(1,419)
(9,252)
1,310
-
-
-
-
-
-
-
-
-
-
-
110
248
244
216
198
155
180
115
5,313
3,595
4,952
2,743
5,776
3,198
2,633
2,085
2,070 17,626
6,669 93,624
(3,983) (55,361)
(a) Refers to Federal VAt (IPI) tax credits on raw materials and packing
materials purchased at a zero tax rate and with tax exemption. the
subsidiary Indústria e comércio de cosméticos natura ltda. filed
for and obtained an injunction granting entitlement to the credit. On
September 25, 2006, a sentence was rendered dismissing the injunction,
judging the company’s request invalid. the company filed an appeal for
review of the merit and reestablishment of the injunction’s effects. to
suspend payments of the tax, the company made escrow deposits in
the amount in dispute in October 2006. As regards the amount offset
during the effectiveness of the injunction, the total amount deposited
in escrow, adjusted as of December 31, 2009, is R$36,897 (R$34,192
as of December 31, 2008). In the fourth quarter of 2009, in order to
profit from the benefits arising from Provisional Act 470/09, through the
institution of tax payment and installment plan options, the subsidiary
filed a motion partially withdrawing the injunction filed, more specifically
regarding the credits on exempt products, which amount to R$9,536
from a total of R$36,897, withdrawing, therefore, the claim of the IPI
credits on products purchased at zero rate or untaxed, which total
R$27,361 as of December 31, 2009. On this date, after having met the
requirements to join the tax installment plan introduced by Provisional
Act 470/09, the subsidiary awaits the tax authorities’ approval to write
off the amounts recorded in liabilities related to the corresponding
escrow deposits.
(b) Refers to fine for late payment of federal taxes.
(c) Refers to cSll that was addressed by an injunction that questions
the constitutionality of law 9316/96, which prohibited the deduction
of cSll from its own tax basis and the IRPJ basis. A portion of this
reserve, in the amount of R$5,272 (R$4,962 as of December 31, 2008),
is deposited in escrow.
(d) Refers to the monetary adjustment of Federal taxes (IRPJ/cSll/Ill)
related to 1991 based on the UFIR (fiscal reference unit), discussed in an
injunction. the amount involved is deposited in escrow.
(e) the subsidiary Indústria e comércio de cosméticos natura ltda. is
discussing through injunctions the right to the IPI credit on purchases of
fixed assets and consumption materials.
(f) Refers to a tax collection lawsuit intended to collect IPI for July 1989,
when wholesale establishments began to be considered equivalent to
industrial establishments under law 7798/89. the lawsuit is in the 3rd
Region Federal court (São Paulo) for judgment of the appeal filed
by the debtor. the amounts involved in this tax collection lawsuit are
collateralized by restricted investment held by the subsidiary natura
Inovação e tecnologia de Produtos ltda., in the amount of R$5,769 as
of December 31, 2009 (R$5,250 as of December 31, 2008), which is
recorded in a specific caption in noncurrent assets.
(g) Refers to InSS (social security contribution) required by tax
assessments issued by the national Institute of Social Security as a result
of an inspection. the company, as a taxpayer having joint liability for tax
payment, is required to pay InSS on services provided by third parties.
the amounts are discussed in court through a tax debt annulment
action and are deposited in escrow. the amounts required in the tax
assessment notice cover the period from January 1990 to October
1999. In 2007 the company reversed the amount of R$1,903, relating
to the expiration of part of the amount involved in the lawsuit for the
period from January 1990 to October 1994, as recently instructed under
case law Decision 8 of the Federal Supreme court (StF).
(h) Refers to legal fees for defense against the tax deficiency notices
issued against the company in August 2003, December 2006 and
December 2007 by the Federal Revenue Service, in which income tax
and social contribution (IRPJ and cSll) are demanded related to the
deductibility of the yield of the debentures issued by the company in
1999, 2001 and 2002. the legal counsel’s opinion is that the likelihood
of unfavorable outcome for the period from 1999 (cSll) to 2001 and
2002 (IRPJ and cSll) is remote.
the final and unappealable administrative decision issued in January
2010 on the tax infringement notification issued against the company
in August 2003, related to tax deductibility in 1999, partially upholds
the deductibility of IRPJ and fully confirms the nondeductibility of cSll.
In view of this decision, the company will file a lawsuit to claim the
cancellation of the remaining IRPJ and cSll due. the company’s legal
counsel considers that the likelihood of an unfavorable outcome is
remote.
(i) Refers to a tax assessment notice issued by the Federal Revenue
Service requiring the payment of income tax on profit from incentive-
based exports made in base year 1989, at the rate of 18% (law 7988, of
naturaannualreport
123
December 29, 1989) and not 3%, as established by article 1 of Decree
law 2413/88, which supported the company in its tax payments at that
time.
(j) Refers to legal fees for filing and dealing with the administrative
proceeding for requesting a refund of the IcmS included in the PIS and
cOFInS tax basis in the period from April 2002 to march 2007. the
legal counsel assessed the risk of loss as remote.
(k) Refers to the offset of PIS paid as per Decree laws 2445/88 and
2449/88, in the period from 1988 to 1995, against Federal taxes due
in 2003 and 2004. the reversal made by the company in 2007 in
the amount of R$14,910 is due to the final decision favorable to the
company, rendered in August 2007. the remaining reserve refers to the
subsidiary Indústria e comércio de cosméticos natura ltda., which is
awaiting the appreciation of the lawsuit by the Board of tax Appeals.
(l) the balance refers to lawyers’ fees to defend the company’s and its
subsidiaries’ interests in tax lawsuits. the amount of R$4,013, accrued in
2009, refers to lawyers’ fees to prepare the defense against an IRPJ and
cSll infringement notification against the company, issued on June 30,
2009, which challenges the tax deductibility of goodwill amortization
carried out as detailed in note 14. It is the opinion of the company’s
legal counsel that, as structured, the transaction and its tax effects can be
upheld in a court of law and thus the risk of loss is classified as remote.
civil contingencies
changes between January 1 and December 31, 2008
Company
Several civil lawsuits (a)
legal fees - environmental civil lawsuit (d)
civil lawsuits and legal fees - nova Flora Participações ltda. (b) and (c) 485 14,821 (11)
5,631 19,878 (5,270)
total reserve for civil lawsuits
escrow deposits
-
(202) -
current
noncurrent
5,631
4,044
1,013
-
January 1,
2008
5,146
-
Addictions Reversals
(5,259)
-
Payments
(848)
-
Inflation
adjustments
1,439
28
2008
4,522
1,041
- 560 15,855
(848) 2,027 21,418
- (4) (206)
15,791
5,627
Several civil lawsuits (a)
legal fees - environmental civil lawsuit (d)
civil lawsuits and legal fees -
nova Flora Participações ltda, (b) and (c)
total reserve for civil lawsuits
escrow deposits
current
noncurrent
Consolidated
January 1,
2008
5,456
-
Addictions Reversals
(5,622)
-
4,738
1,013
Payments
(1,005)
-
Inflation
adjustments
1,418
28
2008
4,985
1,041
15,649 14,421 (14,432)
21,105 20,172 (20,054)
(3,202) (86)
1,754
13,420
7,685
- 2,304 17,942
23,968
(1,005) 3,750
(1,668)
- (134)
15,791
8,177
changes for the years ended December 31, 2008 and 2009
Company
2009
5,111
Several civil lawsuits (a)
legal fees - environmental civil lawsuit (d)
1,363
civil lawsuits and legal fees - nova Flora Participações ltda, (b) and (c) 15,855 4,131 (11) (21,175) 3,195 1,995
21,418 10,862 (5,357) (22,134) 3,680 8,469
total reserve for civil lawsuits
(206) - - - (25) (231)
escrow deposits (note 11)
1,465
current
7,004
noncurrent
2008 Addictions Reversals
(5,338)
6,431
(8)
300
15,791
5,627
Payments
(959)
-
4,522
1,041
Inflation
adjustments
455
30
Consolidated
2009
5,353
Several civil lawsuits (a)
1,363
legal fees - environmental civil lawsuit (d)
civil lawsuits and legal fees - nova Flora Participações ltda, (b) and (c) 17,942 3,913 (13) (21,175) 3,367 4,034
23,968 11,027 (5,898) (22,166) 3,819 10,750
total reserve for civil lawsuits
(1,668) - - - (210) (1,878)
escrow deposits (note 11)
1,465
current
9,285
noncurrent
Addictions Reversals
(5,879)
(6)
15,791
8,177
Payments
(991)
-
2008
4,985
1,041
6,814
300
Inflation
adjustments
424
28
(a) As of December 31, 2009, the company and its subsidiaries are parties to 1,578 (1,148 as of December 31, 2008) civil lawsuits and administrative
proceedings, of which 1,572, were filed with civil courts, special civil courts and the consumer protection agency (PROcOn) by natura Beauty consultants,
consumers, suppliers and former employees, most of which claiming compensation for damages.
(b) the company is a party to civil lawsuits filed by a former shareholder of subsidiary Flora medicinal J. monteiro da Silva ltda., which seek the determination
of any assets and the settlement of liabilities allegedly due as a result of the former shareholder’s withdrawal. In march 2007, a ruling was issued in favor of the
plaintiff and upheld by the Rio de Janeiro court of Justice in november of the same year. the parties filed all possible appeals, which, however, were overruled
by the competent courts. the justice upheld the decision issued by the Rio de Janeiro court of Justice. In november and December, the company deposited
R$19,704 and R$1,471 related to the sentence and legal fees, respectively. these amounts explain the decrease in the reserve in 2009, as shown in the table.
naturaannualreport
124
(c) As of march 31, 2008, after the merger of nova Flora Participações
ltda., the company started to be liable for the civil lawsuits of the former
subsidiary, which is a party to three civil lawsuits filed by a former shareholder
of Flora medicinal J. monteiro da Silva ltda., the nature and likelihood of a
favorable outcome of which are described below:
• Lawsuit for arbitration of capital reimbursement: lawsuit in which the
former shareholder alleges being entitled to receivables resulting from his
withdrawal from the company. In January 2008, the former shareholder
filed with the Superior court of Justice a special appeal against the decision
issued by the court of Justice of Rio de Janeiro that, by upholding the lower
court decision, denied the former shareholder’s claim. the amount involved
cannot be reliably measured. the legal counsel’s opinion is that the likelihood
of unfavorable outcome is remote.
• Lawsuit for collection of business plan: lawsuit in which the former
shareholder alleges being entitled to receivables resulting from his withdrawal
from the company. In January 2009, the parties were required to disclose
the technical report. the parties filed their arguments and the company
challenged the documents and the order of clarifications presented by
the plaintiff. We await a decision of the motion challenging the report of
the appraiser appointed by court. the legal counsel’s opinion is that the
likelihood of unfavorable outcome is possible.
• Lawsuit for payment allocation: refers to ICMS credits deposited by the
former shareholder on account of the tax payment in installments agreed
by Flora medicinal J. monteiro da Silva ltda. the judgment by the Superior
court of Justice of the bill of review filed by the former shareholder against
the decision that rejected his special appeal is waited since September 2007.
the court of Justice of Rio de Janeiro overruled the lower court decision
and denied the claim made by the former shareholder. the legal counsel’s
opinion is that the likelihood of unfavorable outcome is remote.
• Collection lawsuit for known amount against a solvent debtor: refers
to payroll credits under loan contracts signed by the ex-shareholder and
Flora medicinal J. monteiro da Silva ltda. the main amount of the collection
lawsuit is collateralized by the pledge of 10% of Flora medicinal invoicing.
Due to the disagreement between the parties regarding the escrow deposit
amount, the legal homologation of calculations is pending. the company is
awaiting the position of Banco do Brasil in respect to the updated amount of
said deposit. the motions for Stay of execution filed by the company were
judged groundless in the lower court. this court decision was confirmed by
the Rio de Janeiro court of Justice. the parties are awaiting the decision on
the bill of review filed against the decision that did not authorize the special
appeals presented by the parties against the decision of the mentioned
court of Justice. the legal counsel’s opinion is that the likelihood of an
unfavorable outcome is probable.
(d) Refers to legal fees for the defense of the company’s interests in the
public lawsuit filed by the Federal Public Prosecution Office of Acre against
the company and other institutions for alleged access to the traditional
knowledge associated to the asset (“murumuru”).
labor contingencies
As of December 31, 2009, the company and its subsidiaries are parties
to 641 labor lawsuits filed by former employees and third parties (685
as of December 31, 2008), claiming the payment of severance amounts,
salary premiums, overtime and other amounts due, as a result of joint
liability. Reserves are periodically reviewed based on the progress of
lawsuits and history of losses on labor claims to reflect the best current
estimate.
changes between January 1 and December 31, 2008
Company
January 1,
de 2008 Addictions Reversals
Payments
Monetary
adjustment
2008
total reserve for labor contingencies
5,604 148
(712)
(54) 1,454 6,440
escrow deposits
(817) (521)
-
- -
(1,338)
Consolidated
January 1,
de 2008 Addictions Reversals
Payments
Monetary
adjustment
2008
total reserve for labor contingencies
7,323 152 (767)
(54) 1,904
8,558
escrow deposits
(1,097) (538)
-
- -
(1,635)
changes for the years ended December 31, 2008 and 2009
Company
2008 Addictions Reversals
Payments
Monetary
adjustment
2009
total reserve for labor contingencies
6,440 10,134 (3,867)
(50) 791 13,448
escrow deposits (note 11)
(1,338) (285) -
252 (325) (1,696)
total reserve for labor contingencies
8,558 12,705 (6,242)
(50) 2,100 17,071
escrow deposits (note 11)
(1,635) (481) -
252 (329) (2,193)
Consolidated
2008 Addictions Reversals
Payments
Monetary
adjustment
2009
Possible losses
the company and its subsidiaries are parties to tax, civil and labor lawsuits,
for which there is no reserve for losses recorded, because the risk of loss
is considered possible by management and its legal counsel. these lawsuits
are as follows:
naturaannualreport
125
Company
Consolidated
January 1,
January 1,
2009 2008 2009 2008
tax:
Declaratory Action - IcmS -
St of Paraná State (a)
Declaratory Action - IcmS -
St Federal District (b)
Offset of 1/3 of cOFInS -
law 9718/98 (c)
tax notification - InSS
(social security contribution) (d)
tax assessment - transfer pricing
on loan agreements with foreign
related company (e)
tax debt notification - GFIP
(FGtS Payment and Social Security
Information Form) (f)
IcmS - St deficiency notice (g)
Request for offset of taxes of the
same type - IRPJ (income tax) and
IRRF (withholding income tax) (h)
tax assessment - IRPJ and
cSll - debentures (i)
Other
civil
labor
28,186 14,670
28,186 14,670
976
-
976
-
4,925
4,713
4,925
4,713
4,456
4,235
4,456
4,235
1,716
1,127
1,716
1,127
902
529
825
703
902
529
825
703
532
490
532
490
- 11,949
- 11,949
43,825 21,943
38,594 19,360
80,816 58,072 86,047 60,655
18,024 18,351
16,858 5,666
48,986 34,044
74,710 51,647
146,660 97,782 178,781 130,653
(a) lawsuit filed by the company challenging the changes in IcmS - St
tax basis introduced by Paraná Decree 7018/06. the amounts discussed
in the lawsuit, related to the period from January 2007 to December
2009, are fully deposited in escrow, as mentioned in notes 11 and 16, and
its collection is suspended.
(b) Declaratory Action - IcmS - St Federal District action filed by the
company to challenge its liability for the payment of IcmS - St due to
the lack of a statute on and statutory criteria for the determination of the
tax base of this tax or, subsequently, the need to enter into an Agreement
to set out the IcmS - St tax basis. the amount under litigation, related
to the period from February to December 2009, is fully deposited in
escrow, as referred to in note 16, and its collection is suspended.
(c) law 9718/98 increased the cOFInS (tax on revenue) rate from 2% to
3%, and allowed this 1% difference to be offset in 1999 against the social
contribution tax paid in the same year. However, in 1999 the company
and its subsidiaries filed for an injunction and obtained authorization to
suspend the payment of the tax credit (1% rate difference) and to pay
cOFInS based on Supplementary law 70/91, prevailing at that time.
In December 2000, considering former unfavorable court decisions,
the company and its subsidiaries enrolled in the tax debt-refinancing
program (ReFIS), for payment in installments of the debt related to
the cOFInS not paid in the period. With the payment of the tax, the
company and its subsidiaries gained the right to offset 1% of cOFInS
against social contribution tax, which was made in the first half of 2001.
However, the Federal Revenue Service understands that the period for
offset was restricted to base year 1999. On September 11, 2006, the
company was notified that the offsets made were not approved, and
timely filed the applicable appeal. this proceeding is awaiting ruling at the
lower administrative court.
(d) lawsuit filed by the company seeking the annulment of the tax
demanded by the InSS through a tax assessment notice issued for
purposes of collecting the social security contribution on the allowance
for vehicle maintenance paid to sales promoters. the amounts are
discussed in the tax debt annulment action and are deposited in escrow.
the amounts required in the assessment notice cover the period from
January 1995 to October 1999.
(e) Refers to a tax assessment notice whereby the Federal Revenue
Service is demanding the payment of IRPJ and cSll on the difference
of interest on loan agreements with a foreign related party. On July 12,
2004, an administrative defense was filed and is still being judged. In June
2008, the company filed an appeal against the unfavorable decision with
the Board of tax Appeals, which is awaiting judgment.
(f) Demand of fine for failure to complete the GFIP (FGtS Payment and
Social Security Information Form), an accessory social security obligation,
for independent contractors’ social security contributions and indemnities.
the company is discussing the collection at the administrative level.
(g) tax deficiency notice for IcmS - St, demanded by Goiás State, due to
supposed underpayment by the company. the company has presented
its defense at the administrative level and is awaiting the final judgment.
(h) Refers to the non-approval of the offset of IRPJ credits related to
the fourth quarter of 1999 against IRRF debts for the second quarter
of 2000. the company has presented its defense at the administrative
level, for which a partially favorable judgment has been rendered. On
July 12, 2006, an annulment action was filed, and an escrow deposit was
made, to challenge collection of the balance of offset not approved by
the Federal Revenue Service.
(i) tax notification issued against the company in August 2003 whereby
the Brazilian Federal Revenue Service is requiring the income tax
and social contribution due on the yield of the debentures issued by
the company in base period 1999. the company challenged this tax
notification in administrative courts, which upheld part of the income tax
and the whole social contribution collected. In view of the termination
of this administrative proceeding, the company will file a lawsuit claiming
the cancellation of the remaining income tax and social contribution. the
company’s legal counsel considers that the likelihood of an unfavorable
outcome is remote. As of December 31, 2009, the adjusted balance of
the tax notification is R$12,314.
contingent assets
Significant contingent assets of the company and its subsidiaries are
as follows:
a) the company and its subsidiary Indústria e comércio de cosméticos
natura ltda. are challenging in court the unconstitutionality and illegality
of the increase in the tax basis for PIS and cOFInS established by
article 3, paragraph 1, of law 9718/98. the amounts involved in the
lawsuits, updated as of December 31, 2009, total R$20,078 (R$19,170
as of December 31, 2008). even though said article 3, paragraph 1, of
law 9718/98 was declared unconstitutional by the Federal Supreme
court in 2009, consistent with the claim filed by the company and its
subsidiary, there is no final and unappealable decision on the lawsuits
filed by the company and its subsidiary, which await the judgment by
the 3rd Region Federal court (tRF). the lawsuits are awaiting judgment.
the legal counsel’s opinion is that the likelihood of favorable outcome
is probable.
b) the company and its subsidiaries Indústria e comércio de cosméticos
natura ltda., natura Inovação e tecnologia de Produtos ltda. and
natura logística e Serviços ltda. are requesting at administrative level
the refund of the IcmS and ISS (Service tax) included in the PIS and
cOFInS tax basis and paid in the period from April 1999 to march
2007. the amounts of the refund request as of December 31, 2009 are
R$323,013 (R$278,632 as of December 31, 2008). the legal counsel
believes that the chance of a favorable outcome is probable.
Since an unappealable decision has not been issued on said lawsuits in
favor of the company and its subsidiaries, they did not record credits
related to contingent assets, as set forth by cPc 25
tax installment plans introduced by law 11941/09
On may 28, 2009, Federal Government enacted law 11941, as a result of
the conversion of Provisional Act 449/08, which, among other changes to
tax law, established the possibility of a tax debt installment plan managed
by the Federal Revenue Service and the national treasury Attorney
General (PGFn), including the remaining balance of consolidated debts
in the tax Debt Refinancing Program (ReFIS) (law 9964/00), Special
Installment Plan (PAeS) (law 10684/03) and the tax Debt Refinancing
Program (PAeX) (Provisional Act 303/06), in addition to the regular
payments in installments provided for by article 38 of law 8212/91 and
article 10 of law 10522/02, even if excluded from the programs or
payments in installments.
the entities which opted for paying or dividing into installments the
debts under this law, in the applicable cases, may settle the amounts
corresponding to default and automatic fines and late-payment interest,
including those related to debts to the government, using tax loss
carryforwards, and will benefit from reduced fines, interest and legal
charges whose reduction percentage depends on the installment plan
chosen.
Pursuant to the established rules, for compliance with the first stage of
installment payments, the company and its subsidiaries, after having filed
motions with courts, formalized the withdrawal from the lawsuits related
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126
to taxes that will be paid in installments, applied to the installment plans,
and indicated the generic nature of tax debts, paying the corresponding
first installments, in conformity with the rules set out in Federal Revenue
Service and PGFn.
the tax debts recorded for payment in installments by the company
and its subsidiaries, pursuant to law 11941/09, are as follows:
Company
Inflation
tax notification - InSS (a)
Income tax (IRPJ)/social
contribution (cSll)/tax on
net income (Ill) (b)
Others
InSS tax liability -
tax notification (a)
Income tax (IRPJ)/social
contribution (cSll)/tax on
net income (Ill) (b)
Federal VAt (IPI) on the
acquisition of property, plant
and equipment and materials
for own use and
consumption (c)
Others
2008 Reversals adjustment 2009
4,113
(1,586)
2,743
216
5,049
1,586
10,748
-
(234)
(1, 820)
133
87
436
5,182
1,439
9,364
Consolidated
Inflation
2008 Reversals adjustment 2009
4,113
(1,586)
216
2,743
5,203
-
110
5,313
4,722
2,716
16,754
(1,375)
(582)
(3,543)
248
146
720
3,595
2,280
13,931
(a)the details of this lawsuit are mentioned in item g) - “tax risks”.
Due to the withdrawal from this lawsuit, as the company opted to
pay all its debt at sight, it reversed to income R$1,586, corresponding
to 100% of the late-payment fine and 45% of the interest.
(b) the details on this lawsuit are mentioned in item d) - “tax risks”.
Since the company has an escrow deposit for this lawsuit, no reversal
of late-payment fines and interest was made by the company upon
its withdrawal.
(c) the details of this lawsuit are mentioned in item e) - “tax risks”.
Due to the withdrawal from this lawsuit, as the company opted to
pay all its debt at sight, it reversed R$1,375, corresponding to 100%
of the late-payment fine and 45% of the interest in the fourth quarter
of 2009.
Due to the lack of tax loss carryforwards, the company and its
subsidiaries do not offset them against the remaining balance of the
interest on installments.
In order to comply with the tax debt payment and installment plan
by the company and its subsidiaries, the consolidation of tax debts by
the PGFn and the Federal Revenue Service is expected at this stage
and the companies will indicate the debts to be paid in installments
and the number of installments. this consolidation stage is estimated
to occur by the end of the first half of 2010.
tax installment plans introduced by Provisional Act 470/09
As of October 13, 2009, Provisional Act 470 was enacted, introducing
the tax debt payment and installment plans arising from the undue use
of sector tax incentive, introduced by article 1 of Decree law 491, of
march 5, 1969, as well as those arising from the undue use of Federal
VAt (IPI) credits, in the scope of the PGFn and the Federal Revenue
Service.
On november 3, 2009, the PGFn and the Federal Revenue
Service published in the Federal Official Gazette (DOU) the Joint
Administrative Rule 9, which establishes the debt payment and
installment plan addressed in article 3 of Provisional Act 470/09. the
debts arising from the undue utilization of industry tax incentives
introduced by article 1 of Decree law 491/69, and those arising from
the undue utilization of IPI credits challenged by the PGFn and Federal
Revenue Service may be exceptionally paid at sight or in installments to
each agency by november 30, 2009.
As mentioned in item a) - “tax risks”, the subsidiary Indústria e
comércio de cosméticos natura ltda. filed a motion partially
withdrawing from the injunction filed related to Federal VAt (IPI)
credits arising from the products purchased at zero tax rate or tax
exempt, which amounted to R$27,361 as of December 31, 2009.
As of December 31, 2009, the company awaits the position of the
PGFn to complete the stage related to the consolidation of tax debts
and to write off the balances of suspended liabilities against escrow
deposits made until this date at the inflation adjusted amounts. As
there are escrow deposits made in the past and due to the option
made by the company, which opted for payment at sight, no gain was
recognized in income from the reversal of fine and late interest
18. MANAGEMENT AND EMPLOYEE PROFIT SHARINGA
the company and its subsidiaries pay profit sharing to their employees
and officers, tied to the achievement of operational targets and specific
objectives, established and approved at the beginning of each year. As
of December 31, 2009 and 2008, the amounts below were recorded
as profit sharing:
employee
management (*)
Company
Consolidated
2009 2008 2009 2008
55,784 56,927
21,049 20,332
5,749
5,424
6,058
4,189
61,533 62,985
26,473 24,521
(*) Included in caption “management compensation”.
19. mAnAGement cOmPenSA tIOn
the total compensation of the company’s and its subsidiaries’
management is as follows:
Compensation
Variable
Stock option Average
Fixed (a) Total balance exercise
2009
Stock option grant
Directors
Officers
total
(quantity)(b) exercício - R$(c)
3,562 1,713 5,275
4,828 3,960 8,788 977,338
977,338
8,390 5,673 14,063
-
-
20,93
Compensation
Variable
Stock option Average
Fixed (a) Total balance exercise
2008
Stock option grant
Directors
Officers
total
(quantity)(b) exercício - R$(c)
2,636 1,332 3,968
4,331 5,554 9,885
6,967 6,886 13,853
-
391,827
391,827
-
19,58
the compensation of the company´s executives is as follows:
Compensation
Variable
Stock option Average
Fixed (a) Total balance exercise
2009
Stock option grant
executives
9,611 2,152 11,763
718,024
21,20
(quantity)(b) exercício - R$(c)
Compensation
Variable
Stock option Average
Fixed (a) Total balance exercise
2008
Stock option grant
executives
7,563 4,012 11,575
717,656
16,89
(quantity)(b) exercício - R$(c)
(a) Refers to the profit sharing recorded in the statement of income. the
amounts include any additions and/or reversals to the provision recorded in
the previous year in view of the final assessment of the targets established
for directors, officers and executives.
(b) Refers to the balance of unexercised vested and unvested options as
of the balance sheet date.
(c) Refers to the weighted-average exercise price of the option at the time
of the stock option plans, adjusted for inflation based on the extended
consumer Price Index (IPcA) through the balance sheet date.
20. SHAREHOLDERS’ EQUITY
a) capital - As of December 31, 2008, the company’s capital was
R$391,423. In 2009, the following capital increases were made:
• March - 276,597 common shares without par value were subscribed
for R$6,77, which total R$1,871.
• June - 667,353 common shares without par value were subscribed for
R$11,80, which total R$7,872.
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127
• September - 86,158 common shares without par value were subscribed
for R$10,73, which total R$925.
• December - 159,704 common shares without par value were
subscribed for R$13,58, which total R$2,170
and the effects of such additional dividends should be disclosed in a note.
As a result, as of December 31, 2009 and 2008 and January 1, 2008,
the following portions of dividends exceeding minimum dividends were
recorded in shareholders’ equity as “Proposed additional dividend” at
the date of the financial statements:
As of December 31, 2009, after the capital subscriptions and payments
described above, the company’s capital increased to 430,274,561 registered,
subscribed and paid-up common shares, totaling R$404,261. Authorized
capital decreased from 12,381,074 to 11,035,564 registered common shares.
b) Dividend payment policy and interest on capital
the shareholders are entitled to receive every year a mandatory
minimum dividend of 30% of net income, considering principally the
following adjustments:
• Increase in the amounts resulting from the reversal of previously
recognized reserves for contingencies.
• Decrease in the amounts intended for the recognition of the legal
reserve and reserve for contingencies.
the bylaws allow the company to prepare semiannual and interim
balance sheets and, based on these balance sheets, authorize the payment
of dividends upon approval by the Board of Directors.
On April 8, 2009, the company paid dividends totaling R$254,216
(R$0,59 per share) and interest on capital in the total gross amount of
R$57,465 (R$0,13 gross per share), related to income for 2008, pursuant
to payment approved by the Board of Directors on February 18, 2009
and ratified at the Annual Shareholders’ meeting held on march 23, 2009.
On July 19, 2009, the Board of Directors approved a proposal requiring
approval of the Annual Shareholders’ meeting that will analyze the financial
statements for the year ending December 31, 2009, for the payment of
interim dividends related to net income earned in the first half of 2009,
in the amount of R$215,152 (R$0,50 per share), corresponding to 70.1%
of consolidated net income recorded in the first semester of 2009.
On July 19, 2009, again, the company paid interest on capital totaling
R$25,028 (gross), related to the income of January to July 2009 (R$0,06
per share), corresponding to 8.1% of consolidated net income recorded
in the first semester of 2009.
In addition, on February 24, 2010, the Board of Directors appreciated
a proposal to be submitted to the Annual Shareholders’ meeting to be
held on April 9, 2010, for the payment of dividends and interest on capital
(gross), in the total amounts of R$339,385 and R$18,226 (R$15,492, net
of IRRF), respectively, related to income for 2009, which, together with
the R$215,152 - dividends and R$25,028 - interest on capital (gross)
paid in August 2009, correspond to 87% of net income for 2009.
Dividends were calculated as follows:
Company
2009 2008
net income for the year (*)
683,924 525,781
tax incentive reserve - investment grant
(3,145)
(1,816)
calculation basis for minimum dividends
680,779 523,965
mandatory minimum dividends
30%
Annual minimum dividend
204,234 157,190
Proposed dividends
554,537 442,215
Interest on capital
57,465
(8,620)
IRRF on interest on capital
total dividends and interest on capital, net of IRRF 591,303 491,060
Amount exceeding the mandatory
minimum dividend
43,254
(6,488)
387,069 333,870
30%
Dividends per share - R$
Interest on capital per share - net - R$
total dividends and interest on capital
per share - net - R$
1,2888
0,0854
1,0316
0,1138
1,3742
1,1454
(*) In 2008, calculated in accordance with the accounting practices
set out in law 11638/07 and Provisional Act 449/09, subsequently
converted into law 11941/09, without the early adoption of the new
Pronouncements, Interpretations and technical Guidelines issued by
cPc in 2009. the purpose of the restatement of the prior year’s financial
statements was to provide financial statements comparative with the
current year’s financial statements due to the changes in accounting
practices described above.
As mentioned in note 3, the portion of dividends exceeding minimum
dividends, declared by management after the reporting period but
before the authorization date for issuance of these financial statements,
should not be recorded as liability in the respective financial statements
Dividends
Interest on capital
Company
2009
January 1,
2008 de 2008
339,385
254,215 237,752
18,226 57,465 -
357,611 311,680 237,752
c) treasury shares - As of December 31, 2009, the caption “treasury
shares” was as follows:
Average
cost
16,74
Balance as of January 1, 2008
16,86
Acquisition of treasury shares
17,90
Written-off for sale
17,61
Balance as of December 31, 2008
(355) (17,49)
Written-off for sale
Balance as of December 31, 2009 655 14 21,37
Stock R$ - R$
2,701
161,303
21,125
1,170,000
(1,310,348) (23,457)
20,955
(20,300)
369
During the year, 20,300 options were exercised related to the stock
options program, which changed the number of shares held in treasury.
d) Share premium
Refers to the goodwill generated on the issuance of 3,299 common
shares resulting from the capitalization of debentures totaling R$100,000,
occurred on march 2, 2004.
e) Profit reserves - legal
Since the balance of the legal reserve plus capital reserves, addressed by
article 182, paragraph 1, of law 6404/76, exceeded 30% of the capital, the
company decided, in accordance with article 193 of the same law, not to
recognize a legal reserve on net income for 2006, 2007, 2008 and 2009.
f) Reserve for profit retention
As of December 31, 2009, the profit retention reserve was recognized
pursuant to article 196 of law 6404/76 for use in future investments,
in the amount of R$82,988 (R$24,285 as of December 31, 2008). the
retention for 2009, prepared by management and approved by the Board
of Directors on February 24, 2010, will be submitted to the approval of
the Annual Shareholders’ meeting to be held on April 6, 2010.
21. STOCK OPTION PROGRAM
Once a year the Board of Directors meets in order to decide on the
directors and managers who will receive the options and the total
number to be distributed.
Under the format prevailing until 2008, the programs had a four-year term
for the eligibility of the option exercise, of which 50% at the end of the third
year and 50% at the end of the fourth year, and a maximum term of two
years for the exercise of options after the end of the fourth eligibility year.
In 2009, the program was amended and defined the end of the fourth
eligibility year as vesting date of all the options granted, with the possibility
of reducing the vesting period to three years through the cancellation of
50% of the options granted and setting the end of the fourth eligibility
year as the maximum term for the exercise of the options.
On April 22, 2009, within the context of this new 2009 program,
2,583,288 options were ratified by the exercise price of R$22,25.
the changes in the number of outstanding stock options and their
related weighted-average prices in the year are as follows:
2009
2008
Average
Average
exercise price Options
exercise price Options
per share - R$ (thousands) per share - R$ (thousands)
Balance at
beginning of year
Granted
cancelled
exercised
Balance at end
of year
4,733
2,583
(568)
(1,210)
5,456
1,800
(1,057)
(1,466)
19,24
22,44
23,96
10,78
15,46
19,33
16,77
18,33
5,538
4,733
19,24
23,22
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128
Of the 5,538 thousand outstanding options as of December 31, 2009
(4,733 thousand outstanding options as of December 31, 2008), 685
thousand outstanding options are vested (1,276 thousand as of December
31, 2008). the options exercised during the year ended December 31,
2009 resulted in the issuance of 1,210 thousand shares, generating an
impact of R$1,767 on shareholders’ equity (1,466 thousand shares in the
year ended December 31, 2008, generating an impact of R$5,956 on
shareholders’ equity) in the company.
the expense related to the fair value of the options granted during the
year ended December 31, 2009, according to the elapsed vesting period,
was R$4,339 and R$8,573 in the company and consolidated, respectively
(R$2,055 and R$5,088, company and consolidated, respectively, as of
December 31, 2008).
the outstanding stock options at the end of the year have the following
vesting dates and exercise prices:
December 31, 2009:
Outstanding options Vested options
Exercise
Exercise
price
price
R$
8.92
Remaining
Outstanding contract life
options contratual
93,622
Opções
options R$
8.92
93,622
Exercise
price
R$
8.92
0.28
Grant date
April 10, 2004
march 16, 2005
march 29, 2006
April, 24 2007
19.12
28.49
26.94
281,911
623,221
807,511
April, 22 2008
20.92 1,210,647
April 22, 2009
22.82 2,520,690
5,537,602
December 31, 2008:
1.22
2.24
3.36
4.37
7.41
19.12
281,911
28.49
309,906
19.12
28.49
26.94
20.92
-
-
-
-
22.82
- -
685,439
Grant date
April 10, 2003
April 10, 2005
march 16, 2005
march 29, 2006
April 24, 2007
Outstanding options
Exercise
Remaining
price Outstanding contract life
options contratual
203,772
R$
3.47
0.28
8.54
764,606
18.33
27.31
25.76
615,049
731,485
979,940
1.28
2.21
3.24
4.32
5.31
Vested options
Exercise
price Outstanding
Exercise
price
R$ options R$
3.47
203,772
3.47
8.54
764,606
8.54
18.33
307,525
18.33
27.31
25.76
-
-
-
-
19.01 - -
1,275,903
April 22, 2008
19.01 1,437,866
4,732,718
As of December 31, 2009, the market price of each company share was
R$36,31 (R$18,99 as of December 31, 2008).
Significant data included in the fair value pricing model of the options
granted in 2009:
• Weighted-average share price of R$8,80 (R$7,05 as of December 31,
2008) on grant date.
• Volatility of 39% (43% as of December 31, 2008).
• Dividend yield of 5.3% (4.3% as of December 31, 2008).
• Expect option life of three and four years.
• Risk-free annual interest rate of de 9.6% (11.0% as of December 31,
2008).
Below is a simulation of the effects from: (i) the exercise of options
granted through December 31, 2009; and (ii) the exercise of all options
liable to being granted under the Stock Option Program. For both
scenarios, we assumed that all options were exercisable as of December
31, 2009, based on the company’s shareholders’ equity on that date:
Average exercise price per share - R$
number of common shares
number of shares to be issued upon
exercise of options
Book value per share as
of December 31, 2009 - R$
Book value per share as of December
31, 2009, considering the exercise of all
options granted under each plan - R$
Dilution of book value per share,
considering the exercise of all options
granted under each plan - R$
Percentage dilution, considering the exercise
of all options granted under each plan
Scenario I Scenario II
Option Total program
option
granted
23,22
23,22
430,274,561 430,274,561
5,537,602
17,928,125
2,67
2,67
2,64
2,57
0,03
0,11
1.12%
4.00%
22. EMPLOYEE BENEFITS
a) Pension plan
the company and its subsidiaries sponsor two employees’ benefit plans:
a pension plan, through a private pension fund managed by Brasilprev
Seguros e Previdência S.A., and an extension of healthcare plans to
retired employees.
the defined contribution pension plan was created on August 1, 2004
and all employees hired from that date are eligible to it. Under this plan,
the cost is shared between the employer and the employees so that the
company’s share is equivalent to 60% of the employee’s contribution
according to a contribution scale based on salary ranges from 1% to 5%
of the employee’s monthly compensation.
On December 31, 2009, the company and its subsidiaries did not have
actuarial liabilities arising from the former employees’ pension plan.
the contributions made by the company and its subsidiaries totaled
R$961 in the company and R$1,387 in the consolidated in the year
ended December 31, 2009 (R$1,899 in the company and R$3,076
in the consolidated as of December 31, 2008) and were recorded as
expenses in the year.
b) Healthcare plan
the company and its subsidiaries maintain a postemployment healthcare
plan for a group of former employees and their spouses, according to
the rules established by it. As of December 31, 2009, the plan had 2,165
participants.
Actuarial amounts recognized are:
Present value of actuarial liability
Actuarial gain/loss
total actuarial liability accrued as of December 31, 2009
9,342
-
9,342
medium- and long-term assumptions adopted by the independent
actuary in the calculation of the actuarial liability were as follows:
Financial discount rate
Increase in medical expenses (reduced by 0.5% p.a.)
long-term inflation
General mortality table
Annual percentage
(in nominal terms) 2009
11.2
10.5 a 5.5
4.5
RP 2000
23. FINANCIAL INSTRUMENTS
23.1. General considerations and policy
the company and its subsidiaries enter into transactions involving
financial instruments, all of which are recorded in balance sheet
accounts, for the purpose of maintaining their investment capacity
and growth strategy. the company and its subsidiaries contract cash
investments, loans and financing, as well as derivatives.
Risks and the financial instruments are managed through the definition
of policies and strategies and implementation of control systems,
defined by the company’s Finance committee and Board of Directors,
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129
which establish foreign exchange exposure limits, allocate funds in
financial institutions. the compliance of the treasury area’s positions in
financial instruments, including derivatives, in relation to these policies, is
presented and assessed on a monthly basis by the Finance committee
and subsequently submitted to the analysis of the Audit committee,
the executive committee and the Board of Directors.
the treasury area’s procedures defined by the current policy
include monthly projection and assessment of the company’s and
its subsidiaries’ consolidated foreign exchange exposure, on which
management’s decision-making is based.
the “cash Investments Policy” established by the company’s
management elects the financial institutions with which contracts can
be entered into and defines limits for the amounts to be invested in
each financial institution.
Almost in their entirety (99.9% on December 31, 2009 and 97.6% on
December 31, 2008), foreign-currency denominated loans and financing
have been hedged against foreign exchange fluctuations by contracting
swap derivatives to hedge the related transactions.
23.2. Derivative policy
Foreign exchange risks
the company’s and its subsidiaries activities expose it to several
financial risks: market risk (including currency risk, interest rate risk
and price risk), credit risk and liquidity risk. the company’s overall risk
management program is focused on the unpredictability of financial
markets and seeks to minimize potential adverse effects on the financial
performance, using derivatives to protect certain risk exposures.
Risk management is carried out by the company’s central treasury,
and policies must be approved by the Board of Directors. the treasury
identifies, assesses and hedges the company against possible financial
risks in cooperation with the company’s operational units.
a) market risk
the company is exposed to market risks arising from its business
activities. these market risks comprise mainly possible changes in
foreign exchange and interest rates.
i) currency risk
Due to different types of financial liabilities assumed by the company in
foreign currencies, an exchange Rate Hedging Policy was implemented,
establishing exposure limits linked to these risks.
the Policy considers foreign currency-denominated amounts from
receivables and payables related to commitments already assumed
and recorded in the financial statements based on the company’s
operations, and future cash flows, with average maturity of six-months,
not yet recorded in the balance sheet arising from: (i) purchase of
inputs for manufacturing products; (ii) machinery and equipment
import; and (iii) investments in foreign subsidiaries in their related
currencies. Derivative transactions aim solely to mitigate exchange rate
risks linked to projected cash flows in foreign currency.
For exchange rate exposure, the company contracts derivative (swaps)
and non Deliverable Forward (nDF) transactions. the exchange rate
hedging policy establishes that the hedge contracted by the company
should limit loss due to exchange rate depreciation related to the
net income estimated for the current year considering the expected
depreciation of the U.S. dollar. this limit defines the ceiling, or maximum
exchange rate the company may be exposed.
As of December 31, 2009 and 2008, the consolidated exchange rate
exposure is as follows:
Assets Psirion-trade accounts receivable (1)
total assets
liabilities position:
loans and financing (3)
trade accounts payable (4)
total liabilities
total exposure
2008
2009
3,386 2,887
3,386 2,887
(142,649) (185,357)
(4,409) (3,571)
(147,058) (188,928)
(143,672) (186,041)
(-) Derivative instruments (2)
net exposure
186,654 195,897
9,856
42,982
(1) trade accounts receivable: correspond to receivables related to the
company’s exports, excluding its foreign subsidiaries.
(2) Derivative instruments: swap and forward outstanding contracts, stated
below, with maturities between January 2010 and 2013 were signed by
the counterparts represented by the Banks Alfa (2%), Bradesco (2%), Brasil
(8%), HSBc (20%) and Santander/Real (68%) and are as follows:
Consolidated
type of operation
Swaps (2.1)
Forwards (2.1)
Operating forwards (2.2)
Notional
value
Assets
(liabilities)
fair value
2009 2008 2009 2008
37,695
133,033 135,212
(112)
13,594
479
53,464 47,091
186,684 195,897
38,062
(8,430)
(8)
(214)
(8,652)
187
As of December 31, 2009, the notional value totaling R$186,684 (R$195,897
as of December 31, 2008) represents the assets of derivative financial
instruments contracted to hedge the exposure of the company and its
subsidiaries liabilities to foreign exchange risks, as detailed in item 23.4. the
assets (liabilities) balance refer to the net adjustment receivable and payable,
respectively, calculated at fair value as of December 31, 2009 and 2008 of
outstanding derivatives contracted by the company and its subsidiaries
effective at yearend.
(2.1) For financial exchange rate exposures, generated by loans and financing
denominated in foreign currency, the company and its subsidiaries have
contracted swap and forward transactions aiming to mitigate exchange rate
risks these loans and financing are subject to.
Swap transactions consist of swapping the exchange rate change by
apercentage of cDI floating rate. Forward transactions establish a future
parity between the Brazilian real and foreign currency based on their
equivalence when contracted, adjusted by a fixed interest rate.
(2.2) For operating forwards, related to future flows, forward transactions
are contracted.
(3) loans and financing: refer to loans and financing payables denominated
in foreign currency. As of December 31, 2009, of the amount of R$142,649,
R$111,791 are denominated in yen (Yen$5,897,871 thousand) and R$30,858
are denominated in U.S. dollar (US$17,722 thousand).
(4) trade accounts payable: refer to balances payable in foreign currency due
to trade accounts payable.
ii) Interest rate risk
As the company has no significant assets exposed to interest rates, its net
income and operating cash flows are not materially impacted by changes in
market interest rate. the company’s interest rate risk arises on short-term
investments and long-term loans. the company’s management adopts the
policy of maintaining its rates of exposure to asset and liability interest rates
linked to floating rates. Short-term investments and loans and financing,
except when contracted as long-term interest rate (tJlP), are adjusted
by cDI floating rate, pursuant to contracts entered into with financial
institutions. the company contracts swaps to mitigate the risks of loan and
financing transactions with indices different from the cDI floating rate.
iii) Sensitivity analysis
Foreign exchange risk
For the sensitivity analysis of derivatives, the company’s management
understands it is necessary to take into consideration corresponding liabilities
recorded in the balance sheet as linked operations, as follows:
142,649
total loans and financing in foreign currency
(133,220)
Derivatives calculated at notional value
net exposure
9,429
Similarly, the company considers that part of operating derivatives
in the amount of R$20,270 should not be included in the sensitivity
analysis as they were liquidated in January 4, 2010 and recorded a loss
of R$246.
naturaannualreport
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thus, the sensitivity analysis will be applied only to the amount of
R$33,854 as a result of the aforementioned considerations.
Exposure
Company’s
risk
Increase in U.S. dollar rate
Financial
Operating Decrease in U.S. dollar rate
Probable
Scenario
65
2,339
2,404
Possible
scenario
235
(6,771)
(6,536)
Remote
scenario
470
(11,285)
(10,815)
the probable scenario reflects BmF&BOVeSPA quotation as of
February 10, 2010 (R$1.86/US$). considering asset exposures in
U.S. dollar (risk of decrease in this currency), the possible scenario
takes into consideration a 25% decrease on the quotation as of
December 31, 2009 (R$1.39/US$) and a 50% decrease (R$1.16/
US$) for the remote scenario. For liability exposures (risk of
increase in the U.S. dollar), possible and remote scenarios consider a
25% and 50% increase, respectively (R$2.18/US$ and R$2.61/US$).
considering the above-mentioned parity, there would be a gain
of R$2,404 in the probable scenario, a loss of R$6,536 in the
possible scenario, and a loss of R$10,815 in the remote scenario.
the company and its subsidiaries do not use derivatives for speculative
purposes.
Interest rate risk
As described in the previous item 2.1., as of December 31, 2009 almost
all the foreign currency-denominated loans and financing were hedged
by foreign currency fluctuation to cDI fluctuation swaps, in light of
the company’s hedging policy, which exposes the company to cDI
fluctuation risks. the table below presents the interest rate exposure of
transactions pegged to cDI:
704,358
total loans and financing
(500,294)
Short-term investments
net exposure
204,064
concerning the net exposure of loans and financing pegged to the
interest rates cDI and tJlP, from which the company has deducted
the balances of short-term investments, also pegged to cDI (note
6), the company’s management understands that, in view of the low
risk of major fluctuations in cDI in 2010 in view of the stability policy
implemented by the Federal Government and the history of increases
of the basic interest rate of the Brazilian economy in recent years, the
sensitivity analysis of the risk of increase in cDI and tJlP, that would
impact the company’s financial expenses, should consider a maximum
increase of 25% in cDI (representing an increase of approximately
2.5 percentage points), which should impact financial expenses by
approximately R$5,100.
b) credit risk
Sales of the company and its subsidiaries are made to a great number
of Sales Representatives and this risk is managed through a strict credit
granting process. the result of this management is reflected in “Allowance
for doubtful accounts”, as explained in note 6.
the company and its subsidiaries are also subject to credit risks related
to financial instruments contracted for the management of its business.
the risk of not settling transactions with financial institutions is low, as
these are considered by the market as prime banks.
c) liquidity risk
effectively managing liquidity risk implies to maintain enough cash and
securities, funds available through credit facilities used and the ability to
gain market share. Due to the dynamic nature of the company and its
subsidiaries’ business, the treasury maintains flexibility in funds available
through the maintenance of credit facilities used.
the management monitors the company’s liquidity level considering
the expected cash flow against unused credit facilities and cash and cash
equivalents. the table below analyzes the company’s financial liabilities
and derivatives at their net amount, by maturity levels, corresponding
to the remaining period in the balance sheet against the contractual
maturity date. the table below analyses the company’s non-derivative
financial liabilities and derivatives settled by the company, by maturity
levels, corresponding to the remaining period in the balance sheet
against the contractual maturity date. Financial liabilities were included in
the analysis if their contractual maturity dates are crucial to understand
temporary cash flows. Amounts presented in the table are undiscounted
cash flows contracted.
d) Financial liabilities
the carrying amounts of financial liabilities are measured by the
amortized cost method, and its corresponding fair values are as follows:
Fair
value
Carrying
amount
Less
than a
Between
one and
Between
three and
More
than
January 1,
year two years five years five years de 2008
Discount
effect
January 1,
de 2008
As of January 1, 2008:
current:
Finance lease transactions
loans and financing
trade accounts payable
noncurrent
loans and financing
As of December 31, 2008:
current:
Finance lease transactions
loans and financing
trade accounts payable
noncurrent-
loans and financing
3,479
288,959
175,650
1,379
-
-
75
-
-
-
-
-
4,933
288,959
175,650
(681)
-
-
-
100,831
145,667
13,494
259,992
-
Fair
value
year two years five years five years 2008
Between
three and
Between
one and
Less
than a
More
than
Discount
effect
2,481
190,550
186,188
825
-
-
562
-
-
-
225,226
60,572
Less
than a
Between
one and
Between
three and
601
-
-
3,682
More
than
4,469
190,550
186,188
(589)
-
-
289,480
-
Fair
value
2009
Discount
effect
4,252
288,959
175,650
259,992
Carrying
amount
2008
3,880
190,550
186,188
289,480
Carrying
amount
2009
As of December 31, 2009:
year two years five years five years
current:
Finance lease transactions
loans and financing
trade accounts payable
noncurrent-
loans and financing
844
569,366
231,687
602
-
-
348
-
-
-
-
-
1,794
569,366
231,687
(134)
-
-
1,660
569,366
231,687
-
42,695
74,518
17,779
134,992
-
134,992
23.3. capital management
the objectives of the company to manage its capital are to safeguard the
continuous return to the company’s shareholders and benefits to other
related parties, and maintain an ideal capital structure to reduce this cost.
As other companies in its industry, the company monitors its capital based on
financial leverage indices. this index corresponds to the net debt divided
by the total capital. the net debt corresponds to total loans (including
short- and long-term loans, as shown in the consolidated balance sheet),
deducted from cash and cash equivalents.
the consolidated financial leverage indices as of December 31, 2009 and
2008 and January 1, 2008 can be summarized as follows:
naturaannualreport
131
2009 2008
January 1,
de 2008
Short- and long-term loans
and financing
704,358
(-) cash and cash equivalents (*) (500,294)
204,064
net debt
Shareholders’ equity
1,139,821
Financial leverage index
480,030
548,951
(350,497) (405,392)
143,559
129,533
921,052
1,014,109
16%
18% 13%
the financial leverage index change in 2009 was mainly due to the need
for working capital as a result of the company’s growth.
23.4. Finantial derivatives
Regarding swap and forward transactions outstanding as of December 31, 2009
and 2008, gains and losses, taking into consideration their fair value, are as follows:
Consolidated
2009 2008
Gains (losses) on changes in fair values on swap
and forward transactions
Swaps
Swaps - managed Prime rate (tR)
Forwards
Operating forwards
(8,430)
-
(8)
(214)
(8,652)
38,073
(378)
(112)
479
38,062
On the balance sheet dates, the company and its subsidiaries consult
financial institutions with which the transactions were carried out
and update the related amounts based on current derivatives market
conditions.
a) Details on derivative transactions
(1) Financial derivatives
Information on financial derivatives as of December 31, 2009 and 2008,
contracted by the company and its subsidiaries arising from loans and
financing denominated in foreign currency, is as follows:
Accumulated effect
December 31, 2009
at fair value
Fair value
Amount
receivable
Valor a
payable
2008 2009 2008 (received) (paid)
Notional amount
2009
Description
Swap contracts-
Asset position:
long position - U.S. dollar 43,003 22,899 28,138 19,675
90,000 90,000 111,192 141,284
long position - yen
- 22,313 - 25,608
tR
133,003 135,212 139,330 186,567
liability position-
cDI floating rate:
long position - U.S. dollar 43,003 22,899 30,951 16,517
90,000 90,000 116,809 106,370
long position - yen
- 22,313 - 25,986
tR
133,003 135,212 147,760 148,873
-
-
-
-
-
-
-
-
(2,813)
(5,617)
-
(8,430)
-
-
-
-
Forward contracts-
long position - U.S. dollar 187 13,594 192 14,006
-
(8)
liability position-
Fixed rate
187 13,594 200 14,006
-
-
(2) Operating derivatives
Information on operating derivatives as of December 31, 2009 and
2008, contracted by the company and its subsidiaries for hedging the
exposure arising from future cash flows, is as follows:
For derivatives maintained by the company and its subsidiaries as of
December 31, 2009, due to the fact contracts are directly entered into
with the financial institutions and not through the commodities and
Futures exchange, there are no margins deposited as guarantee of the
related operations.
23.5 Fair value estimate
the fair value of financial instruments not traded in active markets (for
example, over-the-counter derivatives) is determined using valuation
techniques. the company and its subsidiaries use several methods
and set assumptions that are based on existing market conditions at
the balance sheet date. the fair value of forward exchange contracts is
determined based on forwards exchange rates quoted at the balance
sheet date.
It is estimated that the balances of trade receivables and trade payables
recognized at their carrying amounts approximate their fair make value
in view of the short term of the transactions conducted.
the company and its subsidiaries use hierarchy rules to measure the
fair value of their financial instruments, as set out in cPc 40, for financial
instruments measured in the balance sheet, which requires the disclose
of the fair value measurements at the following hierarchy level:
• Prices quoted (non-adjusted) in active markets for identical assets and
liabilities (level 1).
• In addition to the quoted prices, included in Level 1, inputs used by the
market for assets or liabilities, whether directly (e.g., prices) or indirectly
(e.g., derived from prices) (level 2).
• Exemptions for assets or liabilities that are not based on the data
adopted by the market (i.e., unobservable inputs) (level 3)
the table below shows the consolidated assets measured at fair value as
of December 31, 2009:
Level 1
Total
Level 2 Level 3 balance
Assets
Financial assets at fair value-
Derivatives
total assets
- 193,646
- 193,646
- 193,646
- 193,646
the fair value of the financial instruments traded in active markets (such as
held-for-trading and available-for-sale securities) is based on market prices
at balance sheet date. A market is considered active if quoted prices are r
eadily and regularly available from an exchange, dealer, broker, industry
group, pricing service or regulatory agency, and those prices represent
actual and regularly occurring market transactions on an arm’s-length basis.
the quoted market price used for the financial assets held by the Group is
the price of current competitors. these instruments are included in level
1.
the fair value of financial instruments not traded in active markets (for
example, over--the-counter derivatives) is determined using valuation
techniques. these valuation techniques make maximum use of market
inputs, where available, and rely as little as possible on entity specific
inputs. If all material inputs required for the fair value measurement of
an instrument are adopted by the market, the instrument is included in
level 2.
If one or more than one material input is not based on market inputs, the
instrument is included in level 3.
Under level 2 rules, specific valuation techniques used to measure financial
instruments include:
• Quoted market prices or quotations of financial institutions or brokers
for similar instruments.
Accumulated effect
December 31, 2009
at fair value
• The fair value of interest rate swaps is measured as the present value
of future cash flows estimated based on the yield curves adopted by the
market.
Description
Forward contracts:
long position - U.S. dollar
long position - euro
Notional amount
2009
2008
Fair value
2009 2008
Amount
receivable
(received)
Valor a
payable
(paid)
53,464 45,314 54,124 46,687
- 1,777 - 2,292
53,464 47,091 54,124 48,979
-
(214)
- -
(214)
-
liability position-
Fixed rate:
long position - U.S. dollar 53,464 45,314 54,338 46,673
long position - euro
- 1,777 - 1,827
53,464 47,091 54,338 48,500
-
-
-
-
-
-
• The fair value of foreign exchange futures contracts is determined using
future exchange rates at the balance sheet date, using the amount resulting
from the discount to present value.
• Other techniques, such as the analysis of discounted cash flows, are used
to determine the fair value of the remaining financial instruments.
the company and its subsidiaries do not have financial instruments
measured at fair value under level 3 for the year ended December 31,
2009.
naturaannualreport
132
Fair value of financial instruments stated at amortized cost
Short-term investments
the amounts of short-term investments recorded in the financial
statements approximate their realizable values as they refer to floating
rate transactions and are highly liquid.
loans and financing
the amounts of loans and financing recorded in the financial statements,
except them pegged to tJlP, approximate their collectible amounts as they
are pegged to cDI fluctuation.
Financing pegged to tJlP approximates the collectible amount recorded
in the financial statements as tJlP is also pegged to cDI and is a floating
rate.
Additionally, it is assumed that the amounts of trade accounts receivable
and trade accounts payable recognized at their carrying amounts
approximate their fair market value in view of the short term of the
transactions conducted.
24. FINANCIAL INCOME (EXPENSES)
Company
Consolidated
2009 2008 2009 2008
Financial income:
Interest on short-term investments 6,378 7,985 28,610 35,912
Gains on monetary and
exchange variations (a)
Gains on swap and
forward transactions (b)
Other financial income
3,459 55,952
4,623 2,792 6,362 1,906
84,176 99,017
56,794 59,498
1,379 48,279
442 45,745
44,414
5,247
Financial expenses:
Interest on financing
losses on monetary and
exchange variations (a)
losses on swap and
forward transactions (b)
Other financial expenses
(20,274) (14,581) (38,466) (37,958)
(43) (63,945)
(7,980) (71,463)
- (67,418)
(57,660)
-
(5,828) (6,497) (12,186) (12,438)
(83,805) (85,023) (126,050) (121,859)
25. OTHER OPERATING INCOME (EXPENSES), NET
Gain (loss) on sale of property, plant
and equipment
Actuarial liability - healthcare
plan (note 22)
Untimely used credits of PIS
and cOFInS (*)
Others
Other operating income
(expenses), net
Company
Consolidated
2009 2008 2009 2008
702
(358) (9,265) (2,676)
(2,384)
- (9,342)
-
- 30,921
- 30,921
2,643 175 3,983 109
961 30,738 (14,624) 28,354
(*) In the second quarter of 2008, the company recorded untimely
used credits related to PIS and cOFInS arising from expense, costs and
charges related to its revenues, incurred from may 2004 to December
2007, in the amounts of R$5,516 and R$25,405 for PIS and cOFInS,
respectively, totaling R$30,921. these credits were generated based on
the new interpretation made by the company of certain provisions of
law 10865/04, which definitely changed the taxation system of such
taxes on revenues earned by the company. the untimely used PIS and
cOFInS credits were fully offset against other Federal taxes in July and
August 2008.
26. COMMITMENTS
a) Inputs supply contracts
the subsidiary Indústria e comércio de cosméticos natura ltda. entered
into a contract for the supply of electric power to its manufacturing
activities, in effect through 2015, which provides for the purchase of a
minimum monthly volume of 3.6 megawatts, equivalent to R$363. As
of December 31, 2009, the subsidiary was compliant to the contract’s
commitment.
the amounts are recognized as electric power is consumed over the
contract term; prices are based on volumes and also estimated assuming
the continuity of the subsidiary’s operations.
total minimum supply payments, measured at present value, according
to the contract, are:
the objective of the breakdowns below is to explain more clearly the
foreign exchange hedging transactions contracted by the company and
their contra entries in the statement of income shown in the previous
table:
less than one year
more than one year and less than five years
Over five years
2009 2008
-
3,941
13,865
12,525
5,286
2,462
19,151
18,928
(a)Inflation and exchange gains
Inflation and exchange losses
(a) Breakdown
exchange rate changes on loans and financing
Adjustment for inflation on financing
exchange rate changes on imports
exchange rate changes on accounts
payable in foreign subsidiaries
exchange rate changes on export receivables
Gains on swap and forward transactions
losses on swap and forward transactions
37,765
3,459
Consolidated
2009 2008
5,247
45,745
(71,463)
(7,980)
37,765
(66,216)
51,587
(2,925)
619
(72,387)
(796)
(919)
(823)
(6,399)
(10,693) 14,285
(66,216)
55,952
(67,418) -
(63,959) 55,952
(b) Breakdown
exchange rate changes on swaps
exchange rate changes on forwards
Swap and forward derivatives
adjusted to fair value
Income from foreign exchange coupon swaps
Financial costs of swaps
Financial costs of forwards
Consolidated
2009 2008
(50,721)
(12,513)
71,577
13,160
13,581
1,705
(13,404)
(2,607)
(63,959)
(13,942)
4,415
(16,140)
(3,118)
55,952
b) Operating lease transactions
the company and its subsidiaries have commitments arising from
operating leases of properties where some of its foreign subsidiaries,
the head office in Brazil and “casas natura” in Brazil and abroad are
located.
contracts have lease terms of one to ten years and no purchase option
clause when terminated; however, renewal is permitted under the market
conditions where they are entered into, for an average of two years.
As of December 31, 2009, the commitment made for future payments
of these operating leases had the following maturities:
2010
2011
2012
2013 thereafter
Company Consolidated
7,173
5,332
3,426
7,221
23,152
1,217
1,217
1,217
3,806
7,457
27. BUSINESS SEGMENT REPORT
OSegment reporting is consistent with the management reports provided
by the main operating decision-maker to assess the performance of each
segment and the allocation of funds. Although the main decision-maker
analyzes the information on revenue at its different levels, according to
naturaannualreport
133
the reports used by management to make decisions, the company’s
business is mainly segmented based on the sales of cosmetics by
geographic regions, which are as follows: Brazil, latin America (“lAtAm”)
and other countries. In addition, lAtAm is divided in two groups for
analysis: (i) Argentina, chile and Peru; and (ii) mexico, Venezuela and
colombia. the segments’ business features are similar and each segment
offers similar products through the same consumer access method.
net revenue by region is presented as follows in 2009:
• Brazil: 93.0%
• Argentina, Chile and Peru: 5.2%
• Mexico, Venezuela and Colombia: 1.6%
• Other: 0.2%
Although international segments do not represent more than 10% of
the information required to aggregate a segment, as established by the
aggregation criteria described in cPc 22, management has substantial
evidence that its foreign business share will increase considerably
against consolidated financial balances and thus, management opted
to report them separately.
the accounting policies of each segment are the same as those
described in note 2, description of natura’s operations and significant
accounting policies. the performance of the company’s segments
was assessed based on the net operating income, net income and
noncurrent assets. this measurement basis excludes the effects
of interest, income tax and social contribution, depreciation and
amortization.
the financial information related to the segments as of December
31 is summarized in the tables below. the amounts provided to the
executive committee related to net income and total assets are
consistent with the balances recorded in the financial statements and
with the accounting policies applied
2008
Brazil
Argentina, chile e Peru
mexico, Venezuela e colombia
Others (*)
consolidated
Net
Net
revenue income amortization (expenses)
(16,671)
(5,877)
(294)
tax
(229,394)
562
(604)
3,360,009
164,391
43,996
7,805
3,576,201
644,745
(25,637)
(47,833)
(53,418)
517,857
(86,153)
(1,811)
(561)
(1,470)
(89,995)
assets
834,779
13,150
6,409
14,338
868,676
Total
assets
2,061,427
99,037
49,785
31,904
2,242,153
Current
liabilities
728,205
63,358
17,071
14,413
823,047
Income Noncurrent
Depreciation
and
Finantial
Income
- -
(22,842)
(229,436)
2009
Net
Brazil
Argentina, chile e Peru
mexico, Venezuela e colombia
Others (*)
consolidated
Net
revenue income amortization (expenses)
(40,912)
317
(1,279)
-
(41,874)
3,946,421
218,541
66,473
10,622
4,242,057
842,214
(14,357)
(52,519)
(91,414)
683,924
(86,863)
(2,128)
(1,945)
(1,490)
(92,426)
Depreciation
and
Finantial
Income
Income Noncurrent
tax
(188,559)
(1,441)
(230)
-
(190,230)
assets
984,566
14,108
5,532
20,650
1,024,856
Total
assets
2,533,261
123,891
50,337
33,729
2,741,218
Current
liabilities
1,244,953
64,749
17,972
9,408
1,337,082
(*) Including operations in the United States and France.
no sales transactions are carried out between segments. the company
has a dispersed customer portfolio, with no concentration of revenue.
the revenue from foreign related parties informed to the executive
committee was measured in accordance with that stated in the
statement of income.
Payroll and bonuses
Profit sharing (note 18)
Defined-contribution plan
Share-based compensation
taxes payable
28. NET OPERATING REVENUES (CONSOLIDATED)
2009 2008
380,906 376,553
56,927
5,726
5,088
122,081 121,467
561,901 565,761
55,784
(5,443)
8,573
Gross revenue:
Domestic market
Foreign market
Other sales
Returns and cancellations
Sales taxes
net income
2009 2008
5,410,545 4,576,289
377,445 275,274
1,323 1,295
5,789,313 4,852,858
(4,459)
(1,539,473) (1,272,198)
4,242,057 3,576,201
(7,782)
29. OPERATING EXPENSES BY NATURE (CONSOLIDATED)
marketing and selling expenses
Freight expenses
General and administrative expenses
Product research and development
expenses (note 2.k)
management compensation
employee benefit expenses (*)
Depreciation and amortization charges
Operating expenses
2009 2008
627,439
716,420
168,933
216,259
151,570
303,977
111,794
14,063
561,901
103,622
13,863
565,761
92,426 89,995
2,016,840 1,721,183
(*) Abertura das despesas com benefícios a colaboradores:
30. INSURANCE (UNAUDITED INFORMATION)
the company and its subsidiaries contract insurance based principally
on risk concentration and significance, at amounts considered by
management to be sufficient, taking into consideration the nature of its
activities and the opinion of its insurance advisors. As of December 31,
2009, the insurance coverage was as follows:
Type
Item
Industrial complex/ Any material damages to buildings, facilities
inventories
Vehicles
loss of profits
and machinery and equipment
Fire, theft and collision for 1,424 vehicles
normalization of profits arising from material
damages to facilities, buildings and production
machinery and equipment
Insured
amount
815,118
51,869
1,124,405
31. APPROVAL OF FINANCIAL STATEMENTS FOR ISSUANCE
these individual and consolidated financial statements were approved
for issuance by the Board of Directors at the meeting held on February
24, 2010.
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134
InDePenDent
AUDItORS’ RePORt
to the Board of Directors and Shareholders of natura cosméticos S.A. São Paulo - SP
1. We have audited the accompanying, individual and consolidated, balance sheets of natura
cosméticos S.A. (the “company”) and subsidiaries as of December 31, 2009 and 2008
and January 1, 2008, and the statements of income, comprehensive income, changes in
shareholders’ equity, cash flows and value added for the years ended December 31, 2009 and
2008, all expressed in Brazilian reais and prepared under the responsibility of the company’s
management. Our responsibility is to express an opinion on these financial statements.
2. Our audits were conducted in accordance with auditing standards in Brazil and comprised:
(a) planning of the work, taking into consideration the significance of the balances, volume
of transactions, and the accounting and internal control systems of the company and its
subsidiaries; (b) checking, on a test basis, the evidence and records that support the amounts
and accounting information disclosed; and (c) evaluating the significant accounting practices
and estimates adopted by the management of the company and its subsidiaries, as well as the
presentation of the financial statements taken as a whole.
3. In our opinion, the financial statements referred to in paragraph 1 present fairly, in all material
respects, the individual and consolidated financial positions of natura cosméticos S.A. and
subsidiaries as of December 31, 2009 and 2008 and January 1, 2008, and the results of their
operations, the comprehensive income, the changes in its shareholders’ equity, their cash flows,
and the value added in operations for the years ended December 31, 2009 and 2008, in
conformity with Brazilian accounting practices.
4. As mentioned in note 3, as permitted by cVm Resolution 603/09, management opted to
early adopt the new Pronouncements, Interpretations and technical Guidelines issued by the
Accounting Pronouncements committee (cPc) in 2009, mandatory for financial statements
for the year ending December 31, 2010. Accordingly, the statements of income, cash flows and
value added, individual and consolidated, for the year ended December 31, 2008, presented
for comparative purposes, have been adjusted and are being restated as prescribed by cPc
23 - Accounting Policies, changes in Accounting estimates and errors.
5. the accompanying financial statements have been translated into english for the convenience
of readers outside Brazil.
São Paulo, February 24, 2010
DelOItte tOUcHe tOHmAtSU
Altair Tadeu Rossato
Auditores Independentes
cRc nº 2 SP 011609/O-8
engagement Partner
cRc nº 1 SP 182515/O-5
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DnV ASSURAnce StAtement SUmmARY
nAtURA SUStAInABIlItY RePORt 2009
1. Context and responsibilities
Det norske Veritas (DnV) has been commissioned by natura cosméticos SA (‘natura’)
to provide assurance services in connection with the Portuguese version of natura’s
Sustainability Report 2009 (‘the Report’).
the Board of natura is responsible for all information provided in the Report as well as
the processes for collecting, analysing and reporting that information. DnV’s responsibility
regarding this verification is to natura only, in accordance with the scope of work
commissioned. DnV disclaims any liability or responsibility to a third party for decisions,
whether investment or otherwise, based upon this Assurance Statement summary, or its
full version available in Portuguese at www.natura.net/relatorio.
2. Independence
DnV was not involved in the preparation of any text or data included in the Report,
except for this Assurance Statement summary and its full version available in Portuguese
at www.natura.net/relatorio. moreover, in 2009, DnV did not work with natura on any
engagements that could compromise the independence or impartiality of our findings,
conclusions or recommendations.
3. Scope and limits of the verification
the verification scope included information provided in the Report for the period of 12
months ending on 31 December 2009. Based on the scope of work commissioned by
natura, the main objectives of DnV’s assurance engagement were to assess and verify
• Processes and activities carried out by Natura in order to identify, assess and prioritise
material sustainability issues;
• Processes and activities carried out by Natura in order to identify, analyze and respond
to stakeholders’ expectations in relation to the company’ sustainability strategy,
management and performance, and the content of the Report;
• Systems, processes and tools to collect, aggregate, control/assure the quality of data and
repor t on sustainability-related information;
• The description of sustainability related policies, strategies, objectives, initiatives,
achievements and performance in 2009 in the Report;
• Adherence of reported information to the principles of materiality, reliability, balance,
clarity and comparability set out in the Global Reporting Initiative Sustainability Reporting
Guidelines, 2006 (GRI G3) and AA1000APS (2008);
• Verification and endorsement of the GRI (2006) application level declared by Natura;
this statement does not cover the verification of information or processes related to
greenhouse gas emissions, which were subject to assessment and assurance by another
third party.
this assurance engagement focused mainly on the quality of the sustainability information
and data presented in the Report and the underlying reporting systems. DnV’s scope of
work did not include an assessment of the adequacy, effectiveness or efficiency of natura’s
strategy or management of sustainability issues. It also excluded the assessment or verification
of sustainability management, performance or reporting practices by natura’s suppliers or
any other third parties mentioned in this Report.
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4. Approach and methodology
this assurance engagement was carried out between January and may 2010 by suitably qualified
and experienced professionals, following DnV’s Protocol for Verification of Sustainability Reports.
DnV’s Verification Protocol has been developed in accordance with the most widely accepted
reporting and assurance standards, including AccountAbility’s AA1000 Assurance Standard
(2008) and the GRI Sustainability Reporting Guidelines, 2006 (GRI G3).
the methods used in this engagement included:
• Interviews with 30 directors and managers responsible for Sustainability-related processes
at natura’s headquarters and production unit in cajamar, Brazil;
• Review of documentation and other evidence of developments in the company’s sustainability
objectives, resources, activities and performance;
• Review of sustainability performance-related reports, performance records and samples of
data at source;
• Assessment of the quality and effectiveness of data management systems and tools for
collection, aggregation, quality control/assurance and reporting of sustainability information,
including the testing of samples of data;
• Review of the outputs of materiality assessment and external stakeholder engagement
initiatives carried out by natura, as well as internal and external communications regarding
natura’s commitment, approach and performance on sustainability;
• Assessment of draft and final versions of the Report against relevant reporting standards
and guidelines.
5. Main conclusions
Based on the work undertaken as part of this assurance engagement, DnV concludes that:
• Natura’s Sustainability Report 2009 provides a reliable and fair representation of Natura’s
sustainability-related policies, management approach, initiatives and performance over the
reporting period;
• The Report is well aligned with the principles established in the GRI Sustainability Reporting
Guidelines, 2006 (GRI G3);
• Natura has deepened their definition and understanding of material topics, which has been
translated into improvements in the focus, content and structure of the Report. the company
also made a significant effort to identify, understand and respond to the expectations and
issues raised by their stakeholders regarding the company’ sustainability strategy, management
approach and performance, and the content of the Report;
• Natura has improved internal reporting processes and their application throughout the
organisation, which has resulted in an improvement in the quality of reported information
and the translation of the Report into english.
Detailed information on DnV’s approach, conclusions and recommendations is provided in
the full Assurance Statement available in Portuguese at www.natura.net/relatorio.
Jasmin eymery
Lead Verifier
Ana cristina campos marques
Verifier
Antonio Ribeiro
Quality Assurance
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ABOUt tHe RePORt
this is the 10th natura Annual Report developed based on the
guidelines of the Global Reporting Initiative (GRI), and refers to the
period between January 1 and December 31, 2009. We adopted once
again the G3 GRI version, and for the third consecutive year we declare
that we have applied the A+ application level for reporting economic,
social, and environmental performances.
For the third consecutive year, the socio-environmental information was
subject to external examination by the company Det norske Veritas
(DnV). In the case of greenhouse gas (GHG) emissions, a specific
examination (limited assurance) was conducted on the data of the
2009 inventory by the consulting firm Pricewaterhousecoopers. the
economic and financial information was audited by Deloitte touche
tohmatsu Auditores Independentes. We published the opinions on the
external examinations on page 110.
this publication considers the information related to all our operations,
including Argentina, chile, colombia, mexico, Peru, and France. Due
to the discontinuation of our activities in Venezuela in August 2009,
some data on that country has not been collected, resulting in partial
information that cannot be compared with the other operations. the
scope of the socio-environmental information is mainly related to the
activities in Brazil, where our production is concentrated and where
most of our social and environmental impacts occur. the economic data
includes all of our operations.
In the presentation of environmental impacts on water and energy
consumption and generation of waste, we included in the calculations
data on the outsourced suppliers that manufacture our products. As from
2009, there was improvement of quantitative surveys and we started to
consider the margin of error that corresponds to the confidence interval
of 95% for calculating results
Possible significant changes in relation to the previous years, as well
as changes in the calculation basis or measurement techniques, are
presented throughout the report and in the tables.
We present data on our relationships with our main strategic stakeholders,
who we define as our brand builders: employees, consultants/ncAs,
consumers, suppliers, supplier communities, government, surrounding
communities, and shareholders.
In order to broaden access to the 2009 natura Annual Report, we made
the information available in different formats and accessible in different
communication channels
• Management Report – published in the Valor Econômico and Brasil
econômico newspapers and in the Diário Oficial official gazette on
February 25, 2010, containing the main performance data for the year.
• Book for opinion makers – the main printed publication, with the most
relevant information on our performance in Portuguese, english, and
Spanish.
• Internet – presents the complete content in Portuguese and English.
Access our electronic address www.natura.net/relatorio.
• Newspaper for employees – with the topics of interest to our internal
stakeholders, also on the Internet in Portuguese and Spanish.
• Magazine for consultants – it gathers specific information for our sales
force, in Portuguese only.
mAteRIAlItY DeVelOPment
the purpose of natura’s materiality development is to guide the focus
of our strategic sustainability management by cross-referencing the
socio-environmental topics our stakeholders feel are relevant with their
importance to the company in accordance with its strategy, risks and
opportunities, and its pioneering spirit. this approach helped us decide
the matters addressed in each of the formats and communication
channels mentioned above.
Our materiality process involves a biannual cycle to prioritize topics.
In 2009 we discussed and verified the topics with stakeholders of our
Brazilian operations. We used the discussions with stakeholders in in-
person meetings, such as the two multi-stakeholder panels and the panel
with specialists, and also in virtual meetings and debates, held by means
of the natura conecta (natura connects), to increase feedback. In
total, more than 1,400 people were involved in the process. the panel
of specialists critically analyzed the 2008 natura Annual Report and
found opportunities to improve the reporting process.
Materiality Matrix
l
s
r
e
d
o
h
e
k
a
t
s
f
o
s
t
s
e
r
e
t
n
I
L
A
N
R
E
T
X
E
Biodiversity
Greenhouse gases
Quality of relationships
Impacts of products
Education
INTERNAL
Natura’s Importance
Control and influence level
high medium low
Although it is not a topic addressed by our stakeholders, natura sees
the Amazon as a key factor in the development of Brazil, and thus we
included this high-priority sustainability topic.
In January 2010, we launched the so-called Wiki Reports. Six virtual
forums were opened, where we further the discussions with our
stakeholders on each sustainability topic elected as a high priority in
2008. the participants contributed through both the discussion forums
and by filling out a form asking about their expectations for a given
topic and natura’s actions. learn more on pages 21 and 22.
the process of collecting the information for the Annual Report is
supported by a consultancy firm in communication for sustainability
and includes over 70 in-person or telephone interviews with
representatives of both employees and management, in addition to the
development of indicators by many departments of the company.
the information is validated by the company’s senior management and
is subject to external audit. most indicators reflect the impacts of the
operations in Brazil. there is room for us to improve the systematization
of data on foreign operations.
For further information on this report, please directly contact the team
responsible for its preparation via e-mail: relatorioanual@natura.net.
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GlOBAl cOmPAct PRIncIPleS
Since July 2000, natura has been a signatory of the Global
compact, a UnO initiative that brings together companies,
workers, and civil society to promote sustainable growth and
civic awareness. We are also part of the Global compact Brazilian
committee (cBPG), created from the partnership between the
ethos Institute and the Un Development Programme in 2003.
the cBPG is made up of companies, Un agencies in Brazil, legal
entities, academia, and civil society organizations that work on
topics such as human and labor rights, the environment, and
combating corruption. For further information on this initiative,
please visit www.pactoglobal.org.br
GRI indirectly
relevant
indicators
lA4; lA13;
lA14; SO1
HR1; HR2; HR3
HR1; HR2; HR3
HR1; HR2; ec5;
ec7; lA13
ec2
Global Compact
principles
GRI relevant
indicators
HR1; HR2; HR8
HR7; HR8; HR9
Human Rights
Principles
Principle 1
HR1; HR2; HR3;
Respect and protect HR4; HR5; HR6;
human rights
Principle 2
Prevent human
rights violations
Principles of
Working Rights
Principle 3 - Support
freedom of association HR5; lA4; lA5
in the workplace
Principle 4
Abolish
forced labor
Principle 5
Abolih child labor
Principle 6
eliminate discrimination
in the workplace
Principles of
Environmental Protection
Principle 7
Support a precautionary
approach to
environmental challenges
Principle 8
Promote
environmental
responsibility
environmental
Performance
chapter
HR4; lA2;
lA13; lA14
HR6
HR7
en2; en5; en6;
ec2; en1; en3;
en7; en10; en13; en4; en8; en9;
en14; en18; en21; en11; en12;en15;
en22; en26; en27; en16; en17; en19;
en20; en23; en24;
en30
en25; en28; en29;
PR3; PR4
en2; en5; en6;
en7; en10; en18;
en26;en27
Principle 9
encourage
environmentally
friendly technologies
Anti-Corruption
Principle
Principle 10
Fight against corruption
in all its forms, including SO2; SO3; SO4
extortion and bribery
SO5; SO6
We ARe An ORGAnIZAtIOnAl
StAKeHOlDeR OF tHe GlOBAl RePORtInG
InItIAtIVe (GRI) AnD SUPPORt ItS mISSIOn
tO DeVelOP GlOBAllY AccePteD
GUIDelIneS FOR SUStAInABIlItY RePORtS
tHROUGH A PROceSS OF StAKeHOlDeR
enGAGement
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GRID InDeX
In order to locate our performance indicators according to the GRI standard, please refer to the table below. The general indicators are
available in the online version at www.natura.net/relatorio. Further information on the GRI model can be obtained from the website
www.globalreporting.org.
Págs.
StRAteGY AnD AnAlYSIS
1.1. message from management.
1.2. Description of impacts, risks and opportunities
ORGAnIZAtIOnAl PROFIle
2.1. name of the organization
2.2. Brands, products and/or services
2.3. Operational structure
2.4. location of the organization’s head office
2.5. Geographic operations
2.6. legal nature
2.7. markets served
2.8. Size of the organization
2.9. changes in the period covered by the report
2.10. Awards and certifications
PARAmeteRS FOR tHe RePORt
Report profile
3.1. Period covered by the report
3.2. Previous report
3.3. Frequency
3.4. contact details
Scope and limit of the report
3.5. Definition of content
3.6. limit of the report
3.7. Scope of the report
3.8. Basis for preparing the report
3.9. measurement techniques and calculation basis
3.10. consequences of information reformulations
3.11. Significant changes
Summary of GRI content
3.12. GRI summary
Audit
3.13. external audit
GOVeRnAnce, cOmmItmentS AnD enGAGement
Governance
4.1. Governance structure
4.2. Indication of whether the chairman of the highest governance body is also an executive officer
4.3. number of independent members or non-executives of the highest governance body
4.4. mechanisms for recommendations to governance bodies
4.5. Relation between compensation and economic and environmental development
4.6. Processes to avoid conflict of interests
4.7. Qualifications of the Board members
4.8. Values, codes of conduct and internal principles
4.9. Work of the Board of Directors
4.10. Self-evaluation of the Board of Directors
Commitments with external initiatives
4.11. Principle of precaution
4.12. letters, principles and initiatives
4.13. Participation in associations
Engagement of stakeholders
4.14. list of stakeholders
4.15. Identification of stakeholders
4.16. engagement of stakeholders
4.17. main topics and concerns of stakeholders
5
5
capa; 5
7
7
7
7
7
7
7
134-135
9-12
134
134
134
135
135
134-135
134-135
134
134
134
134
137-140
134
14-17
14
14
16-17
17-18
14
14
3
14
14
56
136
71-72
135
135
20-21; 136
21-24
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ecOnOmIc PeRFORmAnce
economic management approach (objectives and performance, policy and other contextual information)
Economic performance
ec1. Direct economic value generated and distributed, including revenues, operating costs,
employee compensation, donations and other community investments, retained earnings
and payments to capital providers and governments.
ec2. Financial implications and other risks and opportunities for the organization’s activities
due to climate change.
ec3. coverage of the organization’s defined benefit plan obligations
ec4. Significant financial assistance received from government
Market presence
ec5. Range of ration of standard entry-level salary compared to local minimum salary
44
at significant locations of operations.
ec6. Policy, practices and proportion of spending on locally-based suppliers at significant locations of operations 64
ec7. Procedures for local hiring and proportion of senior management hired from the local
community at significant locations of operations.
Indirect economic impacts
ec8. Development and impact of infrastructure investments and services provided primarily
for public benefit through commercial in-kind or pro bono engagement.
ec9. Understanding and describing significant indirect economic impacts, including the extent of impacts
74
64
19-20
45
30; 70
64; 74
43; 74
enVIROnmentAl PeRFORmAnce
environmental management approach (objectives and performance, policy, organizational responsibility,
training and awareness raising activities, monitoring and follow up, other contextual information)
Materials
en1. materials used by weight or volume
en2. Percentual dos materiais usados provenientes de reciclagem.
Energy
en3. Direct energy consumption by primary energy source.
en4. Indirect energy consumption by primary source.
en5. energy saved due to conservation and efficiency improvements.
en6. Initiatives to provide energy-efficient or renewable energy-based products and services,
and reductions in energy requirements as a result of these initiatives.
en7. Initiatives to reduce indirect energy consumption and reductions achieved
Water
en8. total water withdrawal by source
en9. Water sources significantly affected by withdrawal of water
en10. Percentage and total volume of water recycled and reused
Biodiversity
en11. location and size of land owned, leased, managed in, or adjacent to, protected areas
and areas of high biodiversity value outside protected areas
en12. Description of significant impacts of activities, products, and services on biodiversity
in protected areas and areas of high biodiversity value outside protected areas.
en13. Habitats protected or restored
en14. Strategies, current actions, and future plans for managing impacts on biodiversity
en15. number of IUcn Red list species and national conservation list species with habitats
in areas affected by operations, by level of extinction risk.
Emissions, effluents and waste
en16. total direct and indirect greenhouse gas emissions by weight
en17. Other relevant indirect greenhouse gas emissions by weight
en18. Initiatives to reduce greenhouse gas emissions and reductions achieved
en19. emissions of ozone-depleting substances by weight
en20. nOx, Sox, and other significant air emissions by type and weight
en21. total water discharge by quality and destination
en22. total weight of waste by type and disposal method
en23. total number and volume of significant spills
en24. Weight of transported, imported, exported, or treated waste deemed hazardous
under the terms of the Basel convention Annex I, II, III and IV, and percentage of transported
waste shipped internationally.
en25. Identity, size, protected status, and biodiversity value of water bodies and related habitats
significantly affected by the reporting organization’s discharges of water and runoff.
87
88
90
90
90-91
90
90
88
89
89
87
84
87
83-84
85
81
81
81-82
81
81
89
91
89
92
89
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Products and services
en26. Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation
en27. Percentage of products sold and their packaging materials that are reclaimed by category.
Compliance
en28. monetary value of significant fines and total number of non-monetary
sanctions for non-compliance with environmental laws and regulations.
Transport
en29. Significant environmental impacts of transporting products and other goods
and materials used for the organization’s operations, and transporting members of the workforce.
Overall
en30. total environmental protection expenditures and investments by type
SOCIAL PERfORMANCE – LABOR PRACTICES AND DECENT WORk
labor management approach (objectives and performance, policy, organizational responsibility,
training and awareness raising activities, monitoring and follow up, other contextual information)
Employment
lA1. total workforce by employment type, employment contract, and region
lA2. total number and rate of employee turnover by age group, gender, and region
lA3. Benefits provided to full-time employees that are not provided to temporary
or part-time employees by major operations.
Labor/ management relations
lA4. Percentage of employees covered by collective bargaining agreements.
lA5. minimum notice period(s) regarding significant operational changes, including whether
it is specified in collective agreements.
Occupational health and safety
lA6. Percentage of total workforce represented in formal joint management-worker health
and safety committees that help monitor and advise on occupational health and safety programs.
lA7. Rates of injury, occupational diseases, lost days, and absenteeism, and total number
of work-related fatalities by region.
lA8. education, training, counseling, prevention, and risk control programs in place to assist
workforce members, their families, or community members regarding serious diseases
lA9. Health and safety topics covered in formal agreements with trade unions
Training and education
lA10. Average hours of training per year per employee by employee category
lA11. Programs for skills management and lifelong learning that support the continued
employability of employees and assist them in managing career endings.
lA12. Percentage of employees receiving regular performance and career development reviews
Diversity and equal opportunity
lA13. composition of governance bodies and breakdown of employees per category,
according to gender, age group, minority group membership, and other indicators of diversity.
lA14. Ration of basic salary of men to women by employee category
SOCIAL PERfORMANCE – HuMAN RIGHTS
Human rights management approach (objectives and performance, policy, organizational responsibility,
training and awareness raising activities, monitoring and follow up, other contextual information).
Investment and procurement practices
HR1. Percentage and total number of significant investment agreements that include human rights
clauses or that have undergone human rights screening.
HR2. Percentage of significant suppliers and contractors that have undergone screening
on human rights and actions taken.
HR3. total hours of employee training on policies and procedures concerning aspects of human rights
that are relevant to operations, including the percentage of employees trained.
Non-discrimination
HR4. total number of incidents of discrimination and actions taken
Freedom of association and collective bargaining
HR5. Operations identified in which the right to exercise freedom of association and collective
bargaining may be at significant risk, and actions taken to support these rights.
Child labor
HR6. Operations identified as having significant risk for incidents of child labor, and measures taken
to contribute to the elimination of child labor.
Forced and compulsory labor
HR7. Operations identified as having significant risk for incidents of forced or compulsory labor,
and measures taken to contribute to the elimination of forced or compulsory labor.
87
53
63; 89
82
74
37
38
46
45
45
48
47
48
48
41
42
40
43
44
59
59
41
35
45
50; 59; 62
50; 59
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Security practices
HR8. Percentage of security personnel trained in the organization’s policies or procedures concerning
aspects of human rights that are relevant to operations.
Indigenous rights
HR9. total number of incidents of violations involving rights of indigenous people and actions taken
SOCIAL PERfORMANCE – SOCIETy
Social management approach (objectives and performance, policy, organizational responsibility, training
and awareness raising activities, monitoring and follow up, other contextual information).
Community
SO1. nature, scope and effectiveness of any programs and practices that assess and manage
the impacts of operations on communities, including entering, operating, and exiting.
Corruption
SO2. Percentage and total number of business units analyzed for risks related to corruption.
SO3. Percentage of employees trained in organization’s anti-corruption policies and procedures
SO4. Actions taken in response to incidents of corruption
Public policy
SO5. Public policy positions and participation in public policy development and lobbying
SO6. total value of financial and in-kind contributions to political parties, politicians,
and related institutions by country.
Anti-competitive behavior
SO7. total number of legal actions for anti-competitive behavior, anti-trust, and monopoly
practices and their outcomes.
Compliance
SO8. monetary value of significant fines and total number of non-monetary sanctions
for non-compliance with laws and regulations.
SOCIAL PERfORMANCE – PRODuCT RESPONSIBILITy
Product responsibility management approach (objectives and performance, policy, organizational
responsibility, training and awareness raising activities, monitoring and follow up, other contextual information)
Customer health and safety
PR1. lifecycle stages in which health and safety impacts of products and services are assessed
for improvement, and percentage of significant products and services categories subject to these procedures.
PR2. total number of incidents of non-compliance with regulations and voluntary codes concerning health
and safety impacts of products and services by type of outcomes.
Product and service labeling
PR3. type of product and service information required by procedures, and percentage of significant
products and services subject to such information requirements.
PR4. total number of incidents of non-compliance with regulations and voluntary codes concerning
product and service information and labeling by type of outcomes.
PR5. Practices related to customer satisfaction, including results of surveys measuring customer satisfaction
Marketing communications
PR6. Programs for adherence to laws, standards, and voluntary codes related to marketing
communications, including advertising, promotion, and sponsorship.
PR7. total number of incidents of non-compliance with regulations and voluntary codes concerning
marketing communications, including advertising, promotion, and sponsorship by type of outcomes.
Customer Privacy
PR8. total number of substantiated complaints regarding breaches of customer privacy and losses of customer data
Compliance
PR9. monetary value of significant fines for non-compliance with laws and regulations concerning
the provision and use of products and services.
41
61
62
17
41
17
69
69
70
70
56
56
87
56
55
56
55
50; 55
56
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eDItORIAl teAm
Art direction and graphic design
modernsign Design e Inovação
Writing and proofreading
Report comunicação
Image treatment and prepress
modernsign Design e Inovação
Printing
makrokolor
Photography
Daniela Giorgia Spinardi (pages 30 and 49)
Juan esteves (pages 8, 9 and 10)
Kiko Ferrite (pages 53, 62 and 71)
taterka (covers and pages 51 and 68)
Strawberry Frog / Peralta (page 35)
Wilson Spinardi Junior (back cover and pages 1 to 7, 18,
32, 44, 47, 57 and 58)
Determination of Indicators
Sustainability Office,
Office of the Senior Vice President
of Financial and legal Affairs
and Report comunicação
General Coordination
corporate Affairs and Government Relations Office
This report was prepared in GillSans, with the cover printed on Couché
the body printed on Couché
Suzano Matte 230 g/m2 paper and
Suzano Matte 150 g/m2 paper. A total of 3,000 copies of this edition
in Spanish.
were printed
in English and 1,000
in Portuguese, 1,000
THE USE OF MORGAN STANLEY CAPITAL INTERNATIONAL INC.’S (“MSCI”) TRADEMARKS AND INDEX
NAMES DOES NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION BY MSCI, ANY OF
ITS AFFILIATES, ANY OF ITS INFORMATION PROVIDERS OR ANY OTHER THIRD PARTY INVOLVED IN, OR
RELATED TO, COMPILING, COMPUTING OR CREATING ANY MSCI INDEX. THE MSCI INDEXES ARE
THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES ARE TRADEMARKS OF
MSCI OR ITS AFFILIATES AND HAVE BEEN LICENSED FOR USE FOR CERTAIN PURPOSES BY NATURA.
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