BeFra Reports Fourth Quarter 2024 Results
GUADALAJARA, Mexico--(BUSINESS WIRE)--February 27, 2025--
Betterware de México, S.A.P.I. de C.V. $(BWMX)$ ("BeFra" or the "Company"), announced today its consolidated financial results for the fourth quarter 2024. The figures presented in this report are expressed in nominal Mexican Pesos (Ps.) unless otherwise noted, presented and approved by the Board of Directors, prepared in accordance with IFRS, and may include minor differences due to rounding.
Message from the Chairman
I am pleased to share a comprehensive perspective on our many achievements in 2024 and outline our vision that will guide BeFra in the years to come.
2024 was a year filled with achievements. We maintained our growth momentum with double-digit revenue growth of 11.1% in the last quarter compared to the previous year. Jafra Mexico was a key driver of this success, achieving remarkable 22.2% growth in the same period. Also, noteworthy was the performance of Betterware Mexico, which, despite persistent market challenges, including a slowdown in durable-goods consumption trends in Mexico, delivered revenue results 1.5% above the same quarter last year. Thanks to a strong Q4, BeFra concluded 2024 with a 8.4% revenue growth compared to 2023, with both companies contributing growth; Jafra Mexico grew 13.0% while Betterware Mexico grew 4.6%. We faced temporary challenges in profitability, but despite those we generated $2,775M in EBITDA, which was 2.0% above 2023. This was primarily driven by Jafra Mexico with a 15.5% increase in EBITDA, partially offset by Betterware Mexico, where EBITDA declined 9.6%, due to temporary challenges in the international supply chain during the second half of the year. However, we see this as a temporary situation; and expect Betterware Mexico's EBITDA to return to historical levels during 2025.
2025 will be a year of significant milestones for BeFra.
--
Betterware Mexico's 30th anniversary -- this is a significant milestone
that reflects a long history of constant growth. We achieved a remarkable
17.9% CAGR in revenue and of 19.4% CAGR for EBITDA for the last 23 years
(2001 -2024, and 2000 the year when I acquired the company), with a
notable 14.2% CAGR in revenue and of 8.8% CAGR in EBITDA for the years
that followed the Covid-19 pandemic (2019-2024). We also substantially
expanded our Associate base from 5K in 2001, to 675K in 2024, reaching an
estimate of 8M Mexican households today. This success underscores our
steadfast commitment to delight our customers and empower our
entrepreneurs. And Betterware Mexico still has ample room to grow, with
only a 4.0% estimated share of the household product market, meaning we
are ready for the next years of growth.
--
5 years since our U.S. IPO -- A period that has seen continued and even
accelerated growth. Since our U.S. IPO, we multiplied BeFra's revenue
4.6x, representing 35.5% CAGR (going from $3,000M in 2019 to $14,000M
pesos in 2024). During that time, we multiplied our EBITDA by 3.3x,
representing a 26.7% CAGR, despite significant disruptions in Betterware
Mexico's value chain. In addition, the value of BeFra's assets has
increased 2.4x, and we've consistently paid dividends totaling $4,800M.
Much of this growth and value creation was driven primarily by Betterware
Mexico's organic growth, although complemented by the strategic
acquisition of Jafra, which has not only strengthened our growth
trajectory, but also diversified our portfolio and risk. At the same time,
we have been able to leverage our expertise and business model to
substantially grow Jafra.
--
3 years since the acquisition of Jafra -- a move that brought a
valuable brand and increased our category diversification. After 15 years
of 0% growth, Jafra has thrived under our leadership. From 2021 to 2024,
we multiplied Jafra's sales by 1.4x and profitability by 1.6x, achieving
12.1% and 14.9% CAGRs respectively, while expanding its EBITDA margins
from 13.0% to 20.7% for Jafra Mexico.
These milestones underscore the breadth and depth of our successful journey, reflecting our commitment to delivering long-term value creation and sustained growth across our brands.
Looking ahead, we continue our transformational path for BeFra. For Betterware Mexico, we will continue calibrating and optimizing our proven business model to enhance operational efficiency and scalability. For Jafra Mexico, we aim to continue employing this model, while we discover new learnings and avenues of growth in the large and vibrant beauty market in Mexico. For both, we will continue to explore Operational and Commercial Synergies that can drive our growth and profitability further. At the group level, we will continue focusing on executing successful international expansions, accelerating both brands in the United States and Latin America region, while exploring adjacent brands and categories that complement our portfolio, just as we did with Jafra. To sustain our momentum, we continue focusing on: innovation, business intelligence, and technology, anchored by a strong sense of purpose. These elements enable us to adapt and thrive in a constantly evolving world while remaining true to our core values.
As we report our Q4 and FY 2024 results, we are proud to highlight the progress we have made across different metrics, from revenue growth, to profitability, to shareholder returns, and the very positive impact on millions of entrepreneurs who trust our model and benefit from it. This year will not only be a celebration of our achievements, but also another important step in our sustained growth and strategic transformation.
Luis G. Campos
Chairman of the Board
Important notes on the financial statements:
1.
In February 2025, BeFra's management in conjunction with the external
auditor (PwC) determined a restatement with no effect on net revenues,
EBITDA or net income related to a financial statement misclassification.
The underlying issue originated from Jafra Mexico, where certain
production-related labor and indirect manufacturing costs were
incorrectly classified as administrative and distribution expenses
instead of cost of goods sold, affecting the fiscal year 2022 (starting
from Q2 2022) and subsequent periods. While this misclassification
impacted gross margin, it had no effect on net revenues, EBITDA or net
income. The financial information presented herein and going forward
reflects the corrected classification and previously issued financial
statements and the related audit opinion from fiscal year-end 2022 and
2023 should not be relied upon. This misclassification is considered
material, due to the amount that has been reclassified ($433.7M pesos in
2024), necessitating a restatement of previously issued financial
statements, which we lay out in the final section by the end of this
document.
The restated financial statements for the year ended December
31, 2023 will be issued in connection with the issuance of the 2024
financial statements.
2.
As a result of the necessary restatement described above, an additional
adjustment is being made to the financial statements for fiscal year 2023
and first three quarters of 2024. This adjustment is being carried out as
a best practice, given that the amount is not material. Specifically, the
net adjustment of $10.1M pesos involves additional expense in interest
expense and depreciation associated to the lease accounting, offseted by
the relating deferred income tax of Jafra Mexico's offices in 2023. This
amount was originally adjusted in 2024; however, since the 2023 financial
records have been reopened, we are making this adjustment now to ensure
the integrity and accuracy of the financial statements for both years.
3.
It's important to note that this quarter, we are reporting adjusted
EBITDA, Net Income, and EPS to exclude the one-time impact that the sale
of Jafra Mexico's real estate properties had on BeFra's 2024 consolidated
financial results, additionally, we are adjusting for the impairment of
the unsold property as of the end of fiscal year 2024, for which we
received a purchase offer in December along with an updated valuation
estimate. The impact resulted in a non-cash accounting loss of $696.0M
pesos. The transaction prices reflected the current market value of the
assets. Essentially, this accounting loss had no impact on BeFra's
operational performance, further underscoring the relevance of Adjusted
EBITDA, Net Income and EPS as key performance indicators.
Q4 2024 Select Consolidated Financial Information
Q4 FY
---------- ------------------------------ --------------------------------
Results
in '000
MXN 2024 2023 2024 2023
---------- ---------- ------------------ ----------- -------------------
Net
Revenue $3,778,468 $3,401,692 +11.1% $14,100,758 $13,009,507 +8.4%
---------- ---------- ---------- ------ ----------- ----------- ------
Gross +116 +70
Margin 67.3% 66.2% bps 67.9% 67.2% bps
---------- ---------- ---------- ------ ----------- ----------- ------
EBITDA $510,323 $819,484 -37.7% $2,078,394 $2,720,900 -23.6%
---------- ---------- ---------- ------ ----------- ----------- ------
EBITDA -1,058 -618
Margin 13.5% 24.1% bps 14.7% 20.9% bps
---------- ---------- ---------- ------ ----------- ----------- ------
Adj.
EBITDA $771,596 $819,484 -5.8% $2,774,697 $2,720,900 +2.0%
---------- ---------- ---------- ------ ----------- ----------- ------
Adj.
EBITDA -367 -124
Margin 20.4% 24.1% bps 19.7% 20.9% bps
---------- ---------- ---------- ------ ----------- ----------- ------
Net
Income $225,305 $395,191 -43.0% $711,728 $1,039,287 -31.5%
---------- ---------- ---------- ------ ----------- ----------- ------
Adj. Net
Income $436,664 $395,191 +10.5% $1,219,280 $1,039,287 +17.3%
---------- ---------- ---------- ------ ----------- ----------- ------
EPS $6.04 $10.59 -43.0% $19.07 $27.85 -31.5%
---------- ---------- ---------- ------ ----------- ----------- ------
Adj. EPS $11.70 $10.59 +10.5% $32.66 $27.85 +17.3%
---------- ---------- ---------- ------ ----------- ----------- ------
Free Cash
Flow $533,555 $657,121 -18.8% $1,769,026 $2,256,395 -21.6%
---------- ---------- ---------- ------ ----------- ----------- ------
Net Debt
/ Adj.
EBITDA 1.76 1.83 1.76 1.83
---------- ---------- ---------- ------ ----------- ----------- ------
Interest
Coverage 3.46 2.83 3.46 2.83
---------- ---------- ---------- ------ ----------- ----------- ------
Associates
-------------- --------- --------- ----- --------- ----------------
Avg. Base 1,196,417 1,249,230 -4.2% 1,179,058 1,225,595 -3.8%
-------------- --------- --------- ----- --------- --------- -----
EOP Base 1,180,458 1,240,023 -4.8% 1,180,458 1,240,023 -4.8%
-------------- --------- --------- ----- --------- --------- -----
Distributors
-------------- --------- --------- ----- --------- --------- -----
Avg. Base 64,260 62,727 +2.4% 64,654 61,833 +4.6%
-------------- --------- --------- ----- --------- --------- -----
EOP Base 63,339 62,338 +1.6% 63,339 62,338 +1.6%
-------------- --------- --------- ----- --------- --------- -----
--
Net revenue grew 11.1% in Q4 2024, led by Jafra Mexico with a 22.2%
increase in sales, driven by innovation, improved incentives, and a
revamped catalog. Betterware Mexico revenue grew 1.5%, maintaining growth
momentum, but impacted slightly by various external headwinds discussed
on the business unit section. Full-year revenue rose 8.4%, with Jafra
Mexico up 13.0%, Betterware Mexico up 4.6%, and Jafra US stable, all
reflecting the strength of BeFra's commercial model. BeFra's full-year
revenue was in the middle range of our previously communicated guidance
range.
--
Gross Margin: Q4 gross margin improved by 116 bps, with Betterware
Mexico expanding by 675 bps derived from better promotional performance,
despite external cost increases. Jafra Mexico's margin decreased 469 bps
due to prior years synergies and cost reductions that positively impacted
Q4 2023. Full-year gross margin increased 70 bps to 67.9%, driven by
Jafra Mexico's 129 bps gain stemming from a more favorable product mix,
improved pricing strategy, and continued efficiency benefits from scale,
while Betterware Mexico remained stable despite market pressures.
--
EBITDA: Q4 adjusted EBITDA declined 5.8%, mainly from a 17.3% drop in
Jafra Mexico's EBITDA derived from prior years synergies and costs
optimization benefits that were reflected in Q4 2023, creating an
unfavorable year-over-year comparison. Betterware Mexico's EBITDA grew
31.8%, derived from better performance of promotional initiatives and
expense control in Q4 2024, that created a favorable year-over-year
comparison, partially offsetting this decline. Full-year EBITDA rose 2.0%
but was slightly below guidance, given unexpected external cost pressures,
and distribution expenses faced by Betterware Mexico, which will be
reduced during 2025. EBITDA from Betterware's international expansion
impacted directly our growth compared to 2023, without these losses,
consolidated EBITDA for 2024 would have increased by 5.6%.
--
Free Cash Flow: Free cash flow was 69% of EBITDA, down 18.8% in Q4 and
21.6% for the year, due to a one-time supplier payment adjustment in
2023, where we moved supplier terms from 30 days to 120 days, which
benefited substantially FCF that year. It is important to point out that
in 2024, international expansion experienced a negative cash flow of
$122.5M.
--
Adjusted EPS: Adjusted EPS grew by 10.5% in Q4 and 17.3% for the full
year, driven by increased revenue and gross margin, lower interest
expense, and a gain on derivative instruments.
For more details, please refer to the results of each business unit in the accompanying pages.
Continued Financial Strength and Performance
Strong balance sheet at the end of Q4 2024.
BeFra's balance sheet continues strong in Q4 2024, providing financial flexibility to further reduce debt leverage, continue investing in growth and efficiency initiatives, and pay additional dividends.
Although some metrics were temporarily affected in Q4 24 vs Q4 23, because of lower EBITDA margin and slightly higher inventory, we believe our balance sheet remains strong and is poised to continue strengthening in the months ahead.
Our key financial metrics reflect our strength:
Asset Light Business BeFra's asset
light business model provides
flexibility to adapt to challenging
Cash Flow & Liquidity ratios As shown conditions. While SG&A increased
below, BeFra's cash flow generation temporarily (comments in each
remains strong, with almost 69% FCF to company's sections), we have taken
EBITDA, and lower cash conversion days all measures to get back in line
in our cycle. with our historical figures.
Q4 Q4 Q4 Q4
2024 2023 2024 2023 bps
----------- ------ ----- ---------- ----------- ----- ----- ---------
Fixed
Assets /
Current Total
Ratio 1.09 1.04 +4.5% Assets 17.2% 26.2% -900
FCF / Variable
Adj. Cost
EBITDA 69.1% 80.2% -1,104 bps Structure 76.1% 76.1% -6
Fixed
CCC Cost
(days) 41 47 -6 days Structure 23.9% 23.9% +6
*CCC: Cash SG&A /
Conversion Net
Cycle Revenues 49.5% 40.7% +860
Return on Investment Over the years,
BeFra has consistently achieved Leverage BeFra's current debt is
exceptional returns. Despite a primarily related to the acquisition
short-term EBITDA margin shortfall vs of Jafra, and to the construction of
2023, management is confident in being the Betterware Campus. Management is
able to recover profitability, and committed to reducing it faster than
increase it going forward. initially planned.
Q4 Q4 Q4 Q4
2024 2023 2024 2023 %
----------- ------ ----- ---------- ----------- ----- ----- ---------
Equity Debt to
Turnover 12.13 8.89 +36.4% EBITDA 1.86 2.03 -8.2%
Net Debt
to
ROE 61.2% 71.0% -983 bps EBITDA 1.76 1.83 -3.9%
Interest
ROTA 12.4% 15.8% -343 bps Coverage 3.46 2.83 +22.6%
Dividend
Yield 12.09% 8.53% +356 bps
*Equity Turnover = Net Revenues TTM / Equity *ROTA = Net Income TTM / (Cash
+ Accounts Receivable + Inventories + Fixed Assets) *Calculation of Dividend
Yield Using the Closing Price on December 31, 2024, which was $11.18.
Capital Allocation
Strategic Focus on Balance Sheet: BeFra's balance sheet remains a priority. As of December 31, 2024, Net Debt-to-EBITDA was 1.76x, a slight decrease from 1.83x at the end of Q4 2023.
Quarterly Dividends and Shareholder Value: In light of BeFra's results to date, management remains committed to enhancing shareholder value through quarterly dividends. The board of directors has proposed a $250M Pesos dividend for Q4 2024 pending approval at the Ordinary General Shareholders' Meeting on March 7, 2025. This would mark the twentieth consecutive quarterly dividend payment since the Company went public in March 2020. During this time, a total of more than $5,000M Pesos in dividends has been paid. Future dividends are expected to meet the amount proposed for Q4, and will be contingent on BeFra's financial performance and its ongoing debt repayment plan.
2025 Guidance and Long-Term Growth Prospects
Looking ahead, BeFra is well-positioned for a strong year in net revenue and EBITDA. Management expects to achieve mid-to-high single-digit growth in both net revenue and EBITDA in 2025.
2025 2024 Var %
------------------------- ------------------- -------- --------------------
Net Revenue $ 14,900 - $ 15,300 $ 14,101 .APPROX. 6.0% - 9.0%
------------------------- ------------------- -------- --------------------
EBITDA $ 2,900 - $ 3,000 $ 2,775 .APPROX. 6.0% - 9.0%
------------------------- ------------------- -------- --------------------
* Figures in millions
Pesos.
Q4 2024 Financial Results by Business
Betterware Mexico
Key Financial and Operating Metrics
Q4 FY
--------- ------------------------------- --------------------------------
Results
in '000
MXN 2024 2023 2024 2023
--------- ---------- ------------------- ---------- --------------------
Net
Revenue $1,494,855 $1,472,480 +1.5% $5,991,834 $5,726,608 +4.6%
--------- ---------- ---------- ------- ---------- ---------- --------
Gross +675
Margin 57.2% 50.4% bps 57.1% 57.3% -21 bps
--------- ---------- ---------- ------- ---------- ---------- --------
EBITDA $330,075 $250,342 +31.8% $1,296,538 $1,434,501 -9.6%
--------- ---------- ---------- ------- ---------- ---------- --------
EBITDA +508
Margin 22.1% 17.0% bps 21.6% 25.0% -341 bps
--------- ---------- ---------- ------- ---------- ---------- --------
Associates
--------------------- ------- ------- -------- ------- ------- -------
Avg. Base 693,666 756,250 -8.3% 704,433 757,653 -7.0%
--------------------- ------- ------- -------- ------- ------- -------
EOP Base 674,654 741,170 -9.0% 674,654 741,170 -9.0%
--------------------- ------- ------- -------- ------- ------- -------
Monthly Activity
Rate 64.8% 66.0% -116 bps 66.3% 66.5% -20 bps
--------------------- ------- ------- -------- ------- ------- -------
Avg. Monthly Order $2,158 $1,959 +10.2% $2,068 $1,857 +11.4%
--------------------- ------- ------- -------- ------- ------- -------
Distributors
--------------------- ------- ------- -------- ------- ------- -------
Avg. Base 43,585 42,369 2.9% 44,016 41,193 6.9%
--------------------- ------- ------- -------- ------- ------- -------
EOP Base 42,608 41,825 1.9% 42,608 41,825 1.9%
--------------------- ------- ------- -------- ------- ------- -------
Monthly Activity
Rate 96.7% 98.1% -138 bps 97.8% 98.2% -35 bps
--------------------- ------- ------- -------- ------- ------- -------
Avg. Monthly Order $22,945 $23,518 -2.4% $22,432 $23,116 -3.0%
--------------------- ------- ------- -------- ------- ------- -------
--
Returning to Growth in 2024. Betterware Mexico returned to growth with
a 4.6% sales increase following two years of decline. H1 saw 7.0% revenue
growth, but 2H slowed to 2.3% due to external pressures (peso
depreciation, rising product import duties, surging freight costs), and
Q2 stockouts of key products that temporarily demotivated the
salesforce.
--
Salesforce Productivity Improvement: Associate average order size
increased 11.4% YoY, but this recovery has not yet translated into
expansion of the Associate base. However, the base remained more stable
compared to previous years, indicating forthcoming progress. Moving
forward, leveraging distributor growth (+6.9% YoY) and enhancing
recruitment strategies will be crucial for driving sustained volume and
productivity gains in 2025. This, together with new commercial strategies
for 2025, should yield more stable growth in 2025.
--
Gross margin improvement. Gross margin expanded by 675 basis points in
Q4, due to better performance of promotional initiatives and expense
control in Q4 2024 that created a favorable YoY comparison. For the full
year the gross margin was maintained close to 2023 levels, with only a 21
bps decline, and despite pressures related to the sharp depreciation of
the Mexican Peso (-22.7%), freight costs that surged from $1,550 per
container in February to almost $6,000 in August, (a full-year average of
$3,100); and changes in product import duties, which increased from 17.0%
to 33.0% for approximately 144 SKUs, or 16.5% of total sales.
--
EBITDA growth in the fourth quarter. Q4 EBITDA grew 31.8% YoY, due to
aforementioned explanation of the growth in gross margin.
--
EBITDA margin contracted from 25.0% in 2023 to 21.6% in 2024, mainly
due to a temporary increases in corporate and logistics expenses related
to the additional inventory during the second half of the year. These
additional expenses are to be eliminated during 2025 and are ready to
recover our EBITDA margins throughout the year. It is also important to
state that during 2024, we experienced a negative EBITDA of $101M in our
international expansion operations, without which, Betterware Mexico's
EBITDA for the year would have been $1,400M, a year-over-year decrease
of 2.5% instead of 9.6%
2025 Priorities
Consumer Vertical:
--
Portfolio Reconfiguration: Price increases in 2024, driven by external
cost pressures, hindered revenue growth and reduced market
competitiveness. Although freight prices have been decreasing, exchange
rates and product import duties are expected to remain high for the
foreseeable future. Accordingly, the company intends to: (1) rebalance
Betterware Mexico's portfolio to improve price accessibility, and (2)
revise product cost structures with suppliers to decrease costs where
possible for each product.
--
Continued innovation impact: A strong innovation pipeline has been
configured for 2025, strengthening Betterware Mexico's core portfolio,
and increasing new category expansion.
--
Improve communication: Betterware Mexico continues strengthening its
social network management to augment and complement its catalog's reach,
including the potential launch of new digital tools such as live
shopping.
Sales Force Vertical:
--
Enhance our incentives program: Although Associate productivity has
strengthened, incentive programs are being enhanced to promote growth in
the Associate base.
--
Technology enhancement: New features in Betterware Mexico's proprietary
B+ app, which are designed to enhance the experience of Associates and
Distributors.
--
New Training App $(LMS.UK)$: A new Learning Management System $(LMS.SI)$, will be
launched. It is intended to improve online training of Associates and
Distributors.
International Expansion
--
Betterware US. Since its April 2024 launch, the company has been
working toward pinpointing the optimal path to sales force and revenue
growth. The focus of 2025 will be on strengthening recruitment programs
to accelerate growth.
--
Betterware Latin America. Initially planned for Peru, expansion will
now begin in Ecuador to capitalize the availability of growth opportunity
assessments we carried out during 2024. The team is ready to start
operations in June 2025, which will be our first move to the Andean
region (Peru, Ecuador, Colombia).
Jafra Mexico
Key Financial and Operating Metrics
Q4 FY
--------- ------------------------------- --------------------------------
Results
in '000
MXN 2024 2023 2024 2023
--------- ---------- ------------------- ---------- --------------------
Net
Revenue $2,038,993 $1,668,956 +22.2% $7,183,823 $6,354,952 +13.0%
--------- ---------- ---------- ------- ---------- ---------- --------
Gross -469
Margin 74.1% 78.8% bps 76.2% 74.9% +131 bps
--------- ---------- ---------- ------- ---------- ---------- --------
EBITDA $179,357 $532,780 -66.3% $790,073 $1,288,381 -38.7%
--------- ---------- ---------- ------- ---------- ---------- --------
EBITDA -2,313
Margin 8.8% 31.9% bps 11.0% 20.3% -928 bps
--------- ---------- ---------- ------- ---------- ---------- --------
EBITDA
Adj $440,630 $532,780 -17.3% $1,486,377 $1,288,381 +15.4%
--------- ---------- ---------- ------- ---------- ---------- --------
EBITDA
Margin -1,031
Adj 21.6% 31.9% bps 20.7% 20.3% +42 bps
--------- ---------- ---------- ------- ---------- ---------- --------
Associates
--------------------- ------- ------- -------- ------- ----------------
Avg. Base 476,211 461,712 +3.1% 445,323 438,238 +1.6%
--------------------- ------- ------- -------- ------- ------- -------
EOP Base 480,532 467,736 +2.7% 480,532 467,736 +2.7%
--------------------- ------- ------- -------- ------- ------- -------
Monthly Activity
Rate 49.9% 52.9% -300 bps 51.5% 52.0% -55 bps
--------------------- ------- ------- -------- ------- ------- -------
Avg. Monthly Order $2,439 $2,181 +11.8% $2,327 $2,106 +10.5% --------------------- ------- ------- -------- ------- ------- ------- Distributors --------------------- ------- ------- -------- ------- ------- ------- Avg. Base 18,889 18,576 +1.7% 18,885 18,753 +0.7% --------------------- ------- ------- -------- ------- ------- ------- EOP Base 19,093 18,720 +2.0% 19,093 18,720 +2.0% --------------------- ------- ------- -------- ------- ------- ------- Monthly Activity Rate 94.6% 95.3% -73 bps 94.3% 94.4% -17 bps --------------------- ------- ------- -------- ------- ------- ------- Avg. Monthly Order $2,758 $2,624 +5.1% $2,635 $2,396 +10.0% --------------------- ------- ------- -------- ------- ------- -------
Highlights
--
Q4 2024 delivered a 22.2% year-over-year revenue increase--the
strongest quarterly growth of the year-- as a result of top brand
innovations, sales force incentives, an effective pricing strategy, as
well as an improved consultant journey that boosted both associate
productivity (+11.8% YoY) and the number of active associates (+3.0%
YoY).
--
Sustained strong double-digit growth for the third consecutive year.
Net revenues increased by 13.0% in 2024, reaching a historically high
milestone of $7,000M pesos in revenue, driven by strong product
innovation; a differentiated pricing strategy; an extensive re-design of
Jafra Mexico's catalog that was re-launched in October; a revamped
incentive program; and enhancement focused on ease of doing business.
--
Year-on-year increase in the end-of-period associate base: This base
expanded 2.7%, ending the year close to 500K Associates, which is the
next targeted milestone.
--
Gross margin for Q4 2024 was 74.1%, a decrease of 469 basis points
compared to the same period last year. This decrease is primarily
attributable to prior years synergies and cost reductions that positively
impacted Q4 2023, and are now distributed throughout the whole year in
2024. For the full year, Jafra Mexico's strong 131 bps increase to 76.3%,
surpassed expectations due to a more favorable product mix,
differentiated pricing strategy, and continued efficiency benefits from
scale.
--
Adjusted EBITDA growth of 15.4% for 2024, despite accounting benefits
derived from the reversal of provisions, as well as previous years
synergies and cost reductions which created an unfavorable YoY comparison
in the Q4. Growth was driven by an expansion in gross margin resulting
from higher volume, productivity improvements in manufacturing, lower raw
material costs, and a more favorable product mix.
2025 Priorities
Consumer Vertical:
--
Brand Refresh: Jafra Mexico's top brands will receive a modern and
vibrant design update, strengthening their market presence and potential
revenue impact.
--
Product Innovation: Innovation drove 19.0% of total net revenues in
2024, with strong contributions from the Biolab skincare line (10.0% of
category revenue) as well as the Color Passion and Double Nature
collections (both with 40%+ year-over-year revenue growth). For 2025 a
strong pipeline of innovation across categories is being developed.
--
Pricing and Competitive Strategy: Building on strong 2024 performance,
Jafra Mexico continues to refine its pricing strategy to strike the right
balance between competitiveness, affordability, and profitability.
--
Catalog: Following the October 2024 catalog relaunch, the catalog's
offering will increase (more SKU's and more content) in Q2 2025.
Sales Force Vertical:
--
Digital Marketplaces: Jafra Mexico plans to launch a new Shopify+
powered website, to help its sales force transition to a stronger digital
marketplace, unlocking new growth opportunities and expanding consumer
reach.
--
Sales Force Tools: A planned launch of a new J+ app, which is based on
the same technology as B+, to enhance the experience of Associates and
Distributors, and make Jafra more attractive to younger audiences in
Mexico.
--
Enhance incentive program: Similar to Betterware's, Jafra Mexico's
incentive program is being refined to make it more attractive to new and
existing Associates and Distributors.
Jafra US
Key Financial and Operating Metrics
Q4 FY
------------- ------------------------------ -----------------------------
Results in
'000 MXN 2024 2023 2024 2023
------------- -------- -------------------- -------- -------------------
Net Revenue $244,620 $260,256 -6.0% $925,101 $927,947 -0.3%
------------- -------- -------- ---------- -------- -------- ---------
Gross Margin 73.1% 74.4% -134 bps 73.5% 75.7% -222 bps
------------- -------- -------- ---------- -------- -------- ---------
EBITDA $891 $36,361 -97.5% -$8,217 -$638 -1,188.0%
------------- -------- -------- ---------- -------- -------- ---------
EBITDA
Margin 0.4% 14.0% -1,361 bps -0.9% -0.1% -82 bps
------------- -------- -------- ---------- -------- -------- ---------
Q4 FY
----------------- ---------------------------- ---------------------------
Results in '000
USD 2024 2023 2024 2023
----------------- ------- ------------------- ------- ------------------
Net Revenue $12,190 $14,802 -17.6% $50,615 $52,002 -2.7%
----------------- ------- ------- ---------- ------- ------- ---------
Gross Margin 73.1% 74.4% -134 bps 73.5% 75.7% -218 bps
----------------- ------- ------- ---------- ------- ------- ---------
EBITDA $44 $2,068 -97.9% -$458 -$36 -1,181.4%
----------------- ------- ------- ---------- ------- ------- ---------
EBITDA Margin 0.4% 14.0% -1,361 bps -0.9% -0.1% -84 bps
----------------- ------- ------- ---------- ------- ------- ---------
Associates
----------------- ------- ------- ---------- ------- ------------------
Avg. Base 26,540 31,268 -15.1% 29,302 29,704 -1.4%
----------------- ------- ------- ---------- ------- ------- ---------
EOP Base 25,272 31,117 -18.8% 25,272 31,117 -18.8%
----------------- ------- ------- ---------- ------- ------- ---------
Monthly Activity
Rate 44.5% 43.8% +67 bps 43.6% 42.8% +85 bps
----------------- ------- ------- ---------- ------- ------- ---------
Avg. Monthly
Order $248 $231 +7.7% $234 $231 +1.2%
----------------- ------- ------- ---------- ------- ------- ---------
Distributors
----------------- ------- ------- ---------- ------- ------- ---------
Avg. Base 1,786 1,782 +0.2% 1,754 1,886 -7.0%
----------------- ------- ------- ---------- ------- ------- ---------
EOP Base 1,638 1,793 -8.6% 1,638 1,793 -8.6%
----------------- ------- ------- ---------- ------- ------- ---------
Monthly Activity
Rate 85.5% 90.2% -467 bps 87.8% 86.4% +140 bps
----------------- ------- ------- ---------- ------- ------- ---------
Avg. Monthly
Order $219 $215 +1.9% $225 $218 +3.2%
----------------- ------- ------- ---------- ------- ------- ---------
Highlights
--
Jafra US has successfully stabilized its business after years of
decline, marking a turning point driven by the strategic implementation
of our business model. Q4 net revenues declined 6.0% year-over-year, or
17.6% in USD to US$12.2M. Full-year revenues were slightly below last
year's level, decreasing 0.3% or 2.7% in USD, to $50.6M. The quarterly
and annual decreases were partially mitigated by the Mexican peso's
depreciation (from $17 at the beginning of the year to $20 USD/MXN at
year-end).
Despite these challenges, the first half of the year
demonstrated strong growth momentum, laying a solid foundation for the
future. The weaker second half was primarily as a result of the
transition to Shopify+, a critical upgrade for Jafra long-term digital
strategy in the US. Although the implementation took longer than expected,
briefly impacting sales, the transition is an investment that will unlock
long-term opportunities expected to be significant.
--
Associates demonstrated higher productivity, driving a 7.7% rise in the
average price of monthly orders in Q4 2024 and a 1.2% increase for the
full year. Activity levels also gained momentum, improving by 67 basis
points in Q4 and 85 basis points for the year. While these achievements
demonstrate the strength of the business model, the transition to
Shopify+ affected recruitment as well. This resulted in a 15.1% decline
in the average Associate base for the quarter and a 1.4% decrease for the
year.
--
Quarterly EBITDA remained positive, reflecting the company's ability to
navigate market changes. Although quarterly EBITDA decreased nearly 100%,
remained positive at $891 pesos ($44K USD). For the full year, EBITDA
landed at -$8,217 pesos (-$458K USD), nearing breakeven point even after
absorbing approximately $1M USD in one-time expenses, mostly related to
legal settlements. Without these extraordinary expenses, full-year 2024
EBITDA would have been a positive $500K USD.
When compared to 2023 on a
net income level (factoring in similar costs), the year-over-year
variance was -$5K USD or -15%. This demonstrates the underlying strength
and potential of the business, with a clear path to profitability as we
move past these non-recurring costs.
--
Gross Margin Contraction. Gross margin declined both for the quarter
and the full year, falling short of 2023 levels and budget estimates. The
primary impact was increased investment in promotions and incentives
aimed at boosting average order value within the salesforce.
--
Inventory levels remained elevated at around $3.6M USD. To optimize
inventory management, strategic measures have been implemented, including
storing excess stock at Jafra's Queretaro facility and dynamically
distributing SKUs as needed to enhance operational efficiency.
2025 Priorities
Consumer Vertical:
--
In tandem with Jafra Mexico's product and innovation strategies,
renovate the core portfolio lines, and launch a strong innovation
portfolio.
--
Pricing Strategy: Adjust prices to become more competitive in the Skin
Care and Cosmetics categories. Focus on gaining traction and improving
performance in these two segments.
--
USA-Mexico trade issues: We are monitoring the possibility of new
product import duties that the US Government could impose in Mexican
imports, and alert that this could have a negative impact in our sales or
profitability, given the fact that +95% of Jafra US products are
manufactured in our Queretaro plan in Mexico. While we have options to do
third party manufacturing in the USA, we are constantly monitoring the
best option available.
Sales Force Vertical:
--
Incentive Program: Roll out a new and enhanced incentive program in Q2
2025 to attract new Associates and strengthen the existing base. In the
meantime, focus on increasing sponsorship activity and boosting
productivity among current Associates.
--
Digital Catalog on Shopify: Launch a new digital catalog through
Shopify in Q1 2025 to improve the user experience and align with modern
consumer preferences.
--
Hispanic Market support: Recent political changes have disrupted the
Hispanic market in ways that have impacted motivation levels. Because
this market is 85% of the US revenue base, a difficult start to the year
is expected. Accordingly, Jafra US is moving to support Hispanic customer
and salespeople so both can regain trust, with the aim of supporting
growth during the rest of the year.
Appendix
Financial Statements
Betterware de México, S.A.P.I. de C.V.
Consolidated Statements of Final Position
As of December 31, 2024 and 2023
(In Thousands of Mexican Pesos)
------------------------------------------------------------------------------
Dec 2024 Dec 2023
------------------------------------------------------ ---------- ----------
Assets
------------------------------------------------------ ---------- ----------
Cash and cash equivalents 296,558 549,730
------------------------------------------------------ ---------- ----------
Trade accounts receivable, net 1,133,093 1,072,455
------------------------------------------------------ ---------- ----------
Accounts receivable from related parties 250 104
------------------------------------------------------ ---------- ----------
Inventories 2,505,093 2,030,533
------------------------------------------------------ ---------- ----------
Prepaid expenses 87,682 77,468
------------------------------------------------------ ---------- ----------
Income tax recoverable 98,265 29,462
------------------------------------------------------ ---------- ----------
Derivative Financial Instruments 108,846 -
------------------------------------------------------ ---------- ----------
Non Current Assets held for sale 40,000 -
------------------------------------------------------ ---------- ----------
Other assets 358,951 230,688
------------------------------------------------------ ---------- ----------
Total current assets 4,628,738 3,990,440
------------------------------------------------------ ---------- ----------
Property, plant and equipment, net 1,801,475 2,910,353
------------------------------------------------------ ---------- ----------
Right of use assets, net 314,023 361,561
------------------------------------------------------ ---------- ----------
Deferred income tax 525,086 527,929
------------------------------------------------------ ---------- ----------
Intangible assets, net 1,570,223 1,649,953
------------------------------------------------------ ---------- ----------
Goodwill 1,599,718 1,599,718
------------------------------------------------------ ---------- ----------
Other assets 14,504 53,757
------------------------------------------------------ ---------- ----------
Total non-current assets 5,825,029 7,103,271
------------------------------------------------------ ---------- ----------
Total assets 10,453,767 11,093,711
------------------------------------------------------ ---------- ----------
Liabilities and Stockholders' Equity
------------------------------------------------------ ---------- ----------
Short term debt and borrowings 656,084 508,731
------------------------------------------------------ ---------- ----------
Accounts payable to suppliers 2,156,715 1,790,026
------------------------------------------------------ ---------- ----------
Accrued expenses 380,835 306,997
------------------------------------------------------ ---------- ----------
Provisions 748,918 804,748
------------------------------------------------------ ---------- ----------
Value added tax payable 71,192 117,864
------------------------------------------------------ ---------- ----------
Trade accounts payable to related parties 1,237 -
------------------------------------------------------ ---------- ----------
Statutory employee profit sharing 139,255 132,855
------------------------------------------------------ ---------- ----------
Lease liability 110,252 132,839
------------------------------------------------------ ---------- ----------
Derivative financial instruments - 47,920
------------------------------------------------------ ---------- ----------
Total current liabilities 4,264,488 3,841,980
------------------------------------------------------ ---------- ----------
Employee benefits 128,312 127,150
------------------------------------------------------ ---------- ----------
Deferred income tax 495,117 783,169
------------------------------------------------------ ---------- ----------
Lease liability 234,343 255,882
------------------------------------------------------ ---------- ----------
Long term debt and borrowings 4,168,859 4,622,691
------------------------------------------------------ ---------- ----------
Total non-current liabilities 5,026,631 5,788,892
------------------------------------------------------ ---------- ----------
Total liabilities 9,291,119 9,630,872
------------------------------------------------------ ---------- ----------
Stockholders' Equity
------------------------------------------------------ ---------- ----------
Capital stock 321,312 321,312
------------------------------------------------------ ---------- ----------
Share premium account - 25,264 - 16,370
------------------------------------------------------ ---------- ----------
Retained earnings 892,398 1,178,724
------------------------------------------------------ ---------- ----------
Other comprehensive income - 24,076 - 19,194
------------------------------------------------------ ---------- ----------
Non-controlling interest - 1,722 - 1,633
------------------------------------------------------ ---------- ----------
Total Stockholders' Equity 1,162,648 1,462,839
------------------------------------------------------ ---------- ----------
Total Liabilities and
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