Guilherme Castellan: Hey, Joao, thank you for the question. Yes, so look, you’re right, right, on Avon International. I think let’s take one step back and basically look at the — a little bit all the steps that we have taken in Avon International. Basically, in the last three years, it has been 100% focusing on fixing the fundamentals, right? In the middle, of course, we got a big cyber incident that impacted the channel. We got COVID. We got a lot of turbulence in some markets. But I think it’s fair to say when we look at the results that we are seeing in the channel, even though, right, there are still addition changes in the commercial channels, there is still going on. Remember that we start changing our commercial channel in Avon International basically in September, October of last year.
So even though we are in that — we are almost one year out, we’re still seeing basically adjustments in the channel going forward. And there is some encouraging KPIs that we can see in the channel. But of course, as we mentioned also in the past, this is a journey. And of course, as time passes, we make other adjustments, but we are confident that we are in the right track. As you see, revenues, especially on CFT, stabilizing more and more. Now we are entering to a period now of basically as the — we fix the fundamentals, we’re entering into the period of stabilizing those revenues. Because as we have been saying, the operational deleverage has hit us a lot on the margin, right, has hit us a lot on the margin because the pace that we can deliver our transformational agenda was not the same pace that we saw revenues declining.
So, we are entering this phase of more stabilization on the revenues, of course, with some volatilities depending on the external scenario. And a scenario that again we’ll be able to see more and more the transformational costs flowing in full to the EBITDA. So, we’re confident, look, that we’re on the right track there. And the role of Avon International right now is not a role of growing top-line, and we should not expect that big growth in top-line for Avon in the short term — short to medium term. But it’s a role of improving profitability. It’s a role, of course, of getting the EBITDA margin improvement every single quarter compared to previous year, and that’s what we’re trying to do. We were able to deliver that in Q1. We were able to deliver that in Q2 albeit it’s marching, more improvement.
And we’re targeting to do the same thing in H2 to finish with a good momentum. Keeping in mind that the transformational agenda will continue because we need to do more savings to come in Avon International. Now as you know, we basically — we took out those — that guidance that you referred in the past. So the guidance is not valid anymore. But of course, we’ll continue to focus on delivering a sustainable solid margin for Avon International in the short to medium term. On the working capital, we had a good quarter in terms of improvements. It’s not where we want to be yet, just to be clear. There’s a lot to be done. Again, we have been talking the last few quarters about payables in particular. This quarter, we had a better quarter in payables.
Of course, that — as LatAm continues to overperform, especially Brazil, you can imagine that, that adds some pressure in terms of receivable, which the team has been able to match quite well. And inventories will follow our strategy across the countries and regions to minimize that. And of course, the stack of migrating Home & Styles specifically to consignment sales is going to definitely help us on the track. So, as Fabio mentioned in his letter, right, in the release, we still see additional benefits coming from working capital, especially if you compare on a full year basis, right, because there may be volatility within quarters. And as we mentioned, again, we don’t give guidance, of course. But we’re now happy to have a positive working capital percentage of net revenues, right?
