OREANDA-NEWS. Fitch Ratings has affirmed and withdrawn the ratings for Natura Cosmeticos S.A. (Natura). The Rating Outlook has been revised to Negative from Stable.

The Outlook revision to Negative reflects Fitch's concerns regarding the challenges Natura faces as it seeks to reformulate its business strategy in light of evolving tough market dynamics. During the past few years, the company's EBITDA margin has declined to about 20% from 24% and its market share has declined. Several changes in senior management have taken place within the past year as the company seeks to confront a more competitive environment.

Going forward, Natura has the challenge to maintain its solid market position within the context of increasing competition and lower market growth rates. Also, there is a new business dynamic in the CF&T market in Brazil with competitive threats coming from drugstores and supermarkets, and from new 'beauty specialty store chains' and e-commerce.

Natura's conservative capital structure and positive free cash flow generation before dividends support a 'BBB' credit profile. Further deterioration in margins and market share over the next two years would pressure this rating level.

Fitch has chosen to withdraw Natura's ratings for commercial reasons. As of June.30 2015, the company had BRL1.5 billion in local debentures and no outstanding cross-border issuances.

KEY RATING DRIVERS

Fitch will no longer provide rating or analytical coverage of this issuer.

RATING SENSITIVITIES
Not applicable.

FULL LIST OF RATING ACTIONS
Fitch has affirmed and withdrawn the following ratings:

--Long-term foreign currency Issuer Default Rating (IDR) at 'BBB';
--Long-term local currency IDR at 'BBB';
--Long-term national scale rating at 'AAA(bra)';
--Fifth and Sixth senior unsecured debentures issuance at 'AAA(bra)'.

The corporate Rating Outlook was revised to Negative from Stable.