Brazilian planemaker Embraer lifts overall guidance as Q3 profit soars

SAO PAULO (Reuters) -Brazilian planemaker Embraer raised its projected adjusted earnings before interest and taxes margin for 2024 to between 9% and 10%, from the previous 6.5%-7.5% range, it said on Friday in a securities filing, while also posting a jump in third-quarter profit.

In a conference call with analysts on Friday, top Embraer executives added that the profit margins currently projected by the company are "far below our ambition."

In its updated guidance, the world's third-largest planemaker behind Airbus and Boeing (NYSE:BA ) also bumped up its free cash flow guidance for this year to $300 million or higher, from the floor of $220 million that was previously expected.

The company lowered its guidance for this year's commercial aircraft deliveries to between 70 and 73, from the previously estimated 72 to 80.

"We expect a positive reaction to the new guidance due to the increase in profitability and FCF (free cash flow)," JPMorgan analysts said in a report to clients.

Shares in Embraer rose more than 2% in early trading, while Brazil's benchmark stock index Ibovespa fell more than 1%. Sao Paulo-traded shares of the planemaker are up 128% this year amid good demand for its aircraft.

Embraer said in a separate securities filing on Friday that its third-quarter adjusted net profit in dollars jumped to $221 million, up from $32.9 million a year earlier.

The result was also much higher than the $74.8 million net profit expected by analysts polled by LSEG.

Embraer said the much higher-than-expected adjusted net profit excluded extraordinary items, such as $50.8 million spent on deferred taxes and a $8.6 million loss in results for its Eve unit.

Adjusted earnings before interest, taxes, depreciation and amortization rose to $356.6 million from $149.3 million in the year-earlier period, beating the $162 million expected by analysts.

Embraer's net revenue jumped to $1.69 billion in the third quarter, from $1.28 billion a year earlier.

"There was solid performance by Defense & Security and Executive Aviation, whose revenues increased both 65% year-on-year," the company said.

Embraer said in its quarterly conference call that it expects "double-digit growth for aircraft deliveries, revenue and EBIT for 2025 and beyond," but added that it is still facing many supply chain challenges, which explains the downward revision in its 2024 delivery guidance.

The planemaker said last month that it delivered 57 non-defense aircraft in the third quarter, up 33% from a year earlier, split between 16 commercial and 41 executive jets.



In September, Embraer announced that Boeing will pay it a gross amount of $150 million over the U.S. planemaker's decision to abort talks on a $4.2 billion agreement to buy Embraer's commercial jet-making operations in the middle of the COVID pandemic.

($1 = 5.6923 reais)

Source: Investing.com