Embraer reduces net loss by almost 90 percent in Q2

E195-E2, the largest commercial aircraft in Embraer's E-Jet E2 family. Photo: Embraer.

With a 27 percent growth in net revenues from the previous year and reaching BRL 6.36 billion (USD 1.3 billion), Brazilian aircraft manufacturer Embraer managed to reduce its net loss by 87.2 percent in the second quarter to BRL 92.6 million (USD 18.8 million). The world’s third-largest planemaker, after Boeing and Airbus, delivered 47 jets in the second quarter— 17 commercial and 30 executive (19 light and 11 medium), which represents a 47 percent increase in deliveries compared to the same period in 2022.

Among the company’s four business fronts, the only one to show a decrease in net revenue compared to the previous year was defense, which reached BRL 410.7 million (USD 82.4 million) in net earnings, a reduction of 28 percent compared to the second quarter of 2022. On the other hand, net revenues in commercial and executive aviation increased by 56 and 39 percent respectively, reaching BRL 2.32 billion (USD 471.9 million) and BRL 1.85 billion (USD 378 million).

The services and support front also expanded, recording a net revenue of BRL 1.68 billion (USD 339.7 million), 7 percent higher than the previous year – but with a gross margin of 24.3 percent, 31.8 percent lower than that of April and June 2022.

The aviation industry was one that was hit hardest by the Covid-19 pandemic and is still recovering – as the travel sector rebounds, orders for aircraft manufacturers continue to increase. Analysts suggest that the Brazilian company is positioned well when compared to the competition to lead this resumption.

The company’s adjusted EBITDA grew 17 percent last year, reaching BRL 724.1 million (USD 149 million), 30 percent higher than analysts’ expectations at XP. “We still see Embraer well positioned in the aviation market, and we believe that the company offers an interesting exposure for the recovering aviation industry,” evaluated BTG analysts Lucas Marquiori and Fernanda Recchia, highlighting that the company’s backlog has remained stable compared to the previous quarter, with an “impressive” USD 17.3 billion in orders. In a conference with analysts this morning, the company’s executives said Embraer signed a deal with an undisclosed client that will increase its backlog by USD 700 million in the third quarter.

As a result, Embraer maintained its original projection to deliver 65-70 commercial jets this year, having increased from 57 in 2022, while executive jet deliveries are forecasted to jump 27.5 percent to 120-130 planes. CEO Francisco Gomes Neto told Reuters that the company expects the third quarter to be as good as Q2, and Q4 to be even better “with new deals in the commercial and defense units.”

Fabiane Ziolla Menezes

Former editor-in-chief of LABS (Latin America Business Stories), Fabiane has more than 15 years of experience reporting on business, finance, innovation, and cities in Brazil. The latter recently took her back to the classroom and made her a Master in Urban Management from PUCPR. At TBR, she keeps an eye on economic policy, game-changing businesses, and people driving innovation in Latin America.