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Brazil’s Embraer Celebrating Record Profits

Embraer, Brazilian airplane manufacturing company, announced March 17 record revenues and profits in 2004. The net sales, according to the company, was of US$ 3.440 billion, an increase in 60.5% in comparison to 2003.

The net income was of US$ 380.2 million, more than double what was registered in the previous year. The company’s portfolio of firm orders adds up to US$ 10.1 billion.


In the year in which the company completed its 35th anniversary, Embraer delivered 148 commercial and executive airplanes, 47% more than in 2003. Exports yielded US$ 3.3 billion to the company, or 92% of the total sales.


This placed Embraer once again in second place amongst the greatest exporting companies in Brazil, losing only to Petrobras, the state-owned company in the oil sector. In 2003 Embraer had lost its place to the Vale do Rio Doce, company in the mining sector.


“The driving force behind these positive results was the entry into service of the Embraer 170, the first member of the Embraer 170/190 family, which, since March of 2004, has been successfully operated by airlines in the U.S. and Europe”, says the statement released by the company.


But there were not only positive facts during the last year, as the company could have delivered more aircrafts had it not been the North American US Airways that had to call for a creditor’s agreement.


“Embraer was adversely impacted after US Airways, one of our largest customers, filed for Charpter 11 in September 2004. As a result, we adjusted our delivery guidance for 2004 and 2005 to 145 deliveries each year, from 160 and 170 aircraft, respectively, and ultimately delivered 148 aircraft in 2004”, states the company’s annual report.


Last year, Embraer received 132 firm orders, where 101 were airplanes in the 170/190 family, of jets with the capacity to carry between 70 and 118 passengers, and 31 aircrafts in the ERJ 145 group, which can carry between 37 and 50 people.


Another positive fact that took place last year, according to the company, as well as the beginning of operations of the Embraer 170, was the delivery of the first five jets in the ERJ 145 group manufactured by Harbin Embraer Aircraft Industry Company, subsidiary to the Brazilian company in China.


Defense


In the defense sector, the company is part of a consortium, lead by Lockheed Martin, which won a tender bidding by the North American government to supply equipments to the aerial vigilance program Aerial Common Sensor (ACS).


Embraer will supply jets based on the ERJ 145 for the project. Initially the consortium will deliver five units which will be tested as of the next year.


The initial value of the contract is of US$ 879 million, where, if it is extended, the amount may reach US$ 7 billion in 20 years. Last year, the company also laid the foundation stone for a new factory in Jacksonville, in Florida.


Military vigilance jets, based on the ERJ 145, are already used by the Brazilian Air Force (FAB) in the System for the Vigilance of the Amazon (Sivam).


Also in the defense sector, the company delivered seven units of the turboprop for training and light attacks, ALX Super Tucano, to the FAB.


Currently the company is working in the modernization of 46 supersonic fighters F-5 and the attack jets AMX, also belonging to the FAB. The AMX were manufactured by Embraer itself in the 1980s, when the company was still state-owned (it was privatized in 1995), through an agreement with Italy.


“Net sales in this segment represented 11% of 2004 total revenues compared to 12% in 2003. Embraer expects to increase participation of the defense segment to 17% in 2005, reaching 20% of total revenues by 2007”, says the company’s report.


Translated by Silvia Lindsey
Anba

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