Brazil’s Embraer has revised its guidance for 2019 and 2020 as the company expects higher ‘cash consumption’ to complete its strategic partnership with Boeing. Net dividend to shareholders will be reduced from $1.3-1.6 billion, down from the previous range of $1.6-1.7 billion, Embraer announced at its Q3 results-presentation on November 12.
The airframer reported Q3 EBIT of $ -20.8 million for Q3 compared to last year’s +54.3 million as results were impacted by separation costs for the Commercial Aviation segment, which will become Boeing Brasil once the joint-venture with Boeing receives regulatory approval. FY19 costs for completing this deal are expected to reach $ 100 million.
Revenues for the quarter were slightly up 1.4 percent to $1.175 billion thanks to higher deliveries of commercial and executive jets plus more income from its Services and Support business, while a cost base revision of the KC-390 transporter contract reduced Defense & Security revenues by 28.7 percent year-on-year.
Q3 net loss is $-48.4 million, loss attributable to shareholders $-77.2 million, up from -12.5 million last year. Free cashflow was $ -257.4 million compared to -162.5 million last year.
For the first nine months, EBIT was $-9.3 million, revenues were almost flat at $3.377 billion, net loss $-124 million and loss attributable to shareholders $-112.4 million. Flat revenues reflect fewer deliveries of commercial aircraft in the January to September-period: 54 compared to 57 last year, with Q3 deliveries 17 versus 15. Executive jet-deliveries were up to 63 for the nine months-period compared to 55 last year and in Q3 27 versus 24 last year. This includes the first full quarter of the Praetor 600.
Total debt reduced $45.6 million to $3.569 billion by the end of September. Backlog was down from $16.9 to 16.2 billion. These include 345 E-jets, of which 181 are E175s, 123 E195-E2s, 37 E190-E2s, 3 E190s, and a single E195.
Embraer expects to deliver 85-95 airliners and 90-110 executive jets this year, plus two KC-390s. It reaffirms full-year revenues of $5.3-5.7 billion and a flat EBIT margin, with free cash flow between -100 and -300 million. It removes estimates for a net cash position and a special dividend that was dependent on the closure of the Boeing deal, which is not expected before March. The dividend of $1.3 to 1.6 billion will be paid only then.
Without the Commercial Aircraft branch, Embraer’s guidance for FY20 is revenues of $2.5-2.8 billion.
KLM confirms and ups order
On November 12, Embraer and KLM also confirmed the order for E195-E2 announced as a Letter of Intent at last June’s Paris Air Show. At the time, KLM opted for 15 firm orders plus 20 purchase rights. The Dutch airline had now modified this order into 21 firm and 14 purchase rights. The aircraft are already in Embraer’s order book and will be sourced from lessors Aircastle (11) and ICBC Aviation Leasing (10). The first deliveries of the 132-seat version will happen in 2021. The E2 are partly for replacement of the oldest E190s in KLM Cityhopper’s fleet as well as for growth and partial replacement of the Boeing 737-700 in KLM network airline.
Active as a journalist since 1987, with a background in newspapers, magazines, and a regional news station, Richard has been covering commercial aviation on a freelance basis since late 2016.
Richard is contributing to AirInsight since December 2018. He also writes for Airliner World, Aviation News, Piloot & Vliegtuig, and Luchtvaartnieuws Magazine. Twitter: @rschuur_aero.
