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May 21, 2024
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Embraer has reported improved results for the second quarter and first six months of 2023 but was still loss-making. The consolidated net loss attributable to shareholders for Q2 was $-18.8 million compared to $-146.4 million last year. Without extraordinary effects, the Adjusted net income for the quarter would have been $57.9 million versus $46.2 million last year. Embraer improves results but the net income is still negative.

Revenues grew to $1.292 billion from $1.019 billion. Adjusted EBIT was $99.9 million versus $81.2 million. This is thanks to a positive operating profit of $73.2 million compared to a $-227.1 million loss, lower costs associated with eVTOL subsidiary Eve Air Mobility, the absence of costs related to warrants for Eve, and no impairment on the sale of assets. The Adjusted EBIT margin was 7.7 percent compared to 8.0 percent last year. Free cash flow was at break even at $10.7 billion and was affected by higher inventories due to increased deliveries.

Q2 revenues for Commercial Aviation increased 57 percent to $471.9 million from $299.9 million, thanks to deliveries of seventeen aircraft compared to eleven in the same quarter of 2022. One-time effects had a slight impact on the gross margin, which was down 0.3 percentage points to 12.9 percent.

Executive Jet generated 42 percent higher revenues in Q2 of $378 million, up from $266.6 million. Here too, more deliveries (thirty jets versus 21 last year) contributed to this result, but as at Commercial Aviation, one-time effects affected the margin by 2.3 percent to 19.8 percent.

Embraer’s Defense & Security business produced 28 percent lower revenues of $82.4 million, down from $114.5 million due to the recognition of delayed revenues during the period. Hence, the gross margin tumbled to -1.5 percent from 28 percent last year. Services & Support grew revenues by six percent year on year to $339.7 million from $320.2 million as MRO activities increased. But one-time effects affected margins at S&S too, by 7.4 percent to 24.4 percent.

HY1 loss also lower than in 2022

Looking at Embraer’s HY1 result, the airframer produced a consolidated net loss of $-89.6 million compared to a $-178.1 million net loss in 2022. Be aware that Embraer restated the original Q2/HY1 2022 results in November. The original earnings release in August 2022 showed a $42.5 million net profit for HY1. The Adjusted net income was $-31 million versus $-29.2 million. Revenues improved to $2.009 billion from $1.620 billion. Adjusted EBIT was $68.3 million versus $54.1 million, with the margin almost on par at 3.4 versus 3.3 percent.

For HY1, Commercial Aviation benefitted from 24 deliveries, up seven aircraft year on year. Revenues were up to $670.7 million from $469.1 million last year. Executive Aviation reported 38 deliveries compared to 28 in HY1 last year, resulting in higher revenues of $465.1 million versus $356.6 million. Defense & Security produced $180.1 million in revenues, down from $194.9 million. Services & Support is up to $665.9 million, up from $591.3 million.

Excluding Eve, Embraer ended June with $1.4.59 billion in net debt compared to $1.529 billion a year ago. The airframer has reprofiled its debt, resulting in extended maturities through 2030, thanks to issuing a new $750 million bond. Total cash stood at $2.945 billion.

The total backlog stood at $17.3 billion, down from $17.4 billion in Q1 and $17.5 billion in Q4 last year. The order backlog of Commercial Aviation stood at 2.203 E-Jets of $8.0 billion by late June. Embraer says that it will add $700 million in firm sales to the Q3 backlog. Executive Jets had a $4.3 billion backlog, thanks to the order from NetJets for 250 Praetors and a book-to-bill ratio of 2:1. Defense & Security has a $2.3 billion backlog, and Services & Support $2.7 billion.

Embraer reiterates its guidance for 65-70 commercial aircraft deliveries and of between 120-130 executive jets. Total revenues are guided between $5.2 and $5.7 billion with an Adjusted EBIT margin of between 6.4 and 7.4 percent or an Adjusted EBITA margin of 10 to 11 percent. Adjusted free cash flow should be $150 million or better.  

author avatar
Richard Schuurman
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.

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