Brazilian airframer Embraer reported a $54.2mln loss over 2018, compared to $312.9mln profit in 2017. Revenues were down from $5.859bln to $5.071bln, which is slightly below its guidance given on January 16.
Already then Embraer said the 2018 results would be negatively be impacted by lower deliveries in all its divisions. Commercial Aviation saw revenues reduced from $2.771bln to $2.358bln, Executive Jets from $1.280bln to $1.104bln, Defense and Security from $853mln to $612mln. Only Services and Support increased revenues from $922mln to $980mln.
E-jet deliveries were at 90, falling within the 85-95 margin announced at the beginning of 2018.
Embraer was faced by a raft of one-off expenses that affected revenues and EBIT, like an impairment charge of $61.3mln on Executive Jets in Q4 and $188.5mln of non-recurring charge following the crash in May of the KC-390 military transport aircraft. EBIT dropped from $341mln in 2017 to just $35.3mln in 2018. Without special charges, adjusted EBIT decreased from $398.2mln to $223.8mln.
Affecting net income was the net debt position, which deteriorated due to higher financial expenses. Net debt went from $-310.4mln on December 31, 2017, to $-439.9mln twelve months later, but reached $-880,5mln in Q3. Thanks to free cash flow generated in Q4 and debt reduction the full-year debt position wasn’t as bad as it had once looked. Total debt decreased from $4.198bln to $3.647bln.
In Q4 Embraer increased investments in product development to $90.2mln, principally for the E2 program. While delivering just 4 E190-E2 in 2018 (3 to Wideroe, 1 to Air Astana), the rate will progressively go up in 2019. Embraer isn’t willing to disclose yet when it expects to have the E195-E2 certified and delivered to its first customer, Azul.
Chief Commercial Officer Arjan Meijer told Airinsight at the recent A4E Aviation Summit in Brussels that Embraer will take its time on this and announce updates when available.
Shark-nosed Embraer E190-E2 testbed. (Richard Schuurman)