(Adds comments, official forecasts, details of earnings)
By Brad Haynes
SAO PAULO, July 31 Brazilian planemaker Embraer
SA has little risk of missing its performance targets
this year after a strong second-quarter profit and a solid
outlook for the end of the year, executives said on Thursday.
Surging regional jet deliveries and a more favorable
currency helped Embraer beat analysts' forecasts and bring
operating profit in line with official estimates during the
first half of the year, when its performance traditionally lags.
"We don't see much downside risk (to profit targets) ...
There may be some upside," Chief Executive Frederico Curado told
analysts on an earnings call. "We have a more balanced year,
that's why we have not revised our guidance upwards."
Curado said he was working hard to distribute deliveries
across the calendar and avoid the year-end rush to hit targets.
Analysts agreed Embraer would have no trouble meeting its
in-house estimates, which JPMorgan Securities analyst Joseph
Nadal described as "abundantly conservative."
Earlier in the day, Embraer booked second-quarter net income
of $143 million, beating all six estimates in a Reuters survey
of analysts with an average forecast of $116 million. Embraer
posted a net loss of $5 million a year earlier, when a sharp
currency swing drove up its tax bill.
The planemaker reported last month that it had delivered 29
E-Jets to airlines in the second quarter, up from 22 planes a
year earlier. Regional jets have ceded ground in Embraer's
portfolio to executive aviation and defense contracting but
still contribute more than half its revenue.
A flood of regional jet orders from the United States last
year helped to keep Embraer's E-Jet production stable. Curado
said the strong reception of the E-175 by U.S. airlines so far
suggested some of them would place new orders next year.
Those big orders of smaller airliners have pressured gross
profit margins, but control of administrative expenses has kept
operating profits in line with 2014 targets so far.
Earnings before interest, taxes, depreciation and
amortization rose 28 percent to $261 million, beating an average
forecast of $238 million.
EBITDA equaled 13.7 percent of revenue in the first half,
near the top of a 13-14 percent forecast for the year.
Another gauge of operating profit including depreciation and
amortization, known as EBIT, came to 9.2 percent of revenue, in
the middle of an estimated 9.0 percent to 9.5 percent range.
Revenue through June this year rose 13.6 percent from a year
earlier to $3.003 billion, in line with an expected full year
revenue of $6.0 billion to $6.5 billion.
During the quarter, Brazil's exchange rate hovered at levels
supportive of Embraer's export-focused business and helped
generate a deferred income tax credit of $15 million, compared
with a year-earlier expense of $97 million.
(Additional reporting by Guillermo Parra-Bernal; Editing by
Lisa Von Ahn and Bernadette Baum)