* Still aiming for 13-14 pct EBITDA, 9-9.5 pct EBIT margins
* 4th-qtr profit more than doubled on late delivery surge
* CEO sees book-to-bill ratio of 1 or better this year
* Shares rise as much as 6 pct, best session in eight months
(Adds CEO comments, financial details, updates stock price)
By Brad Haynes and Roberta Vilas Boas
SAO PAULO, Feb 26 Brazil's Embraer SA
, the world's No. 3 commercial planemaker, said on
Wednesday it was aiming for stable profit margins in 2014 as
better pricing on executive jets should offset deep discounts on
big regional jet orders.
Embraer shares rose as much as 6 percent on Wednesday, their
best session in eight months, as the company issued a steady
outlook after better-than-expected earnings.
The planemaker's outlook reinforced the advantages of an
increasingly diversified revenue stream, which now depends on
airlines for just half of sales.
"The major headwind we have in 2014 is ... the reduction in
gross margins on the commercial jets, which remain our main
business. So we intend to compensate that with better margins in
executive aviation and hopefully also in defense," Chief
Executive Frederico Curado told analysts in Sao Paulo.
A handful of blockbuster contracts from major U.S. airlines
last year replenished Embraer's depleted order backlog, but
raised concerns of deep discounting to win the deals. Curado
said a more favorable exchange rate and signs of a recovery in
the business jet market could offset the pressure.
Executives also sounded confident of new deals. Curado
mentioned "strong order momentum" for commercial jets and
promised at least one new aircraft order for every plane
delivered in 2014, helping to bolster Embraer's order backlog.
The bullish order outlook and nearly stable forecasts for
revenue, production and profit margins followed a rush of
aircraft deliveries at the end of last year that helped Embraer
meet its 2013 targets.
Embraer's fourth-quarter profit more than doubled from a
year earlier to $265 million, beating an average forecast of
$213 million in a Reuters survey of analysts.
Earnings before interest, taxes, depreciation and
amortization, a gauge of operating profit known as EBITDA, rose
75 percent to $544 million, beating an outlook of $361 million.
EBITDA equaled 16.1 percent of revenue in 2013, far above
Embraer's EBITDA margin target of 13-14 percent. Another gauge
of operating profit including depreciation and amortization,
known as EBIT, came to 11.4 percent of revenue, well above its
EBIT margin forecast between 9 percent and 9.5 percent.
Earnings were boosted by a favorable resolution of the
American Airlines bankruptcy, which allowed Embraer to
roll back the provisions it had set aside for a potentially
messy restructuring of a major customer. But even without that
one-time effect the company said it would have hit its 2013
Embraer's delivery outlook for commercial jets in 2014 rose
slightly to 92-97 aircraft, after the planemaker hit the bottom
of its 90-95 jet forecast for 2013.
The company's revenue target also edged up to $6 billion to
$6.5 billion after 2013 revenue of $6.235 fell comfortably
within its target of $5.9 billion to $6.4 billion, due to strong
demand for its business jets.
Embraer nearly exceeded its 2013 target for executive jet
deliveries, but held the same forecasts for this year, aiming
for 80-90 light aircraft and 25-30 big private jets in a sign of
caution over a delicate executive aviation recovery.
The breakdown of revenue between Embraer's divisions is not
expected to change significantly in 2014, with 53 percent coming
from commercial aviation, 26 percent from executive aviation and
20 percent from the defense and security unit.
Embraer plans to invest $650 million this year, up from a
2013 investment plan of $580 million, as it ramps up development
of a military cargo jet and next-generation regional aircraft.
Curado said investments would likely be of a similar scale
in 2015. He added that the executive jet business should improve
by then, helped by new mid-size Legacy jets.
Commercial jet production should be stable in coming years
as several airlines are likely to exercise purchase options for
new planes, he said, offering some possibility of upside.
Embraer shares pared gains in afternoon trading but were
still up 3.9 percent at 20.71 reais in Sao Paulo.
(Editing by Jane Merriman and Matthew Lewis)