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UPDATE 3-Embraer profit misses estimates on defense, business jet writedowns

(Adds analyst comment, updates share performance)

SAO PAULO, March 8 (Reuters) - Brazilian planemaker Embraer SA, engaged in joint-venture talks with Boeing Co , missed analysts’ quarterly profit estimates and its own annual targets on Thursday, due to weaker deliveries and writedowns on defense programs and executive jets.

Embraer shares fell 4 percent in Sao Paulo as investors weighed the company’s challenges even as delicate talks proceed with the U.S. aerospace company and the Brazilian government on a new venture that would join their efforts in the passenger jet market.

Embraer’s next-generation line-up in the 70- to 130-seat segment is facing stiff competition from the CSeries aircraft designed by Canada’s Bombardier Inc and recently taken over by European heavyweight Airbus SE.

Older planes in Embraer’s executive jet portfolio have also forced a series of writedowns. The latest of these reduced net income in the fourth quarter to $35 million, down 82 percent from a year earlier, missing an average forecast of $137 million of analysts surveyed by Thomson Reuters.

“The potential deal with Boeing, which could also involve the executive aviation segment, could help Embraer raise margins through more effective pricing and cost reduction,” wrote Bradesco BBI analysts led by Victor Mizusaki in a client note.

Full-year 2017 earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $645 million, well short of an annual target of at least $770 million.

Including depreciation and amortization (EBIT), operating profit of $329 million also missed a minimum target of $450 million.

Even adjusted for one-time effects such as the writedowns - $54 million for executive jets and $9 million in defense during the quarter - EBIT and EBITDA missed 2017 targets that Embraer had reaffirmed in October.

Unexpected additional costs for flight testing the new KC-390 military airlifter contributed to that miss, Chief Financial Officer Jose Filippo told journalists on a call.

In November, Embraer said it had stopped flying the first prototype of the KC-390, which is due to enter service this year, after a stall test pushed the cargo jet beyond its operating limits. Filippo said the plane has resumed testing.

The company narrowed its 2018 revenue outlook by $200 million to between $5.4 billion and $5.9 billion, compared to $5.84 billion last year. Embraer also lowered its estimate for maximum cash burn this year, or negative free cash flow, to $100 million from a prior forecast of $150 million, citing more certainty about estimates. (Reporting by Brad Haynes; Editing by Will Dunham and Diane Craft)