February 4, 2013 / 10:12 PM / in 5 years

Embraer lifts revenue target despite lower E-Jet output

SAO PAULO (Reuters) - Brazil’s Embraer SA (ERJ.N)(EMBR3.SA), the world’s third-largest commercial planemaker, said on Monday it could post a slight increase in revenue this year despite cutting production of its regional E-Jets by as much as 15 percent.

Embraer said in a filing that it expects net revenue of $5.9 billion to $6.4 billion this year, after meeting estimates for 2012 revenue of $5.8 billion to $6.2 billion.

A rebounding executive jet division and fast-growing defense operations will be crucial to growth, as the planemaker expects to deliver between 90 and 95 regional aircraft to commercial airlines this year, down from 106 commercial jets in 2012.

Sales of regional jets, which made up more than two-thirds of Embraer’s revenue five years ago, are expected to contribute just 52 percent of revenue next year, after weak demand drained its order backlog to a six-year low.

Embraer and its chief rival for the regional jet segment, Canada’s Bombardier Inc (BBDb.TO), have each landed a hefty order since December, tapping what they hope will be a flood of fresh demand from major U.S. carriers.

While Embraer chases those contracts, it plans to cover slipping regional jet deliveries with a surge in production of executive jets, which are expected to make up 25 percent of revenue in 2013 - the biggest contribution ever.

    Embraer also expects its defense unit to provide a bigger share of sales. A military cargo plane under development and a border-monitoring contract with Brazil’s armed forces should help the unit contribute 21 percent of the company’s revenue, more than doubling its share in five years.

    Embraer forecast deliveries of 80 to 90 light executive jets in 2013, up from 77 last year, and 25 to 30 large executive jets this year, up from 22 in 2012

    The planemaker plans to invest about $580 million this year, down from the $650 million earmarked for 2012.

    Reporting by Brad Haynes; Editing by Gary Hill and Dan Grebler

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