Embraer’s 3Q2020: Embraer announces net loss of $148m

By Bjorn Fehrm

November 10, 2020, ©. Leeham News: Embraer presented its 3Q2020 results today. The revenue was down 35% compared to 3Q2019 at $759m ($1,176m 3Q2019) at deliveries of seven E-Jets (17 3Q2019).

Net loss was -$148m (-$48m 3Q2019), which does not include special charges. Liquidity remains adequate at $2.2bn after issuing new credit facilities during the quarter.

Results overall

The revenue for 3Q2019 was $759m ($1,176m 3Q2019) with operational profit (Adjusted EBIT) of -$45m (-$21m 3Q2019), Figure 1. Cash flow was hit by increased inventory, up from $257m 3Q2019 to $567m 3Q2020.

Figure 1. Key financial data for 3Q2020. Source: Embraer.

Embraer took charges of $67m for redundancies and credit losses during the quarter and reversed $76m of previous charges.

The data shows that the operational losses (Adjusted EBIT) have been reduced to about one third from 2Q2020 -$141m to -$45m 3q2020. Net loss was -$148m (-48m 3Q2019), which does not include special charges.

The company has $2,2m of Cash exiting 3Q2020, an increase of $0.2bn from 2Q2020 after successfully issuing a new longer-term credit of $750 to be paid in 2028 and paying back credits that were more short term.

Commercial aircraft

The Commercial Aircraft division delivered seven E-Jets during 3Q2020, none of them E2 standard. This compares with 17 for 3Q2019, Figure 2.

Figure 2. Commercial jet deliveries. Source: Embraer.

Segment revenue of $177m shall be compared with $408m third quarter of last year, Figure 3.

Figure 3. Segment revenues. Source: Embraer.

Business Aircraft

The Executive jets are affected by COVID-19 as well, Figure 4. The quarter has 21 deliveries compared with 27, but only two were the margin richer large jets (12 3Q2020).

Figure 4. Segment revenues. Source: Embraer.

Segment revenue was $212m for 3Q2020 ($363m 3Q2020). The Business jet market is important for Embraer as the business jets margins are larger than for Commercial aircraft.

Defense & Security

Defense and Security delivered no KC-390 airlifters in the quarter, but revenue increased by 48% to $155m compared with $105m in 3Q2019.

Services and Support

Services revenue for 3Q2020 declined to $213m vs. $297m 3Q2019. It now represents 35% of revenues and has increased by 11% since 2Q2020.

7 Comments on “Embraer’s 3Q2020: Embraer announces net loss of $148m

  1. I think Embraer will he ok. Maybe the E175 isn’t right yet, but te E190 has no competition in the 100 seat segment and the E195 seems a capable NB alternative for leaner routes.

    The Tucano’s are still going strong, the KC390 seems a great C130 replacement

    They have gained a strong position in smaller affordable bizz jets.

    The Brasil government realizes they have a strong industry and will pull them through this downturn.

      • Boeing was going to ‘market and support’ the KC-390 under its merger deal. Would still make sense now the merger is off as Boeing doesnt have anything in this category to compete with Lockheed.
        The real advantage for most airforces is that its highly suitable for ‘route flying’ -longer distances, faster quieter inside and a pressurized plane. The USAF and a few others have the bigger C17 and C5 for that type of flying, which are mostly done airline style to a ‘schedule’.
        But Lockheed has history for using unconventional sales tactics for its plane which predates even the 737.

        • The USAF tried to get a bigger transport many times over the last 30 years, but where unsuccessful. They were told they have all they need & should just start buying. The C130 has become a schoolbook example of pork barrel contracts.

          http://www.defensetech.org/2010/10/25/so-the-air-force-wants-a-c-130-replacement-by-2024/

          https://www.latimes.com/archives/la-xpm-1998-sep-24-mn-26059-story.html

          Congress is ordering the C130, not the USAF.
          https://www.tomdispatch.com/blog/175659/tomgram%3A_jeremiah_goulka%2C_c-130_math_and_a_cargo_of_pork

          Agree it might be an opportunity for Boeing to create a JV on the KC-390. I think the usual comments of it being “too capable” to replace the C130s is opportunistic. Time has caught up on the C130.

          • Duke: The Lockheed scandals are 70s stuff, get real.

            The C-130 today looks like the old Herc, but its been changed complete over the years that the internal structure has nothign to do with the old one. Todays 747 may look like the old one but it is not even close.

            What has not changed is the mission need and it fills that very well.

            Keesje:

            The USAF always wants something whiz bang, they would rather have jets on it than turbo props.

            That is the heart of the A330MRT selection (illegal). They got big eyes and ignored the fact that they were violation the terms of their own RFPA. Its kind of like a USAF Crack habit.

            Congress is doing its job because the USAF is so messed up in their quest for glory and big, they loose sight of the fact they have a support mission for those ground pounders (the same ones they won’t allow to have their own aircraft -C27 which is ideal for many Army and even Marine missions).

            The Marines are going small so we may see a pickup of the C-27 which would be great.

          • Lockheed was using bribery in 50s, 60s and 70s. It seemed to stop after the 70s was revealed. Wasnt just them Northrop was included and others in UK. Likely it was endemic then and the methods now have become more opaque with currency trading or structured finance as the vehicle.

            Yes, modernised avionics , engines and stuff. But structurally still almost the same as the original model ( after the first 12 had to have have the rear fuselage replaced with a new build) and still with the levers and wire pulleys that was the only option in 50s and 60s.
            Im not sure the rough field capability is the same for the KC390 which can land on a CBR 4 runway while Hercules is 3 ( weights can vary)

  2. The shorter range biz jets are doing better than long range due to the you never know who is doing what trans ocean and trans country trips.

    I do wish Embraer the best. I think it was another Boeing mistake to back out. Not that Embraer had the right products, but they have a versatile engineering force.

    I still don’t get the scope are as Republic supplies E (not E2) 175s to Delta, American and United and its too heavy and can carry too many pax.

    I don’t know I see the KC390 as a Herc replacement. I think it has a slot but not nearly as wide spread application in direct combat support as the Herc.

    Much like the A330MRT, if you want to cover a wide range of speed, freight etc, the KC390 maybe the better choice. Air Forces that don’t expect to fight or are not but want a capability.

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