Embraer 2021 results helped by Executive jets

By Bjorn Fehrm

March 10, 2022, ©. Leeham News: Embraer presented its 2021 results today. The results follow a recovery trend from Pandemic effects, with strong order intake for Executive and Commercial jets and a revenue increase due to more Executive jet deliveries. Free Cash Flow, FCF, improved $1.3bn over 2020, from -$990m to $292m.

Guiudance for 2022 is 60-70 Commercial deliveries (2021: 45-50), Executive jets 100-110 (90-95), revenue $4.5bn-$5bn ($4.0-$4.5), EBIT margin 3.5%-4.5% (3.0%-4.0%) and Free Cash Flow over $50m (over $100m).

Group results

Sales were strong in the last quarter with a Book to Bill of Commercial and Executive jets over 2:1. The total backlog is now $17.0bn, the highest since 2Q2018.

Group revenue for 2021 was up 11% at $4,197m versus $3,771m 2020. Embraer delivered a net profit (after tax and social charges) of -$29m (-$464m). The development of net profits during the Pandemic is illustrated in Figure 1.

Figure 1. Embraer’s net profit development. Source: Embraer.

Free cash flow for 2021 was $292m compared with -$990 for 2020, a major shift helped by advances on ordered aircraft. Net debt improved from $1.7bn end 2020 to $1.4bn end 2021, with the cash position at $2.6bn ($2.7bn) after the loan payments.

The company guidance for 2022 is per Figure 2.

Figure 2. Embraer’s guidance for 2022. Source: Embraer.

Commercial aircraft

The Commercial Aircraft division delivered 48 E-Jets during 2021 compared with 44 during 2020, Figure 3.

Figure 3. Commercial jet deliveries. Source: Embraer.

Commercial aircraft revenue was $1,316m versus $1,114m in 2020, with the more profitable E195-E2 now 44% of deliveries (25%).

Backlog is 325 E-Jets, with the E195-E2 exceeding the E-175 at 170 jets versus 147.

Business Aircraft

The Business jets continue a positive trend with 93 deliveries compared with 86 2020, Figure 4.

Figure 4. Business jet deliveries. Source: Embraer.

Segment revenue was up 5% at $1,130m versus $1,072m for 2020.

Defense & Security

Segment revenue decreased 9% to $594m vs. $654m for 2020. The decline resulted from a revised delivery plan of KC-390s to the Brazilian Air Force, reducing the KC-390 order from 28 to 22 units and extending deliveries to 2034.

Services and Support

Services revenue improved by 23% to $1,132m vs. $920m 2020 as customers increase the operations as the Pandemic effects subside.

9 Comments on “Embraer 2021 results helped by Executive jets

  1. From an LNA article back in 2014:
    “Embraer sees a market for 728 KC-390s in 77 countries, excluding the US, Russia, China and Europe.”

    Sales to date are about 30 units, but hopefully fortunes will pick up for this nifty plane. Perhaps all the recent (promised) military spending increases by various countries will lead to a flurry of new orders. It’s an ideal replacement for aging C130 fleets.

    • That’s called ‘ addressing the market’ , which would be the entire C-130 replacement size.
      Doesn’t mean they will get there, as they up against Lockheed , who can sell the air the planes fly through .

      • After the very public KC-46 and F35 debacles, I suspect that armed forces around the world will be very wary of creative sales techniques by arms suppliers: better to pay a higher price for something useful than to get something sub-optimal for a bargain.

        The Dutch air force has 4 aging C-130s that are ripe for the scrap heap. The narrative up to now has been that the A400M is too big for NL, though this argument may be moot in view of recent developments. If the A400M isn’t ordered, then the C-390 is perfect — and much faster, too. The C-130J may be an “update”, but it’s essentially a dinosaur with a facelift.

      • I suspect Embraer has more than Lockheed Martins sales skills to contend with:
        – The C130 has a 60+ year legacy of support in the form of training and spare parts.
        – The C130 is fully debugged, who knows what is lurking in the KC-390.
        – The C130 is American and the US is more likely to help than most countries in the form of replacements, surplus and long production runs when a country is threatened. The US recently protected Latvia, Lithuania and Estonia something the EU or NATO without the US is completely incapable of doing. American equipment that has a problem is fixed over the years and has long production runs. You can’t say that about the A400M, KC-390 or the Eurocopter Tiger (essentially unserviceable) . I would rate Embraer however very highly, more so than the A400M and its troublesome engines, but the fact their own Airforce tapped out on budget issues is signed that the Aircraft is doomed. If the Ukraine ever gets out of this mess maybe with a partial no fly zone Embraer is not who they will turn to for a transport aircraft (assuming antanov is ruined). The UK and France to some degree are reliable suppliers.

        • “The US recently protected Latvia, Lithuania and Estonia something the EU or NATO without the US is completely incapable of doing.”

          Not sure where you got this impression from. You think 45,000 US troops in (the whole of) Europe are able to “protect” the Baltic states? And that the EU can’t do that, with 1.5 million troops and more than 2000 fighter jets? In response to the Ukraine war, The Netherlands last week deployed air defense systems and fighter jets to Hungary, and rapid intervention troops to Poland: do you think that was just for decoration?

          • -One of the problems with tactical transport jets is that they lack zero speed thrust and are more prone to getting bogged when moving on rough or sodden ground. There are you tube videos of Dutch and French beeches being used in NATO exercises to take A400M and C130J.
            -It’s something I suspect a KC-390 and certainly C17 might have problems with. The A400M can take a Puma or similar IFV (Infantry Fighting Vehicle) which the KC390 can’t. An IFV “Infantry Fighting Vehicle” is a troop carrier with extremely heavy MBT level armour much superior to the APC (Armoured Personnel Carrier). This is needed because of the accuracy of modern anti armour weapons would increase squad causalities to an unacceptable level. The A400M might have some engine problems but 111 is a sizable production run. A smaller tactical transport was always needed but they were shelved in order to fund the 11 billion Euro A400M budget over run.
            The A400M in a way is a testament to actually getting a multinational program complete though it seems to have single handily sucked the marrow out of defence spending. Much better than the sad saga of the Trigat LR missile.
            With only 3 dozen order the KC-390 is hanging on a thread. It might have succeeded in the event of a Boeing Embraer merger.
            45,000 US troops in the Baltic states won’t stop an Russian invasion but it will require at least 135,000 additional Russian troops to over come them given offense defence ratios and their deployment will be noticed. When some of those troops die it will make people mad and more will come.

  2. I think the billions got swapped for millions in the revenue in the leader. If they made $4.5m on 160+ jets, I could just about afford one 🙂

  3. Comment from a stock analyst regarding Embraer’s 2021 results and 2022 outlook:

    “Embraer earned $0.31 per share in the fourth quarter, significantly better than the $0.11 per share analysts had expected, but much of that beat was due to below-the-line items including tax credits. Embraer’s revenue in the quarter was down 30% year over year to $1.3 billion, short of analyst expectations for $1.47 billion in sales.

    “The defense side of the business was responsible for the revenue miss, largely due to a decision by the Brazilian Air Force to reduce the number of KC-390 cargo planes on order. Embraer’s defense business generated revenue of $114.5 million in the quarter, compared to analyst expectations for nearly $200 million in sales.

    “Issues with the KC-390 order were well known. But Embraer likely also spooked investors with light guidance for 2022. The company said to expect revenue of $4.5 billion to $5 billion in 2022, compared to analyst expectations for $5.33 billion in sales.

    “That guidance is disappointing, but there is at least a case to be made that Embraer is being overly conservative. The company expects to deliver more than 100 business jets in 2022, and at least 60 commercial jets. Strong book-to-bill — a measure of how much new business was booked in the quarter compared to what was billed out — in commercial outweighed the impact of the KC-390 debooking, giving the company total bookings 1.15 times what was billed. If Embraer can deliver on the commercial side in 2022, there is likely upside to its guidance.

    “For now, we are in wait-and-see mode. Embraer shares are down more than 30% in the past six months due to the issues with the Brazilian Air Force, and the latest earnings report is doing little to inspire investors to jump back into these shares.”

    https://www.fool.com/investing/2022/03/10/why-embraer-shares-are-down-today/

Leave a Reply

Your email address will not be published.