Embraer S.A. (ERJ), the largest Brazilian aircraft manufacturer, recently announced its aircraft delivery report for the first quarter of fiscal year 2011. As compared with the fourth quarter of 2010, the company’s aircraft delivery fell, while firm order backlog improved considerably.
The company during the first quarter 2011 delivered 20 jets to the commercial aviation market and 8 to the executive aviation market compared with 31 commercial and 61 executive aircraft delivered in the fourth quarter 2010.
As for the Commercial segment, the company delivered 11 Embraer 190, followed by 6 Embraer 195, 2 Embraer 175 and 1 Embraer 170. Numbers of light and large jets in the executive segment were 6 and 2, respectively.
Embraer’s firm order backlog improved $400 million quarter over quarter to total $16 billion in the first quarter. Orders for aircraft in the Commercial segment were solid, with roughly 2 for the ERJ 145 Family and 268 for the EMBRAER 170/190 Family. During the first quarter, Embraer’s Legacy 650 jet was certified in the United States.
In April 2011, the company announced the delivery of 10 EMBRAER 190 to CDB Leasing Co., Ltd. (CLC). This order was in succession to a similar contract executed in January 2011. The company and CLC also signed an LOI for another batch of 10 EMBRAER 190. The 30 aircraft order brings CLC’s total order to 30 aircraft for a list price of approximately US$1.25 billion. These aircraft will be operated by China Southern Airlines.
Embraer S.A., formerly known as Empresa Brasileira de Aeronautica S.A., designs, manufactures and sells aircraft and aviation-related structural parts to the world’s commercial aviation, executive aviation and defense markets.
The company delivered stellar performance in the fourth quarter 2010 with EPADS of $0.68; above the Zacks Consensus Estimate of $0.63. Topline in the quarter grew 20.9% year over year.
For the fiscal year 2011, management expects net sales to be approximately $5.6 billion, including $3.1 billion from the commercial aviation market, $1.2 billion from the executive aviation market and $600 million from defense and security business. EBIT margin is likely to be roughly 7.5%. The company expects to deliver 102 commercial jets, 100 light jets and 18 large jets.
We currently reiterate a Neutral recommendation on Embraer.
EMBRAER AIR-ADR (ERJ): Free Stock Analysis Report
Zacks Investment Research
