UPDATE 2-Brazil currency drop triggers Embraer loss but bolsters outlook
(Updates with CFO comments, share performance)
By Brad Haynes
SAO PAULO Oct 27 (Reuters) - Brazilian planemaker Embraer SA posted a third-quarter net loss of $110 million on Tuesday, as the country's weaker currency improved long-term profitability but drove up tax obligations.
Excluding the one-time tax impact of Brazil's plunging currency, Embraer reported a profit of $72 million, better than the average forecast of a $55 million profit in a poll of analysts, who rarely consider the currency's short-term tax effect.
Embraer shares rose 3.1 percent in Sao Paulo, nearing an all-time high.
The sharp depreciation of the Brazilian real helps Embraer's export-focused business, with revenue overwhelmingly in dollars and costs such as labor denominated in reais, but it has made quarterly earnings far more volatile.
The real has tumbled 22 percent against the U.S. dollar in the quarter and lost almost 40 percent in a year.
Revenue edged up just 4 percent from a year earlier, due to flagging revenue from domestic defense programs. Profitability sank for the KC-390 military cargo jet program, which bills the Brazilian government in reais but pays many suppliers in dollars.
The weakening exchange rate triggered an accounting revision for the KC-390 program that knocked $30 million off earnings in the quarter, Chief Financial Officer Jose Antonio Filippo told journalists on a conference call. Continuación...