27 de octubre de 2015 / 11:00 / hace 2 años

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.

After a lengthy holdup this year as the government reprogramed payments for the KC-390, Filippo said the program has resumed test flights, with a prototype taking to the air for a second time on Monday.

The real has tumbled 22 percent against the U.S. dollar in the quarter and lost almost 40 percent in a year.

The long-term benefits of a weaker Brazilian currency have provided clear tailwinds for Embraer’s earnings, reducing the cost of development, assembly and administration in dollars.

Earnings before interest, taxes, depreciation and amortization, a gauge of operating profit known as EBITDA, rose 16 percent from a year earlier to $158 million, close to analysts’ average estimate of $163 million.

EBITDA equaled 12.6 percent of revenue so far this year, well within Embraer’s annual target of 12-13 percent going into the fourth quarter, which is often the strongest of the year.

On Tuesday, the company reiterated all of its financial and delivery guidance for 2015. (Reporting by Brad Haynes; Editing by Jason Neely and W Simon)

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