July 28, 2017 / 12:35 PM / a year ago

UPDATE 1-Brazil's Embraer returns to profit as E-Jet deliveries surge

(Adds details of earnings throughout)

By Brad Haynes

SAO PAULO, July 28 (Reuters) - Embraer SA returned to profit in the second quarter as the Brazilian planemaker ramped up deliveries of narrow body E-Jets to airlines and brought down operating costs through job cuts and controls on corporate expenses.

The world’s third-largest commercial planemaker reported net income of $59 million on Friday, below the consensus estimate of $79 million compiled by Thomson Reuters.

Removing the impact of a weaker Brazilian currency on Embraer’s deferred tax bill, which few analysts include in their estimates, net income would have jumped to $123 million.

Last year Embraer booked a $99 million second-quarter net loss due to a corruption probe that culminated in a $206 million settlement with U.S. and Brazilian authorities. On Friday the company said it had filed a motion to dismiss a class action suit related to the case, which the court had not yet ruled on.

The company’s strongest quarter for deliveries to airlines in five years lifted revenue 30 percent from a year ago to $1.77 billion, above all the estimates in the Thomson Reuters survey. A delayed satellite launch and solid demand for new mid-size Legacy business jets also boosted Embraer’s top line.

Recurring operating costs fell 36 percent as a cost-cutting drive thinned Embraer’s ranks and clamped down on corporate expenses, part of Chief Executive Paulo Cesar Silva’s effort to cut $200 million from the company’s annual budget.

Core earnings before interest, taxes, depreciation and amortization (EBITDA) rose to $255 million, from negative EBITDA of $56 million a year earlier.

Embraer also reaffirmed all of its 2017 operational and financial performance estimates. (Reporting by Brad Haynes)

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