3 de marzo de 2016 / 12:56 / en 2 años

UPDATE 2-Embraer shares tumble on modest profit outlook

* Embraer shares down 11 pct, biggest drop in more than 4
    * EBIT margin target 8-8.5 pct; BTG Pactual forecast 10 pct
    * Q4 profit misses expectations on Republic charge

 (Updates with share performance)
    By Brad Haynes
    SAO PAULO, March 3 (Reuters) - Shares of planemaker Embraer
SA tumbled on Thursday after the company offered more
modest profit targets than many analysts expected, deflating
hopes that a strong U.S. dollar meant easy profits for Brazil's
biggest industrial exporter.
    Embraer fell more than 11 percent in midday Sao Paulo
trading, on track for the biggest drop in over four years.
    Operating profit targets for 2016 released with the
company's fourth-quarter earnings report fell short of
expectations among Itaú BBA analysts, for example, and they
downgraded their recommendation on the company to "market
    "Our disappointment with Embraer's 2016 guidance stems from
a challenging outlook for the executive jet market and the
company's inability to translate a weaker Brazilian currency
into higher operating margins," they said in a note to clients. 
    Embraer shares have flirted with all-time highs in recent
months, with many analysts flagging the stock as a rare example
of a Brazilian company able to skirt the local recession due to
a more favorable exchange rate for its export-focused portfolio.
    Yet double-digit inflation in Brazil has driven up labor
costs and the fourth-quarter earnings showed Embraer has been
forced to offer bigger discounts on executive jets as it tries
to grow in a sluggish and highly competitive market.
    Embraer still forecast gradual sales growth this year due to
solid demand for its regional jets and new executive aircraft.
    Net revenue should rise to between $6 billion and $6.4
billion from $5.9 billion last year despite weaker sales from
its defense division, Embraer said on Thursday, when it also
reported a higher fourth-quarter profit.
    The outlook reflects Embraer's confidence in a solid order
backlog for the current generation of its regional E-Jets before
their re-engined replacements start entering service in 2018.
    The company also said it expected its new mid-size Legacy
450/500 jets to boost the executive aviation division's sales
despite a weak recovery in the global market for private jets.
    Embraer reported fourth-quarter net income of $111 million,
up 22 percent from a year earlier. The company benefited from a
more profitable sales mix and a strong U.S. dollar, which
reduces the impact of labor and administrative costs denominated
in Brazilian reais.
    However, the results missed the average estimate of $162
million from a Reuters poll as Embraer set aside money to cover
potential losses from the Chapter 11 filing of major client
Republic Airways Holdings. 
    Below are Embraer's 2016 targets, along with 2015 results:
                                2016            2015
 Commercial jet deliveries      105-110         101
 Light exec jet deliveries      75-85           82
 Mid/large exec jet deliveries  40-50           38
 Defense revenue                $700-750 mln    $811 mln
 Net revenue                    $6-6.4 bln      $5.9 bln
 EBITDA margin                  13.3-13.7 pct   10.9 pct
 EBIT margin                    8.0-8.5 pct     5.6 pct
 Investment                     $650 mln        $288 mln
 Free cash flow                 >$-100 mln      $178 mln

 (Reporting by Brad Haynes; Additional reporting by Priscila
Jordao and Paula Laier; Editing by Lisa Von Ahn and Dan Grebler)

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