SAO JOSE DOS CAMPOS, Brazil, Nov. 3 Embraer-3Q08-GAAP-ern
SAO JOSE DOS CAMPOS, Brazil, Nov. 3 /PRNewswire-FirstCall/ --
The Company's operating and financial information is presented, except
where otherwise stated, on a consolidated basis in United States dollars (US$)
and in accordance with US GAAP. The financial data presented in this document
for the quarters ended September 30, 2007, June 30, 2008 and September 30,
2008, are derived from the unaudited financial statements. In order to better
understand the Company's operating performance, additional information is also
presented at the end of this release, in accordance with accounting practices
adopted in Brazil ("Brazilian GAAP")
Embraer (BOVESPA: EMBR3; NYSE: ERJ), the world's leading manufacturer of
commercial jets with up to 120 seats, recorded third quarter 2008 (3Q08) net
sales of US$ 1,546.0 million and net income of US$ 57.7 million, equivalent to
diluted earnings per ADS of US$ 0.3190.
By the end of September 2008, the volatility of the Brazilian currency
directly impacted Embraer's net results. The Company's policy to mitigate its
exposure to currency variations is based on the balance between assets and
liabilities indexed in foreign currency and on the daily management of its
currency trading, since most of its revenues are denominated in dollars and
possibly could act as a natural hedge for the Company. The trend of
appreciation of the U.S.dollar against the real might cause losses in the
Company's derivative instruments, but those losses tend to be compensated with
an increase in operating revenues, since part of Embraer's costs are
denominated in reais.
Embraer holds derivative positions, mostly Non-Deliverable Forward
("NDF"), to hedge its exposure to the Brazilian currency. Those instruments do
not have any speculative component and serve exclusively to protect the
Company's operations against a potential loss arising from adverse changes in
currency exchange rates.
At September 30, 2008, Embraer's "NDF" positions totaled R$ 1,675.0
million (approximately US$ 875 million), with different maturity dates, as
shown below:
Deri- Accounting Accounting
vativeNotional Average Provision Provision
Instru- Original Current (in R$ Maturity at at
ment Currency Currency thousand) Rate 09.30.2008 09.30.2008
Maturity
up to
12/30/2008 574,290 1.7572 (53,268) (53,268)
Maturity
up to
03/31/2009 "NDF" US$ R$1,005,008 1.7254 (122,504) (122,504)
Maturity
up to
06/30/2009 97,715 1.9000(5,011)(5,011)
TOTAL 1,675,013 - (180,783) (180,783)
Gain (loss)
The exchange rate used to mark the Company's "NDF" positions was R$ 1.9143
per U.S. 1.00 and the table below shows Embraer's foreign exchange gains and
losses in each period and also its gains and losses in derivative positions:
US$ million
1Q08 2Q08 3Q08 9M08
Gain (loss) on derivatives(*) 9.6 55.6 (92.9)(27.7)
Foreign exchange gains (losses), net (4.1)(32.3) 58.7 22.2
TOTAL 5.5 23.3 (34.2) (5.5)
(*) Included in net financial income (expenses) line of the Statement of
Income
The balance between assets and liabilities is constantly monitored by the
Company, as well as our investments in other currencies, but due to the strong
volatility, when we analyze those numbers in the short term, big variations
can be noted, and when we analyze the accumulated amount for the year, the
numbers are in accordance with the operations of the Company.
Embraer delivered 48 aircraft during 3Q08, compared to 47 in the third
quarter of 2007 (3Q07) and 52 aircraft in 2Q08, totaling 145 jets delivered in
by September 30, 2008. Embraer reaffirms its estimate of delivering 195 to 200
jets in 2008, tending toward the higher figure, as well as ten to 15 Phenom
100 jets. Embraer's firm order backlog on September 30, 2008, reached a record
high of US$ 21.6 billion, including sales to the Executive Aviation market,
which backlog is approximately US$ 7.0 billion. The EMBRAER 170/190 jet family
backlog accumulated a total of 865 firm orders and 813 options.
Net revenues for 3Q08 totaled US$ 1,546.0 million, an 8.2% increase over
the US$ 1,428.5 million in net revenues for 3Q07, basically due to the higher
number of aircraft deliveries and a more favorable product mix.
The gross margin for 3Q08 totaled 21.7%, representing an increase over the
21.2% in 3Q07 gross margin in despite the impact of the 13.0% decrease in the
average exchange rate (R$/US$) on the portion of the Company's cost stated in
reais, and the average increase of 10.13% in the payroll. The higher gross
margin is due to productivity gains achieved since the improvement of the
Company's industrial processes that started in mid-2007. The gross margin for
3Q08 is in line with the 21.9% for 2Q08.
Income from operations reached US$ 100.5 million in 3Q08, representing a
decrease from the US$ 162.2 million recorded for the same period in 2007. The
operating margin was 6.5% in 3Q08, representing a decrease from the 11.4% for
3Q07 and also a decrease from the operating margin of 6.9% for 2Q08.
Net income totaled US$ 57.7 million in 3Q08, compared to US$ 194.9 million
in 3Q07 and US$ 134.4 million in 2Q08. The net margin decreased to 3.7% in
3Q08, compared to 13.6% in 3Q07 and 8.2% in 2Q08.
The Company maintained its high level of liquidity, and its net cash
position was US$ 491.9 million for the quarter ended September 30, 2008.
THIRD QUARTER 2008 in perspective
INDIAN GOVERNMENT ACQUIRES THREE EMBRAER EMB 145 AEW&C JETS
Embraer and the Indian Government signed an agreement for three EMB 145
AEW&C (Airborne Early Warning & Control) jets. The contract includes a
comprehensive logistics package comprised of training, technical support,
spare parts, and ground support equipment.
EMBRAER SELLS FIVE EMBRAER 190 JETS TO CHINA'S KUN PENG AIRLINES
Embraer and Kun Peng Airlines Co., Ltd., one of the main operators in the
Chinese regional aviation market, signed a contract for five firm orders for
the EMBRAER 190 jet, marking an important expansion of Embraer's presence in
mainland China.
EMBRAER AND AEROMEXICO SIGN A CONTRACT FOR 12 EMBRAER 190 JETS
Embraer signed a contract with Aeromexico for 12 EMBRAER 190 jets, as part
of the airline's modernization plan. The new aircraft will be flown by its
Aeromexico Connect subsidiary, which already operates 28 ERJ 145 jets, and has
taken operating leases on an additional four EMBRAER 190 jets from GE
Commercial Aviation Services (GECAS), since November 2007.
EMBRAER AND NAS AVIATION CONFIRM FIVE ADDITIONAL EMBRAER 190 JETS
Embraer and Saudi Arabia's National Air Services (NAS) Aviation confirmed
options on five additional EMBRAER 190 jets. The original contract, covering
five firm orders and five options, was announced in November 2007, during the
Dubai Airshow. The airline also retains purchase rights for 12 additional
aircraft of the same model.
EMBRAER SELLS FIVE EMBRAER 190 JETS TO NIKI AIRLINE
Embraer and Austria's NIKI Luftfarht GmbH signed a contract for five
EMBRAER 190 jets. The agreement includes purchase rights for another five
aircraft, which could be either the EMBRAER 190 or the EMBRAER 195.
EMBRAER TO CREATE TWO CENTERS OF EXCELLENCE IN PORTUGAL
In a ceremony held in Lisbon, Embraer announced plans for implementing two
new industrial units dedicated to manufacturing complex airframe structures,
being one focused on metallic assemblies and the other on composites, both of
which to be located in the city of Évora, Portugal.
EMBRAER WILL SUPPLY THE SUPER TUCANO TO THE CHILEAN AIR FORCE
Embraer and the Chilean Air Force (FACH) signed a contract for 12 Super
Tucano aircraft. This is a result of a public bid held by the FACH, which
chose the airplane manufactured by Embraer as the best solution for the
tactical training of its pilots. The first Super Tucano is expected to be
delivered in the second half of 2009.
EMBRAER MADE FIRST E-JETS SALE TO MONTENEGRO AIRLINES
Embraer announced the sale of the first EMBRAER 195 jet to Montenegro
Airlines. The agreement with the airline from the Republic of Montenegro also
includes purchase rights for two more aircraft of the same model.
EMBRAER OPENED TWO NEW EXECUTIVE JETS SERVICE CENTERS IN THE U.S.
Embraer celebrated the opening of its facilities at Phoenix-Mesa Gateway
Airport, in Mesa, Arizona, and another hangar at Bradley International
Airport, in Windsor Locks, Connecticut. The new facilities are dedicated to
full-service care for the Company's Phenom 100, Phenom 300, Legacy 450, Legacy
500 and Legacy 600 executive jets.
SOURCE Embraer
