Brazil's Embraer SA said on March 04 it expects operating profit margins to slip this year as the planemaker makes more of its smaller-cabin E175 regional jets, weighing on profitability despite the boost of a stronger US dollar. The weaker sales mix started to hit Embraer's earnings last year, contributing to a sharp drop in fourth-quarter profit.
Embraer's net income fell 65 percent from a year earlier to $91 million missing an average estimate of $163 million in a Reuters poll of analysts. Recent orders from US regional carriers have pushed Embraer's order book to record highs, but those orders have been focused largely on the 76-seat E175, with slimmer profit margins than the big end of the E-Jet line-up.
Embraer is targeting earnings before interest and taxes, or EBIT, equal to 8 percent to 8.5 percent of revenue this year and earnings before interest, taxes, depreciation and amortisation, or EBITDA, equal to 12 percent to 13 percent of revenue.
Last year, the company booked an EBIT margin of 8.6 percent and an EBITDA margin of 13.2 percent. EBITDA fell 48 percent in the fourth quarter to $281.3 million, missing an average forecast of $318 million. Embraer plans to deliver 90-100 aircraft to airlines this year.
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