WELL IF regional JETS IS GOOD FOR EMBRAER???Embraer Likely to Report First Profit Growth in Five Quarters
Aug. 13 (Bloomberg) -- Empresa Brasileira de Aeronautica SA, the world's No. 4 aircraft maker, will likely report its first profit growth in five quarters as it boosted aircraft deliveries after receiving certification for a new, bigger jet.
The Sao Jose dos Campos, Brazil-based company today will say second-quarter profit jumped 19-fold to 412 million reais ($136 million), or 57 centavos a share, from 21.4 million reais, or 3 centavos a share, in the same period last year, according to the median estimate of seven analysts surveyed by Bloomberg.
Embraer delivered 43 aircraft in the second quarter, an increase of 54 percent from the 23 delivered in the same quarter a year earlier, the company said July 8. Deliveries increased in large part after the February certification of its Embraer 170 jet, the first aircraft in its new family of bigger, regional jets, paving the way for the delivery of the jets to customers such as Alitalia SpA and U.S. Airways Group Inc.
``The worst is over,'' said Oswaldo Telles Filho, an equity analyst for Banif Investment Bank in Sao Paulo, who has a ``buy'' recommendation for the stock. ``The company is now improving the level of its results.''
Embraer's latest planes, which seat 70 to 118 passengers, are aimed at boosting sales as demand for the company's 50-seat commercial jet slows. Fifteen of the 40 commercial aircraft delivered in the second-quarter were Embraer 170 jets, the company said last month.
Earnings before interest, tax, depreciation and amortization will more than double to 656 million reais in the quarter from 322 million reais a year earlier, the survey said.
Currency Calculations
A 6.2 percent depreciation of the Brazilian currency against the U.S. dollar in the quarter also helped boost Embraer's revenue in reais, since its products are priced in U.S. dollars, said equity analysts such as Carlos Albano, from Uniao de Bancos Brasileiros SA in Sao Paulo.
Embraer's shares have fallen 16 percent this year compared with a 4 percent decline for the Bovespa benchmark stock index. The stock yesterday fell for the fourth day in five, losing 19 centavos, or 0.9 percent, to 21.1 reais on the Sao Paulo stock exchange.
``We're seeing a better scenario for the company, but that has not yet been reflected in the stock price,'' said Pedro Galdi, an equity analyst for ABN Amro NV's brokerage in Sao Paulo. ``The company is in a risky sector since not all of its customers are in a good financial situation.''
To contact the reporter on this story:
Romina Nicaretta in Sao Paulo at at Rnicaretta@bloomberg.net
To contact the editor responsible for this story:
Laura Zelenko at lzelenko@bloomberg.net
Last Updated: August 13, 2004 08:00 EDT
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