Embraer Sees Return To Positive Cash Flow, Increases Shares



The logo of Brazilian aircraft manufacturer Embraer SA is seen at the company’s headquarters in Sao Jose dos Campos, Brazil on February 28, 2018. REUTERS / Roosevelt Cassio / File Photo

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SAO PAULO, Nov. 5 (Reuters) – Brazilian aircraft manufacturer Embraer SA (EMBR3.SA) on Friday forecast positive annual cash flow for the first time since 2017, lifting its shares despite a loss in the third quarter.

Embraer reported a net loss of $ 45 million in the third quarter, improving from a loss of $ 121 million a year earlier. After adjusting for non-cash currency effects and other one-time items, the company recorded a net loss of $ 34 million.

Nonetheless, improved working capital efficiency helped Embraer generate $ 21 million in free cash flow, the first positive third quarter cash flow in more than a decade.

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Along with the earnings report, the company raised its free cash flow forecast for 2021 to $ 100 million or more, from a previous forecast of negative $ 150 million to zero.

“We are very pleased that just one year after the worst downturn in aerospace history, Embraer is generating positive free cash flow,” Embraer CFO Antonio Carlos Garcia said at a conference call.

Shares of Embraer traded in Brazil rose 3% at noon in Sao Paulo, before rising 1.4% for the larger Bovespa index. (.BVSP)

The company reported quarterly net revenue of $ 958 million, up 26% from a year earlier, supported by double-digit growth across all of its business segments.

The company also said its earnings before interest, taxes, depreciation, and amortization (EBITDA) reached $ 74 million, from minus $ 1 million a year earlier.

Goldman Sachs analysts said EBITDA, margins and free cash flow all exceeded consensus estimates, noting that new orders were strong in the quarter.

“Revenue was below consensus in the quarter, but on previously announced aircraft unit deliveries,” Goldman added. Read more

Embraer said in a securities filing that shipments and revenue are expected to increase in the fourth quarter, in line with normal seasonal trends.

The company initially filed its results in Brazilian reals before reporting its profits in US dollars.

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Reporting by Gabriel Araujo; Editing by Brad Haynes, Raissa Kasolowsky, Emelia Sithole-Matarise and Dan Grebler

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