Top Stories
Top Stories

UPDATE 2-Brazil's Embraer posts small profit, but expects loss in 2019

Marcelo Rochabrun

(Adds share price, analyst comment)

SAO PAULO, Aug 14 (Reuters) - Brazilian planemaker Embraer on Wednesday swung to a $7.2 million profit in the second quarter as higher revenue at its executive jets business offset lower commercial jet sales, but reaffirmed it would report a loss for 2019.

The company had reported a quarterly loss of $131 million a year earlier, impacted by a runway incident involving a new military plane.

The profit in the latest quarter was better than the Refinitiv estimate of a $29-million loss, and analysts at Cowen told clients the results were "better than feared."

Still, Embraer reaffirmed its previous forecast that it would report a loss this year. It also reported a loss in 2018.

Shares were down about 2% in early Sao Paulo trading.

The planemaker's recent struggles to turn consistent profits have raised questions about its future performance because it is in the midst of selling 80% of its commercial aviation division, historically its most profitable, to Boeing Co.

Embraer expects to conclude that transaction by the end of the year, after which it will have to rely on its remaining divisions, executive jets and defense contracting, to drive most of its bottomline.

During the first six months, Embraer posted operational losses in its commercial, executive and defense divisions.

The company said it expects to deliver its first new cargo military plane, known as the KC-390, to the Brazilian government by the end of the year.

Embraer and Boeing have signed a separate deal to jointly market the plane, which the Brazilian planemaker hopes will draw orders from governments which are allies of the United States.

In a call with journalists, Embraer executives said they were optimistic about demand for their newest executive jet, known as the Praetor 600, which recently received flight certification from Brazil's civil aviation regulator. (Reporting by Marcelo Rochabrun; editing by Jason Neely and Bernadette Baum)