Currency Drop Triggers Embraer Loss

Embraer posted a third-quarter net loss of USD$110 million as the weaker Brazilian currency improved long-term profitability but drove up tax obligations.

Excluding the one-time tax impact of Brazil's softening currency, Embraer reported a profit of USD$72 million.

Revenue edged up 4 percent from a year earlier due to discounts on some executive jets and a smaller contribution from domestic military revenues denominated in Brazilian reais.

The real dropped 22 percent against the US dollar in the quarter and has lost almost 40 percent in a year.

The sharp depreciation helps the profitability of Embraer's export-focused business, with revenue overwhelmingly in dollars and most costs in reais, but it has made quarterly earnings far more volatile.

The long-term benefits of a weaker Brazilian currency have provided clear tailwinds for Embraer's earnings, reducing the cost of development, assembly and administration in dollars.

EBITDA earnings rose 16 percent from a year earlier to USD$158 million, close to analysts' average estimate of $163 million.

EBITDA was 12.6 percent of revenue so far this year, within Embraer's annual target of 12-13 percent going into the fourth quarter, which is often the strongest of the year.

From January to September, Embraer delivered 68 commercial jets of a planned 90-100 aircraft this year. In executive aviation, the plane maker delivered 57 light jets and 18 large jets, compared with targets of 80-90 light jets and 35-40 large jets for the year.

The company reiterated all of its financial and delivery guidance for 2015.