Embraer Net Income Rebounds

Embraer has posted a strong rebound in net income, although heavy discounting on business jets highlighted concerns about competition in a challenging market.

Embraer reported a first-quarter profit of USD$104 million, reversing a net loss of USD$62 million a year earlier.

Net revenue rose 24 percent on strong deliveries of larger business jets, yet the surge was driven mostly by the Legacy 650, a less profitable model built on an old regional jet platform, which has struggled to compete against newer rivals.

Embraer's gross profit margin slipped to 20.0 percent in the quarter from 23.7 percent a year earlier, due mainly to the lower profitability of its executive jets.

Earnings before interest, taxes, depreciation and amortisation rose 12 percent to USD$168 million.

Brazil's currency gained nearly 10 percent in the quarter, posing long-term challenges for Embraer's export-focused business, but boosting net income due to income tax relief of USD$32 million.