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BNDES finances Embraer’s aircraft production for export

R$ 2.2 billion financing will enable commercial jets production and export. This year, Embraer and BNDES celebrate their 25-year partnership, which has allowed the company to export 1,275 aircraft to customers around the world, worth US$ 25 billion in financing.

SAO JOSE DOS CAMPOS, BRAZIL – The Brazilian National Bank for Economic and Social Development (BNDES) approved financing to Embraer S.A. for producing and exporting commercial aircraft manufactured by the company. The operation, in the order of R$ 2.2 billion (US$ 400 million), will be carried out through the BNDES Exim Pre-shipment, a direct bank credit line to produce national goods destined for export.

BNDES operation reinforces the US$ 650 million revolving credit funding recently announced by Embraer with a foreign financial institutions group. The financing consummation is subject, among others, to the fulfillment of previous conditions established by BNDES and the execution of the respective contract.

“Credit operations are important for the resumption of aircraft production by Embraer at pre-Covid-19 pandemic levels and reinforce the strategic partnership between BNDES and Embraer started in 1997, consolidating BNDES support to the aeronautical industry and the export of Brazilian aircraft,” highlighted Bruno Aranha, director of BNDES.

“The longevity of the partnership between Embraer and BNDES illustrates the strength of this relationship that stimulates Brazilian exports and benefits society. Together with other actions that we are carrying out with Brazilian and international financial institutions, this operation reinforces our credibility for access to financial resources that will contribute to executing our growth plan,” said Antonio Carlos Garcia, CFO of Embraer.

The aviation sector is considered strategic due to the high technology involved, the employment of qualified labor, and the ability to generate innovations with positive impacts on the country’s economy, in addition to being a relevant industry for guaranteeing national sovereignty through Defense products. Brazil is a country that can design, manufacture, and export Commercial, Executive, Defense, and Agricultural aircraft worldwide.

Since 1997, when BNDES began to support Embraer, the bank has financed approximately US$ 25 billion in exports of the company’s aircraft, enabling the export of more than 1,275 units to airlines around the world. During the period, the contracted operations enabled the Brazilian manufacturer to compete in the foreign market on equal terms with its competitors.

Embraer earings results 3rd Quarter 2022
Embraer delivered 10 commercial jets and 23 executive jets (15 light / 8 mid/super-midsize jets) in 3Q22, bringing YTD deliveries to 27 commercial jets and 52 executive jets (33 light /19 mid/super-midsize jets). Although deliveries have been back ended to 4Q22 due to supply chain challenges in 2022, they are close to historical average for the quarter.

Reported 3Q22 consolidated gross margin of 19.1% compared to 19.0% reported in 3Q21. As a reference, 9M22 consolidated gross margin of 20.9% higher than 16.0% reported in same period of 2021.

Adjusted EBIT and EBITDA were US$50 million and US$93 million, respectively, yielding Adj. EBIT margin of 5.4% and Adj. EBITDA margin of 10.0%. Free cash flow (FCF) in 3Q22 was negative US$109.4 million, mainly explained by working capital increase due to higher deliveries in 4Q22 which will reverse to a positive trend.

The company finished the quarter with net debt of US$1.275 billion, or US$0.53 billion less than 3Q21 in line with the strategy to reduce interest expenses.

A revolving credit facility of up to US$650 million with 14 financial institutions was signed to increase our liquidity and improve our capital structure, following Embraer liability management strategy, or reducing gross debt and interest expenses.

We reaffirm all aspects of our 2022 financial and deliveries guidance, with an increase in our Free Cash Flow guidance from US$50 million or better to US$150 million or better.

Vicky Karantzavelou
Co-Founder & Chief Editor - TravelDailyNews Media Network | Website

Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales.

She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.