Shares in Brazil’s Embraer rise as it reaffirms 2022 forecasts

Brazilian planemaker Embraer SA (EMBR3.SA) on Thursday stuck with its financial and delivery outlooks for 2022, driving its shares higher as it reported a second-quarter adjusted net profit down 9.6% from a year earlier.

Shares in the company rose by as much as 5.6% in early morning, outperforming Brazil’s Bovespa stock index (.BVSP) which was up 1.1%.

Embraer said it was sticking to its previously announced full-year forecasts which include revenue between $4.5 billion and $5 billion and deliveries of 100 to 110 executive jets and 60 to 70 commercial jets.

Analysts at Santander said some investors were questioning the risks of Embraer missing its guidance given the current supply chain issues.

In a call with analysts, chief executive Francisco Gomes Neto said the company was “cautiously optimistic” supply chain disruptions wouldn’t derail its outlook.

Embraer’s quarterly adjusted net income reached $39.4 million, recovering from the $78.5 million net loss seen in the previous quarter, driven by its product mix, price hikes and foreign exchange gains, according to a securities filing.

Revenue came in at $1.02 billion, down roughly 10% amid lower deliveries in the Commercial and Defense & Security units, which were partially offset by higher revenues in Services & Support.

Embraer had already reported that second-quarter deliveries totaled 32 jets, falling just shy of the 34 jets delivered in the same period last year but gaining pace after a lukewarm first quarter.

Chief financial officer Antonio Carlos Garcia said deliveries were running at a good pace and tend to be historically concentrated in the second half.

He added adjusted EBITDA margin should be at the high-end of the 8%-9% forecast this year.

The world’s No.3 planemaker behind Boeing Co (BA.N) and Airbus SE (AIR.PA) also highlighted a 102% free cash flow improvement to $91.2 million in the quarter, citing the divestment from its Evora facilities in Portugal and the initial public offering of its electric aircraft unit Eve Holding Inc (EVEX.N).