August 15, 2007 -- Brazil's Embraer, the world's fourth-largest airplane maker, said Wednesday that its second-quarter net profit plunged 49 percent as production costs rose sharply with the hiring of thousands of new employees. Empresa Brasileira de Aeronautica SA earned 79.7 million Brazilian reals (US$39.9 million, €29.2 million) in the March-June period, or 0.11 reals (US$0.06, €.04) per share, compared with 155.8 million reals (US$77.9 million, €57.1 million) or 0.21 reals (US$0.11, €.08) per share in last year's second quarter. Second quarter revenue was virtually flat at 2.2 billion reals (US$1.1 billion, €820 million) compared to the same period last year.
The company delivered 36 aircraft in the second quarter, including 27 commercial jets, seven executive jets and two destined for the military or governments. The number of deliveries was the same as the second quarter last year and rose by 11 planes compared to this year's first quarter. Embraer currently has a backlog of orders valued at US$15.6 billion (€11.43 billion). Embraer this year added a third shift at its plant outside Sao Paulo and is paying hefty overtime wages to ensure deliveries, seeking to overcome problems that emerged last year with supplies of supplies of wings for its E170 and E190 mid-range commercial jets that forced the company to delay delivery of 10 planes. Despite the higher production costs, analysts say the outlook for Embraer is improving because of a deluge in recent orders for commercial jets that will help the company's bottom line in years ahead.
Embraer said the additions to its work force should allow the company to boost production to 14 aircraft per month by the end of the year, up from the current 13 each month. Embraer specializes in regional commercial jets with 30 to 120 seats -- a niche in which neither Boeing Co. or Airbus competes -- and is also expanding sales of its executive jets. It's main competitor is Canada's Bombardier Inc. The company's 70-seat to 120-seat planes are key to Embraer's regional jet strategy, with those planes taking over regional and commuter routes that often don't justify larger jets. Carriers often use 30-to 50-seat regional jets on the routes, making flights uncomfortable for passengers.
Source: Associated Press Newswires
Source: Factiva
