Brazil's Embraer, the world's fourth-largest airplane maker, said Tuesday that its third-quarter net profit jumped 58 percent even though the company delivered far fewer jets compared to the same quarter last year.
Profits rose largely because Brazil's currency, the real, stabilized against the U.S. dollar during the quarter, allowing the company to better manage costs and improve margins. Embraer was hurt badly during the same quarter a year ago as the real strengthened against the greenback.
Empresa Brasileira de Aeronautica SA earned 163.4 million Brazilian reals (US$74.2 million, euro57.83 million) in the July-September period, or .22 reals (US$.10, euro.08) per share, compared with 103.7 million reals (US$47.1 million, euro36.71 million) or .21 reals (US$.10, euro.08) per share in last year's third quarter.
Third quarter revenue fell 21 percent to 1.9 billion reals (US$864 million, euro673.42 million), compared to 2.4 billion reals (US$1.1 billion, euro0.86 billion) in the same period last year because of falling jet sales.
The company delivered 30 aircraft in the third quarter, including 22 commercial jets and eight executive jets, down from 36 delivered in the second quarter and 41 in the third quarter of last year.
Third-quarter results for last year came in low because the Brazilian real staged a strong advance against the greenback. Embraer but 95 percent of its sales are in U.S. dollars.
During this year's third quarter, Embraer had problems with supplies of wings for its E170 and E190 mid-range commercial, forcing the company to delay delivery of 10 planes until the start of 2007.
Despite the company's delivery troubles, analysts say the outlook for Embraer is improving because of a deluge of recent orders for commercial and executive jets that will help the company's bottom line in years ahead.
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. Its 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 analysts predicting those types of planes will take over regional and commuter routes which often don't justify larger jets. Carriers often use 30-to 50-seat regional jets on the routes, making flights uncomfortable for passengers.
Embraer's American depository shares rose 0.6 percent Tuesday after the results were released, or 26 cents to US$41.55 (euro32.39).
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Profits rose largely because Brazil's currency, the real, stabilized against the U.S. dollar during the quarter.
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