Embraer Rises as Earnings Top Forecast on Weaker Brazil Real

Embraer SA (EMBR3) rallied to a seven-month high after the planemaker reported quarterly earnings that exceeded analysts’ estimates as Brazil’s weakening currency boosted revenue from overseas sales.

Shares jumped 4.2 percent to 20.76 reais at the close of trading in Sao Paulo, the highest since July. It was the third-best performer on the Ibovespa (IBOV), which fell 0.2 percent.

The Sao Jose Dos Campos, Brazil-based company’s adjusted net income in the three months ended in December was 607.3 million reais ($256 million), more than the average estimate of 509.2 million reais among analysts surveyed by Bloomberg. While the number of commercial planes delivered dropped to 90 in 2013 from 106 in 2012, a weaker real and increased demand for regional jets helped boost net sales by 12 percent, Embraer said in its earnings statement.

“The weakening of the currency was one of the main positive events for the company,” Banco do Brasil SA analysts Mario Bernardes Junior and Gabriela Cortez wrote in a note to clients. “The outlook for Embraer is positive, since we believe that the company is in a good position to meet the growing demand in the regional aviation industry around the world.”

The real sank 6.1 percent in the fourth quarter, the most after the yen among 16 major currencies tracked by Bloomberg, amid concern that a widening budget deficit and sluggish growth would spark a reduction in Brazil’s credit rating.

Embraer expects to deliver as many as 97 commercial planes and 90 light executive jets in 2014, according to its earnings statement. Chief Financial Officer Jose Antonio de Almeida Filippo told reporters on a conference call today that the company will spend 10 million reais this year as part of a settlement with the Brazilian government over a tax dispute.

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editor responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net

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