Company Announces 4Q'03; Full Year Results
While 2003 was not particularly a booming year for any major
aircraft manufacturer; Embraer seemed to have weathered the
economic storm better than its competitors. Embraer, the leading
Brazilian commercial aircraft manufacturer, registered in 2003 net
sales of US$2,143.5 million and net income of US$136.0 million,
equivalent to diluted earnings per ADS of US$0.7807. The order
backlog as of December 31, 2003 totaled US$28.1 billion, US$ 10.6
billion in firm orders and US$17.5 billion in options.
Embraer officials agree with industry analysts that the
worldwide aviation industry continued to experience great
difficulties in 2003. Commercial aviation experienced the greatest
crisis, with the large commercial airlines accumulating losses
worldwide and the continuation of a high-risk rating for the
industry, which led to a lack of funds available for structuring
sales financing. However, "low-fare, low-cost" companies and
regional airlines stood out in this adverse climate with their
consistent and profitable growth. That's where Embraer benefited
via its range of aircraft products.
Nevertheless, Embraer, as well as other aircraft manufacturers,
endured the consequences of these difficult industry conditions in
2003, experiencing cancellations and postponements of aircraft
deliveries, as well as difficulties in structuring financial
transactions in favor of our customers. The delay in obtaining
final certification ("type certification") for the Embraer 170
helped aggravate the situation, resulting in a further reduction in
deliveries during 2003 and an increase in inventory levels of
finished and under process products. In light of these
circumstances, Embraer revised its schedule for jet aircraft
deliveries in 2003 and, as a result, delivered 101 of the 148
aircraft initially planned.
Despite these setbacks, the company able to obtain significant
results despite the decrease in projected deliveries and the
adverse environment surrounding our operations. Embraer booked
several new and noteworthy orders for the 170/190 family, not only
due to their economic significance and their impact on our
operations for the next few years, but also because of their
operational value to commercial aviation.
Embraer officials say the manufacturer has rebuilt its firm
order backlog to a level of US$10.6 billion at year-end 2003, a
US$1.6 billion increase as compared to year-end 2002. This volume
of firm orders, added to US$17.5 billion in options, equals a total
of US$28.1 billion. Embraer concentrated all of our efforts in
obtaining final type certifications from the Brazilian, US, and
European aviation authorities, which were granted in February
2004.
Not putting all of their aeronautical eggs in one basket,
Embraer also launched with an intense sales promotion effort and
branding for its Legacy family. In line with the company's policy
of continuous technological enhancement of our products throughout
their life cycle, Embraer announced new and improvements to the
Legacy's executive version, including an increase in range to 3,250
nautical miles (6,020 km).
In the defense market, Embraer entered into an agreement with
the Indian Government for the supply of five special executive
version Legacy aircraft. This transaction gives the company an
important addition to its government customer base.
Embraer ended the year with a US$222.1 million net cash position
(cash and cash equivalents less total debt) and with accounts
receivable 51.6 percent below the 2002 level. This result was
achieved despite the adverse international financial scenario due
to the support of the Brazilian Government, mainly through BNDES --
Banco Nacional de Desenvolvimento Economico e Social. Through its
policy in favor of increasing Brazilian exports, BNDES was able to
finance a considerable volume of Embraer's exports in 2003.
As for the future, Embraer believes the trend toward migration
of passengers from larger to smaller modern technology aircraft is
now being confirmed by the world's airlines. The manufacturer
believes this trend, together with the type certification obtained
by and the entry into service of the Embraer 170, should "lead to a
vibrant and productive year."