Embraer november 2010 redburn

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  • 11

  • 22

    Company Highlights

  • 3HighlightsHighlights

    Investment Grade rating by Moodys and S&P.

    Strong Balance sheet with solid Net cash position.

    Company established in 1969, with business in four segments.

    Privatized in 1994 and listed in USA in 2000.

    Broad customer base in commercial, executive and defense aviation segments.

    Global footprint.

    Highly experienced management team.

  • 4Global BusinessGlobal Business

    Operations in Brazil, USA, Europe and Asia Dual listed in Brazils Bovespa (1989) and NYSE (2000)

    Melbourne*

    Fort LauderdaleNashville

    USA

    TaubatBotucatuGavio PeixotoSo Jos dos CamposBrazil

    vora*AlvercaPortugal

    Le BourgetVillepinteFrance

    HarbinBeijingChina

    SingaporeSingapore

    Countries of Operation Factories Offices Service Centers Contracted/ Planned Authorized Network* Under construction

    One of Brazils largest exporters of manufactured goods Diversified customer-base across five continents

    MesaWidson Locks

    So Paulo

    Spare Parts Distribution Centers

    LouisvilleMinneapolis

  • 560

    160 161131

    101148 141 130

    169204

    244

    96

    32

    1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

    5

    Aircraft DeliveriesAircraft Deliveries

    * Phenom Jets

    *2*98

    Through 3Q10 YTD: 154 aircraft delivered

  • 65,250

    7641,354

    1,8372,762 2,927 2,526 2,144

    3,441 3,830 3,760

    5,2456,335

    5,466

    1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*

    6

    Net Revenue Net Revenue (US GAAP)(US GAAP)

    US$ Million

    * EstimatedGuidance 2010: Net Revenue - US$ 5.25 billion

  • 77

    Firm Order BacklogFirm Order Backlog

    2010

    4.16.4

    11.4 10.79.0 10.6 10.1 10.4

    14.8

    18.816.6 15.3

    20.9

    15.2

    2.2 2.3

    3.94.2 4.2

    3.12.6 2.8 2.8

    3.0

    3.83.3

    3.0 3.0

    1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2Q10 3Q10

    US$ Billion

    Firm Order Backlog Backlog/Revenue (Years)

  • 8RevenueRevenue

    Net Revenue US$ Billion 2.76 3.83 5.47 3.39

    Commercial aviation Executive aviation Aviation services and othersDefense

    88%71% 62% 58%

    1%

    7% 16% 15%

    11% 9% 13%

    7% 11% 13% 14%4%

    2000 2005 2009 YTD10

  • 99

  • 10

    Product PortfolioProduct Portfolio

    capacity: 70 to 80 seatsrange: 2,100 nm (3,900 Km)

    capacity: 78 to 88 seatsrange: 2,000 nm (3,700 Km)

    capacity: 98 to 114 seatsrange: 2,400 nm (4,500 Km)

    capacity: 108 to 122 seatsrange: 2,200 nm (4,100 Km)

    capacity: 37 seatsrange: 1,750 nm (3,250 Km)

    capacity: 50 seatsrange: 1,550 nm (2,900 Km)

    capacity: 50 seatsrange: 2,000 nm (3,700 Km)

    capacity: 44 seatsrange: 1,650 nm (3,050 Km)

  • 11

    Commercial Aviation Commercial Aviation Order Book 3Q10Order Book 3Q10

    Firm OrdersFirm Orders OptionsOptions TotalTotal DeliveriesDeliveriesFirm Firm

    BacklogBacklog

    ERJ 145 Family 890 - 890 886 4

    EMBRAER 170 191 47 238 180 11

    EMBRAER 175 173 278 451 130 43

    EMBRAER 190 457 356 813 301 156

    EMBRAER 195 95 66 161 60 35

    TOTAL ETOTAL E--JETSJETS 916916 747747 1.6631.663 671671 245245

    TOTALTOTAL 1.8061.806 747747 2.5532.553 1.5571.557 249249

  • 12

    Worldwide DistributionWorldwide Distribution

    Diversified Customers Across 5 Continents

    Asia Pacific /China14%

    Middle East /Africa21%

    Europe / CIS33%

    LatinAmerica

    17%

    NorthAmerica

    15%

    Firm Orders

    Asia Pacific / China14%

    Middle East / Africa

    9%

    Europe / CIS21%

    NorthAmerica

    44%

    Latin America12%

    Embraer Bombardier

    Sukhoi Boeing Airbus

    Antonov

    Comac

    Mitsubishi

    Commercial Jets Market Share Evolution Worldwide

    0%

    15%

    30%

    45%

    60%

    75%

    1995 1998 2001 2004 2007 2010

    Considering Accumulated Firm Orders:

    30-120 Seats Jets

    44%43%

    4%

    2%3%3%

    1%0%

  • 13

    EE--Jets DeploymentJets Deployment

    World

    8%

    21%

    8%

    21%

    21%

    Natural Growth

    29%

    6%

    29%

    6%

    20%20% 7%8%7%8%

    5%5%

    7%

    32%

    7%

    32%

    11%11%

    50%

    Right-sizing

    NorthAmerica

    57%

    8%

    NorthAmerica

    57%

    8%

    Europe

    40%

    Europe

    40%

    LatinAmerica

    49%

    LatinAmerica

    49%

    Africa

    52%

    Africa

    52%

    Middle East

    62%

    5%

    Middle East

    62%

    5%

    C hina

    12%

    C hina

    12%

    Asia Pacific

    50%

    11%

    Asia Pacific

    50%

    11%8%8%

    14%14%

    New Markets

    6%6%

    20%31%20%31%

    5%

    33%

    5%

    33%

    49%49%

    39%39%

    20%

    8%8%

    Replacementof old Jets

    25%25%

    33%

    7%

    33%

    7%

    7%7%

    9%

  • 14

    Around 6,875 jet deliveries (30-120 seats) in the next 20 years (US$ 200 bi)

    Embraer Market Embraer Market Forecast (2010Forecast (2010--2029)2029)

    North

    America

    84032%

    North

    America

    2,40035%

    Latin

    America

    31512%

    Latin

    America

    5758%

    Europe

    58022%

    Europe

    1,51022%

    Russia / CIS

    1556%

    Russia / CIS

    4056%

    Africa

    803%

    Africa

    2203%

    Middle East

    1054%

    Middle East

    2404%

    Asia Pacific

    2108%

    Asia Pacific

    5758%

    China

    34013%

    China

    95014%Projected Deliveries - Jets

    Market Segment(Seats)

    2010 2019Deliveries

    30-60 60

    61-90 1,015

    91-120 1,550

    30-120 2,625

    Market Segment(Seats)

    2010 2029Deliveries

    30-60 475

    61-90 2,515

    91-120 3,885

    30-120 6,875

  • 15

    B717-200

    B737-200

    B737-500

    F70 F28

    F100DC-9

    Bae 146

    TU-134YAK-42

    0

    50

    100

    150

    200

    250

    300

    350

    5 15 25 35

    N

    u

    m

    b

    e

    r

    o

    f

    A

    i

    r

    c

    r

    a

    f

    t

    Average Age (years)

    Nearly 1,000 aircraft with more than 15 years old

    (Jets 61-120 seats)

    World Replacement World Replacement OpportunitiesOpportunities

  • 16

  • 17

    Product PortfolioProduct Portfolio

    Large

    Aircraft Model

    Phenom 100

    Phenom 300

    Legacy 450

    Legacy 500

    Legacy 600

    Lineage 1000

    Seats / Range

    4 / 1,160 nm

    6 / 1,800 nm

    4 to 8 / 2,200 to 2,300 nm

    4 to 8 / 2,800 to 3,200 nm

    10 to 14 / 3,250 nm

    13 to 19 / 4,400 to 4,500 nm

    Entry

    Light

    Mid-light

    Mid-size

    Ultra-large

    Super Mid-Size

    Certified: 2008

    Certified: 2009

    Expected Certification: 2013

    Certified: 2001

    Certified: 2008

    Expected Certification: 2012

    Ultra-Long Range

    Competitors

    Cessna - Mustang CJ1+

    Cessna - CJ3 Hawker - H400XP

    Bombardier -Lear 60XR

    Cessna - XLS+

    Cessna - Sovereign Hawker - H900XP

    Bombardier -Challenger 300/605

    Dassault Falcon 2000EX/LX

    Airbus - A318 Elite

    Legacy 650 10 to 14 / 3,900 nmCertified: 2010

    Bombardier Global XRS

    Gulfstream G550

  • 18

    Product PortfolioProduct Portfolio

  • 19

    25% 24% 22% 21% 20%

    33% 35% 37% 40%33%

    7% 7% 7%6%

    9%

    12% 13% 13%14%

    11%

    2.7% 3.1% 3.5%3.3%

    14.0%

    19% 16% 16%14% 11%

    2% 3% 2% 1% 2%

    2005 2006 2007 2008 2009

    %

    O

    E

    M

    S

    h

    a

    r

    e

    T

    o

    t

    a

    l

    u

    n

    i

    t

    s

    Total 749 885 1,040 1,154 870

    Market ShareMarket Share

    OthersHawker-BeechEmbraer Gulfstream

    Dassault

    Cessna

    Bombardier

    Deliveries share (units)Revenue share (US$ - based on B&CA list prices)

    Market Forecast 2010: 750 units.Embraer Forecast: 137 units.

    Market Forecast 2010: $16.2 Bi.Embraer Guidance: $1.1 Bi.

    30% 29% 28% 29% 28%

    16% 16% 17% 18%12%

    11% 11% 12% 12% 18%

    23% 23% 23% 24% 21%

    3.5% 3.9% 4.7%4.2% 6.5%

    10% 9% 8%8% 8%

    5% 8% 6% 5% 6%

    2005 2006 2007 2008 2009

    %

    O

    E

    M

    S

    h

    a

    r

    e

    T

    o

    t

    a

    l

    R

    e

    v

    e

    n

    u

    e

    s

    U

    S

    $

    $12.9Bi $16.4Bi $19.0Bi $21.9Bi $17.0Bi

  • Industry Deliveries (units)

    20112011--20 Market Forecast 20 Market Forecast World DeliveriesWorld Deliveries

    0

    40

    80

    120

    160

    200

    240

    2000-10 2011-20

    US$ 169.6 Bi(9,029 jets)

    US$ 210 Bi(10,000 jets)

    Historic Forecast

    Industry Revenues

    More than 10,000 jets: US$ 210 billion over the next 10 years

  • 21

    Business Jets TrafficBusiness Jets Traffic

    2005

    2006

    2007

    2008

    2009

    2010

    20,000

    30,000

    40,000

    50,000

    60,000

    Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

    European Bizjet Flight Activity

    2005

    2006

    20072008

    2009

    2010

    100,000

    130,000

    160,000

    190,000

    220,000

    Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

    US/FAA Bizjet Flight Activity

  • 22

    Pre Owned MarketPre Owned MarketFleet for SaleFleet for Sale

    0

    500

    1000

    1500

    2000

    2500

    3000

    3500

    Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4

    9 9 0 0 0 1 0 2 0 3 0 4 0 5 0 6 0 7 0 8 0 9 10

    U

    n

    i

    t

    s

    0%

    2%

    4%

    6%

    8%

    10%

    12%

    14%

    16%

    18%

    20%

    22%

    24%

    26%

    28%

    %

    o

    f

    a

    c

    t

    i

    v

    e

    f

    l

    e

    e

    t

    % for sale (per total fleet

    in operation)

    Business Jets For Sale

    Source: Embraer analysis October 2010

    fleet older than 10 yrs

    fleet from 6 to 10 yrs

    fleet up to 5 yrs and positions

    % for sale (per total fleet in operation)

    up to 10 yrs % for sale

    fleet up to 5 yrs

    positions 15.0% / 10.5%2647 jets / 896 jets

    2008: Net increase of 1,100 a/c

    2009: Net increase of 33 a/c

    2010TD: Net decrease of 157 a/c

  • 23

  • 24

    Defense Products Defense Products and Servicesand Services

    Advanced Training and

    Light AttackTransport of AuthoritiesISR (Intelligence, Surveillance

    and Reconnaissance)

    Modernization Programs Command and Control Systems

    Military Tactical Transport

    Services

  • Firm orders: 172 aircraft

    Brazil: 99

    Colombia: 25

    Dominican Republic: 8

    Chile: 12

    Ecuador: 18

    Undisclosed: 10

    Deliveries: 146 aircraft

    To be delivered: 26 aircraft

    Prospects:

    South East Asia

    Africa

    Americas

    Ref.: September 2010

    Training and COIN aircraft Market Forecast 2020

    700 aircraft / US$ 8 bi

    Super TucanoSuper Tucano

  • 26

    Currently in the Initial Definition Phase

    Market Forecast 2025: 700 aircraft / US$ 50+ bi

    New tactical military transport aircraft

    Payload: 23 ton / Range: 1400 nm

    Contract signed with Brazilian Air Force in April 2009

    Length: 33.81 m (110.9 ft)Wingspan: 35.06 m (115.0 ft)Height: 10.26 m (33.7 ft)

    EMBRAER KCEMBRAER KC--390390

  • 27

    Financial Results

  • 2828

    Business HighlightsBusiness Highlights

    Legacy 650 certified by ANAC and EASA. Deliveries in 4Q10.

    Argentinas Austral received its first EMBRAER 190.

    Sale of 37 E-Jets at Farnbourogh.

    Sale of 10 + 5 EMBRAER 190 jets to Air Lease Corp.

    NetJets buys 50 Phenom 300, plus 75 options at NBAA.

    Brazil, Chile, Colombia, Portugal, Czech Republic and Argentina signed LOI for up to 60 KC-390 aircraft.

    Embraer expands its Customer Support in China.

  • 2929

    Financial HighlightsFinancial Highlights

    Stable net cash position of US$ 623.8 million.

    EBIT of US$ 63 million and EBIT margin of 6.0%. YTD EBIT margin of 7.3%.

    Net income totaled US$ 98.5 million. Earnings per ADS of US$ 0.5443.

    Net revenues of US$ 1.04 billion and gross margin of 22.1%.

    Firm order backlog remained stable at US$ 15.3 billion.

  • 30

    DeliveriesDeliveries

    30

    30 2821

    2922

    55

    17

    39

    22

    5 8 3 1 220

    3Q09 4Q09 1Q10 2Q10 3Q10

    2010 projected deliveries 90 commercial jets 17 Legacy / Lineage 120 Phenom

    PhenomCommercial Jets Legacy and Lineage

    9770

    43

    78

    13 6

    9M09 9M10

  • 3131

    RevenueRevenue

    66%44%

    53% 61% 58%

    16%

    26% 12%14% 19%

    6%16% 19%

    13% 7%

    12% 14% 16% 12% 16%

    3Q09 4Q09 1Q10 2Q10 3Q10

    Commercial aviation Executive aviation Aviation services and othersDefense

    1.04Net Revenue US$ Billion 1.25 1.61 1.00 1.35

  • 3232

    Net Revenues and Net Revenues and Gross MarginGross Margin

    US Gaap - US$ Million

    Net Revenues Gross Margin

    IFRS - US$ Million

    1,2461,610

    9901,354

    1,043

    18.8%

    20.8% 21.7% 21.4% 22.1%

    3Q09 4Q09 1Q10 2Q10 3Q10

    1,358992

    1,2501,614

    1,044

    20.6%20.8% 20.2%

    17.9%

    19.7%

    3Q09 4Q09 1Q10 2Q10 3Q10

  • 3333

    Income from OperationsIncome from Operations

    US Gaap - US$ Million

    Income from Operations Operating Margin

    IFRS - US$ Million

    3971

    12291

    66

    9.0% 6.4%7.2%

    2.4%7.3%

    3Q09 4Q09 1Q10 2Q10 3Q10

    68 66 57

    126

    63

    6,0%9,3%

    5,8%4,1%5,5%

    3Q09 4Q09 1Q10 2Q10 3Q10

  • 3434

    EBITDAEBITDA

    US Gaap - US$ Million

    EBITDA EBITDA Margin

    IFRS - US$ Million

    90 89 80

    139

    80

    5.6%

    8.1%

    10.2%

    7.7%7.2%

    3Q09 4Q09 1Q10 2Q10 3Q10

    151

    105 117

    166131

    12.1%11.8%

    6.5%

    12.2% 12.5%

    3Q09 4Q09 1Q10 2Q10 3Q10

  • 3535

    Net IncomeNet Income

    Net Income Net Margin

    US Gaap - US$ Million IFRS - US$ Million

    9970

    35

    146

    58

    9.4%5.2%

    3.6%

    9.1%

    4.6%

    3Q09 4Q09 1Q10 2Q10 3Q10

    12295

    2457

    126

    2.4%

    12.1%9.8%

    4.2%5.9%

    3Q09 4Q09 1Q10 2Q10 3Q10

  • 3636

    Free Cash FlowFree Cash Flow

    US Gaap - US$ Million IFRS - US$ Million

    6

    383

    (57)

    220

    (60)

    3Q09 4Q09 1Q10 2Q10 3Q10

    23

    364

    (44)

    253

    (42)3Q09 4Q09 1Q10 2Q10 3Q10

  • 3737

    Indebtedness Profile Indebtedness Profile Net Cash Net Cash (USGAAP)(USGAAP)

    Total Debt 3Q10: US$ 1.43 Billion

    Long-term Short-termLoans Average Maturity (Years)

    Indebtedness Maturity

    Total Cash 3Q10: US$ 2.05 BillionNet Cash

    (USGAAP)(USGAAP)

    78%

    47%29%

    75%94%

    53%

    71%

    6%22%25%

    6.15.8

    5.0

    2.6

    4.9

    3Q09 4Q09 1Q10 2Q10 3Q10

    71

    503 459

    659 624

    3Q09 4Q09 1Q10 2Q10 3Q10

  • 3838

    2010 Guidance

    Revision

  • 3939

    2010 Guidance and 2010 Guidance and OutlookOutlook

    7.25%

    Current Guidance Current Guidance -- 2Q102Q10 New GuidanceNew Guidance

    US$ 380 million~12%

    US$ 340 million

    Net Revenues

    EBIT

    EBIT margin

    US$ 5.25 billion

    6.50%

    R&D

    PP&E

    US$ 160 million

    US$ 140 million

    US$ 420 millionEBITDA

    EBITDA margin 8.0%

    US$ 100 million~30%

    8.75%

    US$ 460 million~10%

    Current OutlookCurrent Outlook New OutlookNew Outlook

  • 40

  • 4141

    Forward Looking StatementForward Looking Statement

    This presentation includes forward-looking statements or statements about events or circumstances

    which have not occurred. We have based these forward-looking statements largely on our current

    expectations and projections about future events and financial trends affecting our business and our

    future financial performance. These forward-looking statements are subject to risks, uncertainties and

    assumptions, including, among other things: general economic, political and business conditions,

    both in Brazil and in our market. The words believes, may, will, estimates, continues,

    anticipates, intends, expects and similar words are intended to identify forward-looking

    statements. We undertake no obligations to update publicly or revise any forward-looking statements

    because of new information, future events or other factors. In light of these risks and uncertainties,

    the forward-looking events and circumstances discussed in this presentation might not occur. Our

    actual results could differ substantially from those anticipated in our forward-looking statements.