SAO JOSE DOS CAMPOS, Brazil, March 31 /PRNewswire-FirstCall/ -- Embraer (Empresa Brasileira de Aeronautica S.A.)(BOVESPA: EMBR3, EMBR4) the world's leading manufacturer of commercial jets up to 110 seats, today announced that 2005 was a record year with net sales reaching US$3,829.9 million, an increase of 11.3% in net sales as compared to 2004. Net income also reached a record US$445.7 million, equivalent to diluted earnings per ADS of US$2.53. The firm order backlog as of December 31, 2005 totaled US$10.4 billion.
2005 in Perspective
In 2005 Embraer reached important milestones as it successfully certified two new aircraft models, the EMBRAER 175 and the EMBRAER 190, and announced the decision to strengthen its presence in the business jet market, beginning with the launch of the Phenom 100 and Phenom 300.
Embraer generated net sales of US$3,829.9 million in 2005, the highest level ever recorded in the Company's history, representing an increase of 11.3% over 2004. Net income reached US$445.7 million, 17,2% higher than in the previous year. The Company also recorded net cash(1) of US$360.1 million at December 31, 2005 compared to US$22.1 million at the end of 2004.
In addition to the significant growth in revenues, our orderbook continued to be strong, totaling US$ 10.4 billion in firm orders and US$ 24.0 billion including options, which we believe is an important indicator of the company's economic sustainability.
Additional sales of E-jets in 2005 increased the presence of this next generation family of aircraft in North America, Central America, and Europe and opened important and promising new markets in the Middle East, India, and China. As of December 31, 2005, the E-jets orderbook reached 440 firm orders and 364 options.
In 2005, we celebrated the delivery of the 900th jet of the ERJ 145 family, a milestone that we believe reaffirms the success of this family of aircraft in the regional airline market. With an average dispatch reliability of 99.7%, the ERJ 145 family has been the cornerstone of Embraer's sustainable growth, and has been the basis for the development of new products in the business jet and defense markets.
As part of a plan to expand its product portfolio, Embraer launched new business jets in 2005, the very light jet Phenom 100, and the light jet Phenom 300.
The Legacy also experienced increasing demand during 2005. As of the end of the year, 62 jets had been delivered to more than 15 countries. Launched in 2000, the Legacy was renamed in 2005 to Legacy 600 to align with Embraer's new nomenclature for its to expanding business jets portfolio.
In the government defense segment, 2005 was marked by the delivery of two modernized F-5BR fighters and of 24 Super Tucano light attack aircraft to the Brazilian Air Force. Two contracts for a total of 48 Super Tucano's were signed in 2005, one by the Brazilian Air Force, which exercised options for 23 aircraft, and one by the Government of Colombia, which ordered 25 Super Tucano's.
Nevertheless, during 2005 the decision to use the ERJ 145 platform for the U.S. Army's Aerial Common Sensor (ACS) program, announced in 2004, became jeopardized as system issues were identified during the development of the program that pointed to the need for a larger platform. In January 2006 the U.S Army announced the suspension of the ACS program.
Embraer continues to increase the number of services offered to its customers, not only to improve fleet dispatchability levels, but also to provide maintenance and repair services. In North America, we are expanding Embraer Aircraft Maintenance Services (EAMS), our maintenance, repair, and overhaul (MRO) facility in Nashville, Tennessee. In Europe, Embraer acquired in March of 2005 OGMA -- Industria Aeronautica de Portugal -- a MRO facility in Portugal. In South America, Embraer opened a new MRO facility in Gaviao Peixoto, Brazil in July of 2005.
Fourth Quarter Highlights
-- Net sales during the fourth quarter were US$1,189.9 million compared
to US$953.5 million during 4Q04.
-- Net income in 4Q05 increased 88.1% over the same period in 2004,
reaching US$156.0 million, equivalent to US$ 0.88 of earnings per
diluted ADS.
-- During the fourth quarter of 2005 40 jets were delivered, including 32
to the airline market, six Legacy 600 aircraft to the business jet
market, and two Legacy 600 to government and defense market.
-- In October 2005, Embraer delivered its 100th E-Jet, 19 months after
Embraer's first EMBRAER 170 delivery.
-- Embraer announced in October 2005 the selection of BMW Group
DesignworksUSA to design the interior of its recently launched Phenom
100 and Phenom 300.
-- In November 2005, Garmin was selected to supply the integrated
avionics suite for the new Phenom family. Garmin joins Pratt & Whitney
Canada, the powerplant supplier, and Eaton as the third major partner
on the new Embraer program.
-- In December 2005, Finnair exercised four of its EMBRAER 170 options,
converting them into EMBRAER 190 firm orders. These aircraft add to
the original firm order of 12 EMBRAER 170s made by the airline in June
2004.
-- Also in December 2005, Embraer announced a contract with the
Government of Colombia for the sale of 25 Super Tucano aircraft. The
value of the contract is US$235 million and marks the first Super
Tucano export deal.
-- At the end of the fourth quarter 2005, Moody's Investor Service
initiated coverage of Embraer, assigning its Baa3 Global Local
Currency Issuer Rating and Indicative Foreign Currency Debt Rating,
which qualifies Embraer as a moderate credit risk without speculative
elements, corresponding to investment grade. In the beginning of
January 2006, Standard & Poor's, also initiated coverage of Embraer,
assigning its 'BBB-' Local and Foreign Currency Corporate Credit
Rating, that corresponds to investment grade too.
Income Statement Highlights
A comparative table of the main items of Embraer's consolidated income statements is presented below for the three months ended December 31, 2004 and 2005 (4Q04 and 4Q05), the three months ended September 30, 2005 (3Q05) and for the fiscal years ended December 31, 2004 and 2005 (FY2004 and FY2005).
(Unaud- (Unaud- (Unaud- (Unaud-
ited) ited) ited) (Audited) ited)
Income Statement 3Q05 4Q04 4Q05 FY2004 FY2005
In US$ millions, except % and earnings per ADS
Net Sales 1,064.3 953.5 1,189.9 3,440.5 3,829.9
Gross Profit 299.5 358.5 335.3 1,173.2 1,158.1
Gross Margin 28.1% 37.6% 28.2% 34.1% 30.2%
Selling, general
administrative, other
expenses and equity in income
from affiliates (114.2) (159.6) (168.9) (523.6) (504.2)
Research and development (5.6) (39.1) (31.1) (44.5) (93.2)
Employee profit sharing (12.8) (18.2) (20.9) (61.2) (56.0)
Income from operations 166.9 141.6 114.4 543.9 504.7
Operating margin 15.7% 14.9% 9.6% 15.8% 13.2%
Net financial income
(expenses) (17.2) (42.5) 23.7 (38.0) (1.7)
Foreign exchange gain (loss),
net (21.4) (7.3) 4.3 (12.2) (15.2)
Other non-operating income
(expense), net 0.7 (0.1) 9.8 (0.1) 9.1
Income before income taxes 129.0 91.7 152.2 493.6 496.9
Income tax expense (11.0) (8.7) 6.0 (112.1) (41.6)
Minority interest (7.8) - (2.2) (1.3) (9.6)
Net income 110.2 83.0 156.0 380.2 445.7
Net margin 10.4% 8.7% 13.1% 11.1% 11.6%
Earnings per ADS - basic 0.6311 0.4768 0.8932 2.1842 2.5477
Earnings per ADS - diluted 0.6280 0.4739 0.8888 2.1710 2.5352
To retrieve a full version of this press release visit http://www.embraer.com/.
This document 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; expectations of trends in the industry; our investment plans; our capacity to develop and deliver products on the previously agreed dates; and existing and future government regulations.
The words "believes," "may," "will," "estimates," "continues," "promises," "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 the light of these risks and uncertainties, the forward-looking events and circumstances discussed in this press release might not occur. Our actual results could differ substantially from those anticipated in our forward-looking statements.
(1) Net cash = Cash and cash equivalents + temporary cash - loans
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