Embraer’s 2Q pre-tax earnings fall as it revises 2011 guidance upward

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Brazilian airframer Embraer recorded a second quarter pre-tax profit of $121 million versus $106 million the year prior. But initial signs of recovery in the commercial aviation segment triggered an upwards revision to its 2011 guidance.

Embraer's net income for the second quarter increased from $57 million to $96 million year-over-year.

The company revenues remained roughly the same year-over-year at $1.4 billion. Embraer recorded a net margin of 7.1% compared with 4.2% the year prior.

Citing signs of recovery in the commercial aviation market that began in the middle of 2010, Embraer is raising its revenue guidance for 2011 from $5.6 billion to $5.8 billion and is decreasing its development investment estimates from $210 million to $160 million.

The company's commercial revenues fell from $915 million to $888 million year-over-year, while executive aviation revenues expanded from $212 million to $245 million, representing 18% of Embraer's total revenues. Defence revenues also fell from $214 million to $201 million year-over-year.

During the first half of 2011 Embraer delivered 45 commercial jets and sold 62 new aircraft. The company said it expects to add agreements for 42 additional jets to its backlog "over the course of the following months".

Embraer's debt during the second quarter increased to $1.7 billion from $1.5 billion the year prior, a result of a increase in short and long-term loans that increased by $65 million and $141 million, respectively.

The airframer explained the increase in total debt was driven by a need for additional working capital.

Embraer ended the second quarter with a net cash balance of $406 million, down from $652 million the year prior. The company's total cash balance was $2.1 billion.