Embraer emerges as Ibovespa’s winner this year
Investors are pricing in Embraer’s recovery after the double crisis of 2020, triggered by the Covid-19 pandemic and the end of the agreement with Boeing in commercial aviation, and more recently, the lack of essential parts for the production of aircraft in the world and pilots in the United States, which directly affects the sales of E1 family jets.Buoyed by a strong fourth-quarter result, the shares of the Brazilian plane maker rose more than 5% on Friday at B3, to R$19, and now lead the gains of Brazil’s benchmark stock index Ibovespa in 2023, with a 32.8% increase.In 2022, the company has met or exceeded its results targets, with the exception of commercial aviation deliveries. The plane maker has established projections for this year that signal the same pace of growth, even as supply chain challenges persist through early 2024, according to industry consensus."2021 and 2022 were years of recovery from a double crisis in 2020. From 2023, the focus is on growth, with higher revenues and profitability," Embraer CEO Francisco Gomes Neto told Valor. "The projections for 2023 are not conservative, they are realistic," he added.Citi analysts Stephen Trent and Filipe Nielsen wrote that the targets for the current year are positive, but did not bring many surprises and were in line with the bank’s estimates, "showing very little improvement in delivery compared to 2022."XP analysts Lucas Laghi, Pedro Bruno and Matheus Sant’anna highlighted the forecast for deliveries of business jets, which exceeded the financial firm’s estimates, and the expected recovery in revenues combined with a better level of operating margin, reinforcing the company’s "positive operating momentum."After reaching consolidated net revenues of $4.5 billion last year, Embraer is working with an estimated range of $5.2 billion to $5.7 billion in 2023. The adjusted EBIT margin is expected to be 6.4% to 7.4%, compared to 6% in 2022. Adjusted EBITDA margin is expected to be in the range of 10% to 11%, compared to 10% in 2022.Deliveries planned for 2023 also include growth. In the Commercial Aviation division, the company expects to deliver between 65 and 70 aircraft, compared to 57 in 2022. In the Executive Jets division, the company expects to deliver between 120 and 130 aircraft, compared to 102 last year.Adjusted free cash flow, which far exceeded last year’s estimate of $540 million, is expected to return to $150 million or more this year. In addition to free cash flow...
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