Embraer SA, the Brazilian plane maker, has reported an unexpected fourth-quarter loss due to a write down in its underperfoming executive jets division. The results have subsequently cast even greater concern over the company's decision to sell off 80% of its profit-making commercial jet unit to Boeing.
The US$18.1 million fourth-quarter loss was primarily due to the US$61.3-million write down for spending on research and development for the ‘Legacy' line of jets which have underperformed where anticipated sales are concerned. The originally anticipated return was US$8.4 million based on a Refinitiv poll of six analysts.
With the defense arm of Embraer posting an operational loss of US$183 million in 2018 and the executive jets division a loss of US$57.5 million, shares fell 2 percent on the Bovesta stock index and a total of 15 percent over the year, the majority of this loss coming after January's warning that the company had missed its revenue estimates for 2018.
With 50 percent of Embraer's revenue coming from commercial jet sales, up from 38 percent in 2017, the sale of 50% of the commercial jets division for US$4.2 billion will now shed uncertainty over the future of the company, a fear backed up by a considerable degree of resistance concerning the sale. Embraer lost US$178 million in all of 2018, compared to a profit of $264 million in 2017.
Embraer had told investors in January that it had missed its revenue estimates for 2018 and the company would see little to no profits in 2019 and 2020.
