Improving production, delivery profile and profitability were decisive for the business to achieve the new “BBB-” rating
São Paulo (SP), Brazil, September 23, 2024 – Fitch Ratings has upgraded Embraer’s (NYSE: ERJ; B3: EMBR3) rating from “BB+” to “BBB-”. According to the agency, improving production, delivery profile and the profitability of the business, combined with gross debt reduction, are driving credit metrics to levels more commensurate with the higher rating. The rating outlook is stable.
In addition, Fitch detailed that Embraer's rating reflect its competitive positions in the commercial and business jet markets; backlog of USD 21.1 billion; and product portfolio diversification that includes defense programs and solid operations in its services and support segment. Embraer's robust liquidity (mostly held outside Brazil), large export revenue, and some offshore operating cash flow further support its rating.
“Embraer has an excellent product portfolio, updated to the market needs, and our focus on operational efficiency and financial discipline ensures sustainable business growth, profitability, and cash generation. This recognition from Fitch clearly demonstrates the success of our strategy and years of hard work", said Embraer’s CFO, Antonio Carlos Garcia.
This September, Embraer secured its second investment grade status, following the upgrade by S&P in February. As the leading manufacturer of commercial jets with up to 150 seats and Brazil's largest exporter of high technology, the company is well-positioned across all its operational segment: with a modern and competitive portfolio in Commercial Aviation and Executive Jets, the C-390 Millennium internationalization and expansion of Services & Support.
With an order book at its highest level in seven years, totaling $21 billion in the second quarter, the company projects to conclude 2024 with revenues between $6.0 billion and $6.4 billion. Since 2020, the company has seen a 49.8% increase in this metric, considering the closing of Q2 2024. The adjusted EBIT margin, which was negative (-2.7%) in 2020, is expected to close 2024 approximately 10 percentage points higher, in the range of 6.5% to 7.5%.