2005* Merrill Lynch 7th Annual Global Industries Conference Embraer Presentation
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Transcript of 2005* Merrill Lynch 7th Annual Global Industries Conference Embraer Presentation
Merrill Lynch
7th Annual Global Industries Conference
May 10th, 2005
Luís Carlos AffonsoSenior Vice-President Corporate Aviation Market
Forward-looking Statement
This presentation 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.
The words “believes,” “may,” “will,” “estimates,” “continues,” “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 light of these risks and uncertainties, the forward-looking events and circumstances discussed in this presentation might not occur. Our actual results could differ substantially from those anticipated in our forward-looking statements.
Customer SatisfactionBackbone of our entrepreneurial action
HighTechnology
QualifiedPeople
Global Presence
FlexibilityCashIntensiveness
SUCCESSFUL BUSINESS
Aerospace Industry Fundamentals
Global Business
Operations in Brazil, United States, Europe and Asia
FranceLe Bourget
Villepinte ChinaBeijingHarbin
SingaporeSingapore
USANashville
Palm Beach GardensFort Lauderdale
Jacksonville
BrazilGavião Peixoto
BotucatuSão José dos Campos
Eugênio de MeloELEB
PortugalAlverca
Product Portfolio
EMBRAER 170/190 Family
Commercial Aviation
ERJ 145 Family
Business Aviation
The Legacy
New products
Combat
IntelligenceSurveillance &Reconaissance
Transport
Defense
Training
Regional Jets - A Dynamic Tool
When markets are strong…RJs expand catchment areas by adding more spokes to carrier hubsin addition to:
• supplementing mainline jet capacity
• increasing route frequency
• opening new “long & thin” routeswith small, low-risk capacity.
• introducing secondary-to-secondary market service
• rightsizing aircraft capacity to match demand.
• maintaining high route-frequency
RJs help to defend an airline’s competitive market position by:
• preserving network integrity and overall market presence
• replacing unprofitable mainline jet capacity service
… and when markets are weak
Regional Jets - A Dynamic Tool
ERJ 145 Family Orderbook
(as of 1st quarter, 2005)
82
47
20
15
FirmBacklog
8161,131233898Total
634892211681ERJ 145
741142094ERJ 140
1081252123ERJ 135
DeliveriesTotalOptionsFirms
THE INFORMATION CONTAINED HEREIN IS PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR DISSEMINATED WITHOUT EMBRAER’S WRITTEN CONSENT
Beyond the Current Model...
Network Airlines
Low Cost Carriers
RA
SK /
M
Capacity
Regional Airlines
There is a need for a new TOOL
E-JetsE-Jets
THE INFORMATION CONTAINED HEREIN IS PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR DISSEMINATED WITHOUT EMBRAER’S WRITTEN CONSENT
The E- Jets Family
CertifiedCTA / FAA / EASA
CertificationMid 2005
CertificationMid 2006
CertifiedCTA / EASATC Mid 2005
THE INFORMATION CONTAINED HEREIN IS PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR DISSEMINATED WITHOUT EMBRAER’S WRITTEN CONSENT
EMBRAER 170/190 Recent Announcement
15-352015EMBRAER 195
301
155
15
116
FirmBacklog
56744387357Total
-385230155EMBRAER 190
-15-15EMBRAER 175
56309137172EMBRAER 170
DeliveriesTotalOptionsFirms
(as of 1st quarter, 2005)
EMBRAER 170/190 Family Orderbook
4
32
59
96
160 161
131
101
148 145 145
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005E 2006E
Jet Deliveries Forecast
Aircraft Deliveries as required by market demand
Backlog
In 1st Quarter 2005 - US$ 24,9 billion in total orders, including US$ 9,9 billion in firm orders
0,6 1,23 4
11,3 12,7 12,7 13,2
17,5 17,5
9,9
6,4
11,4 10,7 9
10,6 10,1
15
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1Q05
US$ billion
Firm Orders
Options
0,6 1,23,0
4,1
17,7
24,1 23,4 22,1
28,1 27,624,9
Defense Market Products
Systems & Services
Training Intelligence, Surveillance andReconnaissance
Combat Transport
Integrated Market Approach
ACS – Aerial Common Sensor
• Embraer will be responsible to supply the new Intelligence and Reconnaissance Aircraft to the U.S. Army and U.S. Navy.
Embraer inBusiness Aviation
33.6
10.5
2004
1.02.2
3.8
4.1
1.9
1.22.6
4.5
6.0
3.3
2014
16.0
Business Aviation Market Size
Source: AT Kearney and Embraer estimates
Airframe / OEM
Completion and Refurbishment
MROFBOAircraft ManagementCharter andFractional Ownership
23.4
(2004 US$ billions)
Solid position in the commercial aviation market
Embraer Competitive Factors
Enterprise expertiseAbility to identify market and product opportunitiesDevelopment of differentiated products at competitive costsIndustrial efficiencyGlobal customer support and services
Solid position in the commercial aviation market
General Aviation previous experienceBusiness Aviation Market experience
Enterprise expertiseAbility to identify market and product opportunitiesDevelopment of differentiated products at competitive costsIndustrial efficiencyGlobal customer support and services
Embraer Competitive Factors
General Aviation Experience
Ipanema
Minuano
More than 2,500 aircraft delivered
Carajá
Seneca
Xingu
Business Aviation Market experience
Worldwide acceptance Continuous market understanding and product enhancementUnmatched reliability levels
Enterprise expertiseAbility to identify market and product opportunitiesDevelopment of differentiated products at competitive costsIndustrial efficiencyGlobal customer support and services
Solid position in the commercial aviation market
General Aviation previous experience
Embraer Competitive Factors
The world discovers the Legacy
49 aircraft, 12 countries, the right choice
CTA / FAA / JAA / CIS
New Interior
Range
41,000 ftCeiling
MaintenancePlan
LCYOperation
Short RunwayPerformance
2002
Certification
Enhancements
2003 20052004
Legacy Landmarks
Legacy Landmarks
Promises made … promises delivered
Enhancementsto come
Window Shade
HSD
9,500 ft Take-off Landing Altitude
EVS
LED lighting
EFB
Legacy Authorized Sales Representative Network
United Kingdom and Ireland
Sub – Saharian African Countries
Belgium MonacoNetherlands Côte d’AzurLuxembourg
Growing Sales Structure
Super midsize category market share
15%
8%
11% 11%
2002 2003 2004 2005-2014
80% of 2005 production sold
Consistent deliveries performance
Vision
To become a major player in the Business Aviation Market
within 10 years by providing innovative and differentiating
product and service solutions with added value to our
customers and shareholders.
Understanding the market
In-depth assessment of the Business Aviation Market
4 advisory board meetings4 global market surveys3,000 operators surveyed9 concept-aircraft tested + 6 under evaluation
Integrated solution
Comprehensive training programOutstanding support and total care programs
Extensive service centers coverageAircraft exchange facilitation
Third-party financing packagesFBO and aircraft management partnerships
Truly revolutionary products
Truly revolutionary products – design drivers
Docile flying qualitiesNext generation engines Designed for high utilizationHigh Availability
Premium comfortOutstanding performanceLow operating costHuman factors
Very Light and Light Jets by Embraer
Truly revolutionary products
Program Data
Very Light and Light Jets
mid 2009mid 2008Entry into Service
US$ 235 millionInvestment
US$ 2.75 million
Embraer VLJ Embraer LJItem
US$ 6.65 millionPrice
Preliminary data
Product portfolio expansion
Very-light
Entry
Light
Mid-light
Mid-size
Super Mid-Size
Large
Ultra-Long Range
Global
Financial Data
THE INFORMATION CONTAINED HEREIN IS PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR DISSEMINATED WITHOUT EMBRAER’S WRITTEN CONSENT
Net Revenues and Gross Margin
2.525,82.143,5
3.440,5
1.353,51.837,3
2.762,2 2.927,0
28,2%32,0%
39,6% 39,4% 37,7%
32,0%34,1%
1998 1999 2000 2001 2002 2003 2004
• 91% of sales are exports (2004)6.7%Customer Services
& Others6.9%
CorporateMarket
10.3 %Defense Market
76.1%Airline Market
US$ million
Annual growth 77% 36% 50% 6% -14% -15% 60%
CAGR 14%
THE INFORMATION CONTAINED HEREIN IS PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR DISSEMINATED WITHOUT EMBRAER’S WRITTEN CONSENT
Income from Operations
543,9
171.7368.0
462.1651.4
469.6264.8
15,8%12.7%
20.0%
16.7%
22.3%
18.6%
12.3%
1998 1999 2000 2001 2002 2003 2004
US$ Million
250% 114% 26% 41% -28% -41% 105%Annual Growth
CAGR 18%
THE INFORMATION CONTAINED HEREIN IS PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR DISSEMINATED WITHOUT EMBRAER’S WRITTEN CONSENT
Net Income
145,3
234,5
320,7 328,4
222,6
136,0
380,2
11,10%
6,3%
8,8%
11,2%10,7%
12,8%
16,7%
1998 1999 2000 2001 2002 2003 2004
US$ Million
4,618% 61% 37% 2% -32% -39% 180%Annual Growth
CAGR 15%
THE INFORMATION CONTAINED HEREIN IS PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR DISSEMINATED WITHOUT EMBRAER’S WRITTEN CONSENT
PP&E and R&D – Cash Flow
US$ million
Gross R&D amounts
111
6450
7759
70
158173
152
119
66
143
114100
020
4060
80100120
140160
180200
2000 2001 2002 2003 2004 2005 E 2006 E
PP&E
R&D
Thank you!