January 2012 16 th Annual Latin American Conference Cancun, Mexico
Santander Conference - Cancun
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Transcript of Santander Conference - Cancun
Investors Presentation
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
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.
Forward Looking Statement
Building a Global
Competive Company
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
High Technology
Qualified People
Global Presence
Flexibility
Cash Intensiveness
Fundamentals
Aeronautical Industry Fundamentals
CUSTOMER SATISFACTION
Backbone of our entrepreneurial action
Towards Growth &
Diversification
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Business Diversification
Expected Sales BreakdownIn five years
CorporateJets
CustomerService
Defense
Commercial70%
30%
Customer Serviçes
10%
Corporate12%
Defense13%
Comercial65%
Current Sales Breakdown3Q03
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Product Diversification
70’s 90’s 00’s80’s
BANDEIRANTE(EMB 110/111)
TUCANO(EMB 312)
BRASÍLIA(EMB 120)
ERJ 145
AEW&C/ RS/ MP
ERJ 135
EMB 326
EMB 321
EMB 121
AMX
BRASÍLIA(EMB 120)
ERJ 140
AL X(EMB 314)
LEGACY
ERJ 145
ERJ 135
ERJ 140
EMBRAER 170EMBRAER 175
EMBRAER 190EMBRAER 195
AMX-TAEW&C/ RS/ MP
AL X(EMB 314)
Mirage 2000 BR ?
AMX
ERJ 145 XR
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Custommer Diversification
Civil & Defense Aircraft flying in 58 countries on 5 continents
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Recent Geographic Diversification
Q Acquisition of the assets of Celsius Aerotech
Q JV in China
Q Plans for an assembly line in Jacksonville, FL -USA
Airline Market Status, Trends
and Outlook
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Share of US Domestic Passenger Enplanements
Source: AvStat Associates, Inc. analysis of U.S. DOT data.
91%84%
71% 65%
7%16%
19%
5% 9% 13% 16%3%
0%
20%
40%
60%
80%
100%
1980 1990 2000 2002
Majors Low Cost/New Entrants Regionals
Market Evolution - USA
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Share of Intra-European RPKs
86% 82% 82% 81% 79% 78% 73% 73%
8%
14% 17% 17% 17% 18% 17% 19% 19%
8%1%
1% 1% 2% 4% 5%
0%
20%
40%
60%
80%
100%
1995 1996 1997 1998 1999 2000 2001 2002
Majors Low Cost Regionals
Source: AEA, ERA, ATI2002 Low Cost Data Estimated
Low Cost: easyJet + Go + Ryanair
Market Evolution - Europe
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
• Fundamental Correction – Not a Traditional Cycle
• Decreasing Average Fare Values
• Decreasing Capacity (USA)
• Increasing Low Cost Carrier Critical Mass
• Increasing Regional Jet Critical Mass
• Pressure on Existing Worldwide Airline Model
• Major USA Airlines trying to re-invent themselves
• Regional affiliates strongly being used as defensive tools (point-to-point X hub and spoke)
• Low cost carriers also being inserted in the current “major” airline model
An Industry in Transition
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Full Service
> 65 years old
Full Service
> 65 years old
Regional Jets
< 10 years old
Regional Jets
< 10 years old
Low Cost
Carriers
< 35 years old
Low Cost
Carriers
< 35 years old
Components of Current Airline Model
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
3. Optimization of Old and Inefficient NarrowbodyServices
• Rightsizing aircraft capacity with demand
• Long & thin routes
• New market opportunities
• Profit potential
1. Turboprop Substitution• Productivity improvements
• Passenger jet preference
2. Frequency, Frequency . . .
Sustaining Regional Jet Growth
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Source: Back OAG (ERJ-145/140/135, CRJ-100/200, 328Jet routes)
Jan 1995 – 76 Routes
Jan 2003 – 1874 Routes
Regional Jet Networks - USA
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Jan 1995 – 104 Routes
Jan 2003 – 1072 Routes
Source: Back OAG (ERJ-145/140/135, CRJ-100/200, 328Jet routes)
Regional Jet Networks - Europe
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
37 Seats
44 Seats
50 Seats
Responding to Market Needs
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
• Fare Structure• Simplified Fare Structures (regular coach fare, limited discounted coach fare)
• Low fares Stimulating Demand
• Cost Leadership• Smart Wage Structures / Partnership with Employees / High productivity
• High Utilization of Assets
• Lean Structure and Operation / Low Overheads / Flexibility and agility
• Low Distribution Costs
• Route Structure• Point-to-Point Networks / Medium-Haul Flights
• High frequencies / High load factors
• Simplified (adequate) on board service
• New airplanes / Good safety track record
The Low Cost Model
• New Frontiers• Penetration into new (thinner) markets
• Single fleet type no longer a sacred cow
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Jan 1995 – 336 Routes
Jan 2003 – 944 RoutesSource: BACK OAG (Southwest, Jetblue, Airtran and Frontier)
Low Cost Networks - USA
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Source: BACK OAG (Ryanair, easyjet, Buzz and GO)
Jan 1995 – 18 Routes
Jan 2003 – 374 Routes
Low Cost Networks - Europe
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
RASK
Capacity
Traditional Main Line Full Service Model
Regional Regional Jet ModelJet Model
Low CostModel
...increase capacity to match market growth, or/and expand their air services to secondary city pairs
LCC Next Steps...
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
.... Natural Growth, or Capacity Rightsizing,There is a need for adding another component
E - Jet Model
Regional Jet Model
Traditional Main Line Full Service ModelRA
SK
Capacity
Low CostModel
Beyond the Current Model...
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Full Service
> 65 years old
Full Service
> 65 years old
Regional Jets
< 10 years old
Regional Jets
< 10 years old
Low Cost
Carriers
< 35 years old
Low Cost
Carriers
< 35 years old
E- Jets
(70-110 seats)
E- Jets
(70-110 seats)
• Natural evolution of50 seat market
• Tapping an existing gap
• Replacing old & inefficient narrow bodies
• Low risk for demand stimulation
• New market opportunities (range)
• Enhancing services(frequency)
• Blurring the line between regional and mainline operations
Introducing a 4th Component...
The Next Step in Industry Transition
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
EMBRAER 170/190 Family
Seat Capacity
120
160
40
80
Stage Length (nm)
200 400 600 800 1000 1200 1400 . . .
30 Seat Tprops
50 SeatERJ 145
Narrow Body Large Aircraft
37 - 44 Seat ERJ 135/140
E xperience
E ntertainment
E asy
E nhance
E xpress
E verywhere
E xcellence
E xceptional
E nvironment
E mbraer
Engineering Ergonomics Economics Efficiency
Introducing the E- Jets
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
34% of flights depart with loads
appropriate
for 100-110 seat aircraft27% of flights depart
with loads appropriate
for 70-80 seat aircraft
Passengers per Departure<50<50 5050 100100 140140
17%
3%
2%
4%
9%
14%
17%
13%
8%7%
4%
2%
Per
cent
age
of
Tota
l Dep
artu
re
6060 7070 8080 9090 110110 120120 130130 >150>150Source: Back (US DOT T100 Jan-Sep 2002)
The Need for 70-110 Seat Jets in the USA
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Replacement of Ageing AircraftFleet in Service (61-120 seat segment - Dec/2002)
Source: Fleet PC (Scheduled Airlines, Active in Service and All Passenger Configuration)
372
208
108
277
330
453
304
0
100
200
300
400
500
0 - 5 6 - 10 11 - 15 16 - 20 21 - 25 26 - 30 >30
Aircraft Age (Years)
Nu
mb
er o
f A
ircr
aft
689 aircraft with more than 20 years
(34 % of total fleet in service)
Market Opportunities - Global
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
70 – 78 Seats
78 – 86 Seats
98 - 106 Seats
108 – 118 Seats
Fleet Management Flexibility and Load Factor Optimization
E-conomics – Aircraft Commonality
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
*Based on Total Operating Costs; Average OW net fare 500 sm USD 90; 600 sm USD 98
USA Environment
EMBRAER 170 78 seat
EMBRAER 17586 seats
EMBRAER 190106 seats
EMBRAER 195118 seats
PROFITBREAK-EVEN*
40 PAX (51%) 38 PAX
44 PAX (51%) 42 PAX
57 PAX (54%) 49 PAX
62 PAX (53%) 56 PAX
*Based on Total Operating Cost500 sm for EMBRAER 170/175
600 sm for EMBRAER 190/195
E-conomics – Profitable by Design
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
… in a First Class cabin
• Single seat ü
• Exclusive environment ü
ü• Partition
ü• Stowage
ü• Catering
ü• Seat comfort
ü• Exclusive lavatory
Everything you expect…
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
… in an Economy cabin
• Middle seat X
X• Cramped seating
X• Narrow aisle
X• Single lavatory
X• Limited baggage space
X• Limited catering capabilities
• “Cattle” feeling X
Nothing you don’t like
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
EMBRAER 190
EMBRAER 170
EMBRAER 195
EMBRAER 175
FAR Domestic Reserves
Taxi allowance14 minutes
Air Maneuvers3 minutes
CruiseISA
Wind85% Annual Reliability
Pax Weight & Baggage90.7 kg (200 lb)
E-fficiency – Range from Dallas
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
JAR OPS Reserves
Taxi allowance14 minutes
Air Maneuvers3 minutes
CruiseISA
Wind85% Annual Reliability
Pax Weight & Baggage 90.7 Kg (200 lb)
EMBRAER 190
EMBRAER 170
EMBRAER 195
EMBRAER 175
E-fficiency – Range from Paris
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
E - Jet Model
New EmbraerE-Jet family
New EmbraerE-Jet family
Regional Regional Jet ModelJet Model Traditional Main
Line Full Service Model
Low CostModel
Filling an Untapped Market
Corporate Aircraft Market Status, Trends
and Outlook
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Lear45 $10,3M G L O B E x p $ 4 4 , 4 M
F 7 X $ 3 5 , 8 M
G 500 $ 3 7 , 5M
G 550 $ 4 5 , 8 M
G 400 $ 3 2 , 5 M
G L O B 5 0 0 0 $ 3 3 , 5 M
Chal 604 $ 2 4 , 9 M
F 9 0 0 C $ 3 0 , 4 M
F 9 0 0 E X $ 3 4 , 3 M
G 2 0 0 $ 2 0 , 2 M
C h a l 3 0 0 $ 1 7 , 4 M
F 5 0 E X $ 2 0 , 0 M
F 2 0 0 0 $ 2 2 , 6 M
H o r i z $ 1 8 , 0 M
C i t X $ 1 9 , 4 M
G 1 0 0 $ 1 1 , 8 M
L e a r 6 0 $ 1 2 , 7 M
8 0 0 X P $ 1 3 , 0 M
L 4 5 X R $ 1 0 , 8 M
E n c o r e $ 7 , 6 M
E x c e l $ 1 0 , 2 M
Lear 31 $6 .6M
B 4 0 0 A $ 6 , 6 M
B r a v o $ 5 , 7 M
C J 1 $ 4 , 0 M
C J 2 $ 5 , 2 M
P r e m i e r $ 5 , 6 M
S J- 3 0 $ 5 , 5 M
S o v e r e i g n $ 1 3 , 5 M A C J $ 4 7 M
B B J 2 $ 6 5 M
B B J 1 $ 5 2 M
L A R G E U - L O N G - R A N G EL I G H T M I D L I G H TE N T R Y M I D S I Z E S U P E R M I D S I Z E G L O B A L
M u s t a n g $ 2 , 3 M
P R E E N T R Y
E c l i p s e $ 8 5 0 K
S a f i r e $ 1 M
G 300 $ 2 5 , 5M
G 150 $ 1 2 , 5MLear 40 $ 7 ,7M
C J 3 $ 6 , 0 M
F 2 0 0 0 E X $ 2 3 , 8 M
L e g a c y $ 2 0 , 8 M
Chal 800 $ 2 7 , 1 M
Prices as in BC&A May03
A crowded and oversegmented marketplace
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Current Competitive Environment
G 400 $ 3 2 , 5 M
G L O B 5 0 0 0 $ 3 3 , 5 M
C h a l 6 0 4 $ 2 4 , 9 M
F 9 0 0 C $ 3 0 , 4 M
F 9 0 0 E X $ 3 4 , 3 M
G 2 0 0 $ 2 0 , 2 M
C h a l 3 0 0 $ 1 7 , 4 M
F 5 0 E X $ 2 0 , 0 M
F 2 0 0 0 $ 2 2 , 6 M
H o r i z $ 1 8 , 0 M
C i t X $ 1 9 , 4 M
G 1 0 0 $ 1 1 , 8 M
L e a r 6 0 $ 1 2 , 7 M
8 0 0 X P $ 1 3 , 0 M
S o v e r e i g n $ 1 3 , 5 M
L A R G E
M I D S I Z E
SUPER MID SIZESUPER MID SIZE
G 300 $ 2 5 , 5MG 150 $ 1 2 , 5M
F 2 0 0 0 E X $ 2 3 , 8 M
L e g a c y $ 2 0 , 8 M Chal 8 0 0 $ 2 7 , 1 M
Prices as in BC&A May03
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Legacy - A New, Breakthrough Concept
QQ Based on a proven airplane platform (ERJ 135), Based on a proven airplane platform (ERJ 135), with almost 700 aircraft in operationwith almost 700 aircraft in operation
QQ Represents value for customersRepresents value for customers
üüComfort Comfort
üüPerformancePerformance
üüCost EfficiencyCost Efficiency
üüReliabilityReliability
QQ Best cost benefit alternativeBest cost benefit alternative
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Legacy Executive - interior
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Supermidsize category
10 20 30 40 50ft
m 3 6 9 12 15
Challenger 30023‘8”(7,22m)
25‘(7,62m)
Horizon
G20024‘6”(7,46m)
42’6”(12,94m)
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Large category
10 20 30 40 50ft
m 3 6 9 12 15
Falcon 200026‘4”(8,01m)
G40041’(12,49m)
42’6”(12,94m)
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Legacy Shuttle - Interior
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Fract ional Ownership Program with Fl ight Opt ions
S/N 462S/N 412
S/N 495 S/N 528
• Introduction in the US market - Thanksgiving 2003• Showcase for the Legacy in this booming market segment
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Area of operation: US
Owner: Raytheon
2002 Total shares sold market-share: 24%
Fleet* and Backlog
S e g m e n t Manufac tu re r Equ ipment # ACFT Avg Age Backlog
Entry Cessna CitationJet 11Entry Raytheon Premier I 71Light Cessna Citation II 6Light Raytheon Beechjet 400 75 12Midlight Cessna Citation III 11Midlight Cessna Citation V 6Midlight Raytheon Hawker 450 50Midsize Raytheon Hawker 700 1Midsize Raytheon Hawker 800 39Supermidsize Dassault Falcon 50 7Supermidsize Raytheon Horizon 27Large Bombardier Challenger 601 11Large Gulfstream IV 2
Total 169 9 160
* P l u s u n d i s c l o s e d a m o u n t of C i ta t i on X i n the f lee t
S o u r c e s : A M S T A T , A i r c l a i m s (t h r o u g h M L y n c h)
EmbraerMarket
Forecast
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
World (30-120 seat segment): 8 ,610 jets (US$180 bill ion)
4,750
1,700
1,600
1,450
2014 - 2023
8,450
2,950
2,900
2,600
2004 - 2023
3,700TOTAL
1,25091 – 120
1,30061 – 90
1,15030 - 60
2004 - 2013Segment
World Del iver ies by Segment - Jets
Airline Market Forecast 2004-2023
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
AsiaPacific
480
6%
AsiaPacific
480
6%
China
635
8%
China
635
8%
USA, Canada& Caribbean
4,740
56%
USA, Canada& Caribbean
4,740
56%
30 - 120 Seats: 8,450 Jets
Europe,
Middle East
& Africa
1,970
23%
Europe,
Middle East
& Africa
1,970
23%LatinAmerica
625
7%
LatinAmerica
625
7%
Airline Market Forecast 2004-2023
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Corporate Aircraft Demand 10-year Forecast
400
500
600
700
800
900
1000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
# o
f A
irc
raft
EMBRAER Jul03 TEAL May03Forecast Int'l Jun03 Honeyw ell Jun03Rolls-Royce Jun03 Average TRB Jun03
8,078
6,900
6,535
6,181
6,833
6,525
s o u r c e : T R B J u n 0 3 v i a R R
Supermidsize = 1,250 units
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Revenue Forecast per Prod. Category
0
2 . 0 0 0
4 . 0 0 0
6 . 0 0 0
8 . 0 0 0
1 0 . 0 0 0
1 2 . 0 0 0
1 4 . 0 0 0
1 6 . 0 0 0
2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2
US
$ m
illi
on
E N T R Y LIGHT M-L IGHT
M-SIZE SUPER-MIDSIZE L A R G E
U L T R A - L O N G R A N G E G L O B A LA c c u m u l a t e d R e v e n u e C o m p o s i t i o n
( 2 0 0 3 - 2 0 1 2 )
ENTRY
4% LIGHT
6%
M-LIGHT
5%
LARGE
22%
GLOBAL
5%
SUPER-
MIDSIZE
23%
ULTRA-
LONG
RANGE
20%M-SIZE
15%
Corporate Market New Segments
Commercial Backlog
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
193
156
20
17
Firm
Backlog
6871,371491880Total
5091,130465665ERJ 145
741142094ERJ 140
1041276121ERJ 135
DeliveriesTotalOptionsFirm(as of September 30 t h, 2003)
ERJ 145 Family Orderbook
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
260150110EMBRAER 190
553308245Total
453015EMBRAER 195
248128120EMBRAER 170
TotalOptionsFirm(as of September 30 t h, 2003)
EMBRAER 170/190 Family Orderbook
Social Responsibility
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Number of Employees
A p r i l / 9 7 : m i n i m u m o f 3 , 2 0 0 p e o p l e
12,227
6,0874,319 4,494
6,737
11,048
8,302
3,849
9 4 9 5 9 6 9 7 9 9 0 0 0 1 0 2
10,334
9 8
12,803
BRAZIL 11,976*
USA 482
CHINA 1 32
SINGAPORE 10EUROPE 19 4
AUSTRALIA 09
O c t 0 3
Employees
* E L E B e m p l o y e e s i n c l u d e d
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
3 0 %
4 %
1 %
6 5 %
Qualified People
Educational Levels
25% of the employees are engineersCurrent as of 2002
College Undergraduate
s
High SchoolGraduates
Graduates
Masters or PhD
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Foccus on Trainnnig
More than US$ 81.5 mill ion invested intraining and development in the last 4 years
21 1824.5
18
1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2
In–house courses:
• 18 - month graduate course in Aeronautical Engineering
• 2 - year MBA course focused on international trade
US$ million
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Comunity
Social & Comunity foccus on Educat ion
Eng. Juarez Wanderley High School developed for 600students
Implementing several programs including the Action Plan concept in public schools benefit ing more than 34,000 students
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Health & Environment
EnvironmentISO 14001 Certificate
(Mar/2002)
Health & SecurityCertification OHSAS 18001
(Mar/2002)
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Dow Jones Sustainabilly Index
Recognignit ion of its corporate policy sustainabil ly through:
Creation of Shareholder Value -Medium & Long Term
Social & Environmentresponsabil ity
Corporate Governance
Nominated for the third consecutive yearFor the DOW JONES SUSTAINABILITY WORLD INDEX
3rd Quarter Results
US Gaap
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Jet Deliveries
Units
23
28
20
41
303030
1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
US$ Million
Net Sales & Gross Margin
7 9 8
4 8 95 6 7
4 3 95 5 7
5 8 15 9 0
3 8 , 1 %3 6 . 5 %
3 9 . 9 % 3 9 . 2 % 3 9 . 3 % 3 9 . 1 %3 9 . 7 %
0
250
500
750
1000
1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03
30%
40%
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Sales per Segment
Third Quarter 2003
Sales per Market
Third Quarter 2003
Revenue Breakdown
Customer
Serviçes
10%
Corporate
12%
Defense
13%
Comercial
65%
Foreing
Market94%
Brazil6%
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
US$ Million
SG&A and Others Expenses
Note: SG&A includes Profit Sharing and does not include R&D
8576 76 76
86 79
124
18.1%
15.1%15.5%15.5%
13.0%13.0%15.2%
-
30
60
90
120
150
1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03
0%
3%
6%
9%
12%
15%
18%
21%
SG&A and Others SG&A , Others (% of Net Sales)
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
US$ Million
Research & Development
41
30
4246
36
51
39
8.9%9.1%
7.3%7.2%
5.1%
7.4%
5.8%
-
20
40
60
1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03
0%
2%
4%
6%
8%
10%
R & D R&D (% o f Net Sa les )
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
US$ Million
Income from Operations
142
83 4970119 11197
11.3%12.3%
17.0%17.9%
19.1%20.3%
17.3%
0
200
400
1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03
10%
15%
20%
25%
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Net Income & Margin
44
519
774137
68
4.4%
12.2%
6.2% 7.0%
9.7% 9.0%
0.9%0
5 0
1 0 0
1 5 0
1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03
0 %
1 5 %
US$ Million
Balance Sheet Highlights
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Trade Accounts Receivable
US$ Million
707
247
326
736
913
790
981
1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03
Note: In t h e short -term
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Inventories
Note: In t h e short -term
995 992946
865
1111
1013 1005
1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03
US$ Million
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Net Cash (Debt)
US$ Million
39
360
217
104
(212)
43
(178)
1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Bank Debt - US$ 1,059.7 million
September 30, 2003
Loans Breakdown
Debt MaturityCurrency Breakdown
• Considering Currency Swaps• Average R$ debt cost: 18.9% p.a. (83.2% of CDI)• Average US$ debt cost: 4.9% p.a.
• Loan Average Maturity: 2 years and 2 months
Long
Term
49%
Short
Term
51%
US$
34%
R$
66%
Investments & Productivity
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
US$ million
PP&E and R&D
125.8
44.1
127.7
143.8
114.2
60.1
158.6
99.6
69.6
18.8
0
2 0
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
1 6 0
1 8 0
1999 2000 2001 2002 Sep. 03
PP&E
R & D
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Flexibility incorporated into the production line allowed an increase in efficiency and decrease in production lead time
Lead Time in Months
8,0
6,0 6,05,5
4,9 5,0
3,7 3,5
1996 1997 1998 1999 2000 2001 2002 Sep.
03
Reduced Production Cycle
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
91
185
242 247
307
254
227
0
5 0
1 0 0
1 5 0
2 0 0
2 5 0
3 0 0
3 5 0
1996 1997 1998 1999 2000 2001 2002
Revenues per Employee
(US$ thousand)
Brazi l ian GAAP
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Investments Forecast
R&D Tota l
- Commercial Aviation
- Corporate Aviation
- Others
Defence
200403 Original
167
126
14
27
53
174
139
16
19
42
Product iv i ty and PP&E 58 64
T O T A L 278 280
US$ million
Defence Investments are funded by the i r contracts and are not inc luded
in the R&D expenses, but in Cost of Sales and Services.
2005
119
72
27
20
54
81
254
03 Actual
140
100
20.
20
48
33
221
(*) Does not include new program & Acquis i t ions
Backlog & Delivery Forecast
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
In 3Q03 - US$ 27.6billion in total orders, including US$ 10.4 billion in firm orders
Backlog
US$ bi l l ion
10.410.37.99.0
10.711.4
6.44.13.0
1.2
17.216.8
11.3
13.212.712.7
11.3
0
5
1 0
1 5
2 0
2 5
3 0
1996 1997 1998 1999 2000 2001 2002 1 Q 0 3 2 Q 0 3 3 Q 0 3
Options
Firm Orders
1.23.0
4.1
17.7
24.123.4
22.2
19.2
27.1 27.6
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Jet Deliveries
Jet Deliveries
432
59
96
160 161131
102
160 170
1996 1997 1998 1999 2000 2001 2002 2003 E 2004 E 2005 E
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Deliveries Forecast
53% 48%
37%
12% 15%
35%
2004 2005
ERJ 145 Family EMBRAER 170 Family Corporate
53% 48%
37%
12% 15%
35%
2004 2005
ERJ 145 Family EMBRAER 170 Family Corporate
160 expected deliveries for 2004 and 170 for 2005