Embraer posts healthy sales but warns of strained defence budgets

Embraer reported Q2 2021 net revenues of $174.9 million in its Defense & Security segment, more than double the $85.8 million posted in Q2 2020 and accounting for 15.5% of total group sales.

Assembly work continued in Q2 on the KC-390 Millennium production line, including five units for the Brazilian Air Force (FAB) and one for the Portuguese Air Force.

Four KC-390 Millennium transport aircraft have already been delivered to the FAB and are performing ‘a variety of logistics missions’ including COVID-19 response, Embraer announced on 13 August.

Since the end of Q2, the company has also conducted unpaved runway tests of the aircraft.

A pair of A-29 Super Tucano aircraft for the Nigerian Air Force was delivered to Sierra Nevada Corporation in Q2, while two other A-29s were delivered to an undisclosed customer.

A maintenance contract with the Chilean Air Force was also renewed.

Group-wide revenues Q2 reached $1.13 billion, representing year-on-year growth of 110.4% with double-digit growth in all segments. Revenues in H1 2021 revenues grew by 65.5% compared to the same period in 2020.

While the Defense & Security segment did not experience the immediate impact of the COVID-19 pandemic, ‘there are signs that budgets of some important customers have become strained following spending to fight the pandemic and its economic impacts’, Embraer noted.

However, the Brazilian conglomerate remains confident that demand for its defence products will improve worldwide.