* CEO sees new E-jet orders on pace with deliveries in 2012
* Embraer aims to build order backlog up from five-year low
* Shares rise 0.8 pct, recovering from earnings miss
(Updates with share performance, comments, background)
By Brad Haynes
SAO PAULO, April 27 Brazilian aircraft maker
Embraer expects regional jet sales to gain steam
after a weak first quarter, helping the company rebuild its
order backlog from its lowest since 2006, Chief Executive
Officer Frederico Curado said on Friday.
"Our outlook for the year is to at least keep the backlog
stable," Curado told journalists on a conference call to discuss
earnings. "Typically, first-quarter sales activity is a little
slower ... We're absolutely not concerned about reaching our
targets for the year."
Embraer booked new orders for commercial planes at about
half the rate it delivered them in the first quarter, drawing
down its backlog, a key pipeline of future revenue, below $15
billion for the first time in over five years.
Shares of Embraer rose 0.8 percent to 16.39 reais in
afternoon Sao Paulo trading after Curado's comments, recovering
from early losses on disappointing first-quarter earnings.
The stock fell over 2 percent in opening trade after a late
Thursday filing showed profits dropped more than expected from a
year earlier due to a heavier tax burden and rising labor costs.
THREATS TO PRICING
Embraer, the world's third-largest maker of commercial
aircraft, expects demand for its regional E-jets to remain
stable or even grow from last year, when new orders slightly
exceeded total deliveries, Curado said.
The company has dominated recent orders for regional jets
seating 70 to 120 passengers, especially in fast-growing Asian
markets, leading many analysts to expect Embraer will benefit
the most from a gathering recovery in the segment.
Still, Curado warned that production from new rivals and
lower leasing rates could eventually bring down pricing in the
market for regional jets.
"In the immediate term, there's no impact yet. But in the
long term I think the whole industry may see a negative impact,"
he said on a separate call with analysts.
To stay ahead of competition from upstart Russian and
Japanese competition, as well as chief regional jet rival
Bombardier, Embraer is studying possibilities for a
new, more efficient engine for its E-jet lineup.
But a final decision on the format and specifications of a
re-engined jet, which Embraer had originally slated for the end
of this year, will likely fall in 2013, Curado said.
The development of a re-engined jet, which Embraer has said
could require investments in the range of $2 billion, will
likely be funded with cash, debt and financing through
suppliers, executives said, rather than with a capital increase.
As for the private jet market, where Embraer has said it
does not expect a rebound until next year, Curado said there are
"promising signs" but the segment continues weighing on results.
Executive aviation fell to just 13 percent of total revenue
in the first quarter, down from 30 percent a year earlier.
Curado said cancelled private jet orders, including from a
client that went out of business, dealt the biggest blow to
Embraer's order backlog, which slipped to $14.7 billion in March
from $15.4 billion in December.
Embraer shares have gained about 40 percent this year as the
economic outlook in its export markets improved, investors
regained appetite for emerging market stocks and the Brazilian
government cut payroll taxes to bolster local industry.
The lag in implementing the lower payroll tax rate will
limit its potential impact on financial results this year,
Curado told analysts.
Management also said it expected to name a new chief
financial officer "within weeks," after former CFO Paulo Penido
Marques resigned this month, forcing the company to fill that
post for the second time in a year.
(Reporting by Brad Haynes; Editing by Gerald E. McCormick, Gary