SAO PAULO (Reuters) - Brazilian planemaker Embraer on Wednesday swung to a $7.2 million profit in the second quarter as higher revenue at its executive jets business offset lower commercial jet sales, but still played down hopes of turning a profit in 2019.
The company had reported a quarterly loss of $131 million a year earlier, impacted by a runway incident that delayed development of a new military plane.
The profit in the three months through Junes was better than the Refinitiv consensus estimate of a $29 million loss. Analysts at Cowen told clients the results were “better than feared.”
Still, Embraer reaffirmed its prior forecast that earnings before interest and taxes (EBIT) would be roughly break-even this year, essentially ruling out an annual net profit. Embraer reported a net loss of $178 million in 2018.
Shares closed 5.9% lower in Sao Paulo — their biggest daily drop since July 2018.
The planemaker’s recent struggles to turn consistent profits have raised questions about its future performance because it is in the midst of selling 80% of its commercial aviation division, historically its most profitable, to Boeing Co (BA.N).
Embraer expects to conclude that transaction by the end of the year, after which it will have to rely on its remaining divisions, executive jets and defense contracting, to drive most of its bottom line.
During the first six months, Embraer posted operational losses in its commercial, executive and defense divisions.
The company said it expects to deliver its first new cargo military plane, known as the KC-390, to the Brazilian government by the end of the year.
Embraer and Boeing have signed a separate deal to jointly market the plane, which the Brazilian planemaker hopes will draw orders from governments which are allies of the United States.
In a call with journalists, Embraer executives said they were optimistic about demand for their newest executive jet, known as the Praetor 600, which recently received flight certification from Brazil’s civil aviation regulator.
Reporting by Marcelo Rochabrun; editing by Bernadette Baum and Lisa Shumaker