2. Corporate and Business Strategy
• Organic growth.
• Margins enhancement through the P3E.
• Business and revenues diversification.
• Product strategy.
• Diversification and expansion of customer base.
• Excellence in Customer Experience (ECE).
• Market share growth.
• Margins improvement.
• Product strategy and customer support focus.
• Establish Embraer as the defense house of Brazil.
• Organic growth and acquisitions.
2
14. Embraer Market Forecast (2012-2031)
• Scope Clauses relaxation allowing 80-seater aircraft as a natural growth of RJ50s in the US
• Right-sizing of narrow-body operations
• Regional aviation development in Emerging Markets
• Acceleration of replacement of old & inefficient jets
Russia /
CIS
Europe
North
North 445
155
America
America 1,460
580 7%
6%
22%
Projected Deliveries- Jets 2,195
840 China
China
32%
MarketSegment 20102019
Market –2031
Segment 2012–
(Seats)
Middle 1,005
340
(Seats) Deliveries
Deliveries Africa East
15%
13%
30-60 405
60
210
80 305
105
61-90 2,625
1,015 Asia
Latin
Latin 3% 4%
91-120 3,765
1,550 Pacific
America
America
30 - 120 6,795 505
210
30 20
-
1 2,625 315
670 7%
8%
10%
12%
Around 6,795 jet deliveries (30-120 seats) in the next 20 years (US$ 315 bi)
14
27. Embraer Defense and Security
Embraer Defense and Security, partners and affiliated companies
UAV’s Radar Satellite Land Systems
27
28. Embraer Defense and Security Results
Revenues Evolution (US$ Million)
CAGR 29%
EBIT Evolution (%) Backlog Evolution (US$ Billion)
Não contabiliza as receitas provenientes da OGMA nos anos de 2006 a 2010.
28
29. Super Tucano
Firm orders: 190 aircraft
Addressable Market Forecast 2025
Brazil: 99 (US$ million)
Colombia: 25
Long-term
Dominican Republic: 8 1,600
Medium-term
Chile: 12 840
Short-term
Ecuador: 18 1,700
Indonesia: 16
Greystone (TACAir): 1
Undisclosed: 11 Total Market Forecast:
Deliveries: 172 aircraft 344 aircraft / US$ 4.1 billion
Ref: dec/12
Partnership with Boeing to provide weapons integration, increasing capabilities of the aircraft.
29
30. EMBRAER KC-390
Brazil Colombia Argentina Chile Portugal Czech Rep. Total Market Forecast 2025:
(28) (12) (6) (6) (6) (2)
700 aircraft / US$ 50+ bi
• A new tactical military transport and tanker aircraft
• First flight in 2014
• Six countries
• Letters of intent totalizing 60 aircraft
• Agreement with Boeing to share technical knowledge and
evaluate markets for joint sales efforts.
• The Brazilian Air Force (FAB) and Embraer concluded the
Preliminary Design Review.
Ref. dec/12
30
31. Modernization Programs
F-5M A1-M A-4
Addressable Market Forecast 2025
(US$ million) Brazilian Navy A-4
12 aircraft
2 prototypes at GPX-CS
Long-term
505 Brazilian Air Force A-1M
Medium-term
567 43 aircraft
Short-term 16 received by Embraer for the modernization
437
Brazilian Air Force F-5M
46 a/c + 11 a/c (2nd batch)
45 already delivered
Total Market Forecast*:
Brazilian Air Force E-99
228 aircraft / US$ 1.5 billion
5 a/c aircraft EMB 145 AEW&C
* Considering the market for Tucano modernization Ref. dec/12
31
32. New Portfolio
Command and Control Systems
Onboard Systems
Simulation Systems
Electronic Warfare Systems
Intelligence Systems
Air Traffic Management and Control Systems
JV with Elbit/AEL Sistemas where Embraer Defense and
Security has a major participation
UAS, simulators and modernization of avionics systems Security of Critical
Infrastructure
SISFRON implementation
Public Security
Embraer Defense and Security has 100% of participation (sporting events, cities, states)
Systems
Air, ground and sea surveillance radars
SISFRON
Remote sensing
SisGAAZ
Engine and Component Maintenance
Overhaul and Modernization
Aerostructure Manufacturing and Assembling
JV between Embraer Defense and Security (51%) and
Telebras
Satellite
32
33. Brazilian Army Priorities
SISFRON
Integrated Borders Monitoring System
First phase: US$ 420 Million
Total estimate: US$ 4 Billion
Comprising radars, communication networks, C4I,
unmanned air vehicles (UAV) and armored vehicles
Comm
9% UAV
12%
Sensors
59%
Satellite
Estimate: US$ 400 Million
SW
20%
Participation in the first Brazilian Geostationary Satellite
Ref. dec/12
33
34. Revenues Breakdown Evolution
2020
2012
New Business
• SisGAAz (“Blue Amazon” Integrated Management
System)
• Security of Critical Infrastructure
• Public Security (sporting events, cities, states)
34
36. 2013 Consolidated Outlook
Net Revenues US$ 5.9 – 6.4 Billion
EBIT US$ 530 – 610 Million EBITDA US$ 770 – 900 Million
EBIT margin 9.0% – 9.5% EBITDA margin 13.0% – 14.0%
36
37. 2013 Business Units Outlook
Deliveries: 90 to 95 E-jets
Net Revenues US$ 3.20 – 3.35 Billion
Deliveries: 80 to 90 light jets
25 to 30 large jets
Net Revenues US$ 1.40 – 1.60 Billion
Net Revenues US$ 1.25 – 1.35 Billion
Other Revenues US$ 50 – 100 Million
37
38. 2013 Investment Outlook
Research US$ 100 Million
Development US$ 300 Million
CAPEX US$ 180 Million
TOTAL INVESTMENTS: US$ 580 Million
38
39.
40. Net Revenues / SG&A Expenses
Net Revenues - US$ Million SG&A Expenses - US$ Million
Total 2012: 6,178 Total 2012: 763
219
194
186 180
170 75
72 75
71 59
2,025
1,900
1,717
1,405 144
1,156 114 109 119 111
4Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12
G&A Expenses Selling Expenses
40
41. Income from Operations / EBITDA
Income from Operations - US$ Million EBITDA - US$ Million
Total 2012: 612 / 9.9% Total 2012: 891 / 14.4%
16.4%
12.0% 15.4%
11.5%
12.8%
11.8%
7.4% 7.2%
312
-0.3% 228 265
197 2.9%
148 166
86 101
59
(6) 4Q11 1Q12 2Q12 3Q12 4Q12
4Q11 1Q12 2Q12 3Q12 4Q12
EBIT EBIT Margin EBITDA EBITDA Margin
41
42. Net Income / Free Cash Flow
Net Income - US$ Million Free Cash Flow - US$ Million
Total 2012: 348 / 5.6% Total 2012: (81)
9.1% 6.5%
277
4.6% 206
3.2% 414
105 123 444
55 65 155
25
(30)
(77) (70) (76) (50)
-4.5% (40) (163)
(60) (55) (58)
(65)
(92) (138) (76)
(174)
4Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12
Free cash flow
Net Income Net Margin Net cash generated (used) by operating activities*
Additions to PP&E Additions to Intangible
* Net of Financial assets adjustment
42
45. Investments
US$ Million
350
251
211 200
77 100
RESEARCH DEVELOPMENT CAPEX
2012 Total 2012 Outlook
2012 Outlook: US$ 650 Million
Total Investment 2012: US$ 539 Million
45
46. EPADS and Pay Out
US$
116%
52%
34%
26% 26%
2.57
2.14
1.83 1.92
0.62
2008 2009 2010 2011 2012
EPADS Pay Out
2008: USGAAP
2009-2012: IFRS
46
49. Sustainability Initiatives
ISO 14001 and OHSAS
18001 Certifications
Brazilian Alliance for Bio-fuel
1st ethanol powered
aircraft in the World
Social Activities
Reforestation Projects
Ipanema
Recycling
Corporate Values
Greener Technology
49
50. P3E - Lean Results
E-Jets Final Assembly Line Transformation
E-Jets Wing Junction Line Transformation
50
51. P3E Results
Kaizen - E-Jets Cycle Reduction Cost of Non Quality Reduction
40% 57%
40% reduction on the production cycle 44% reduction on CNQ
51
54. 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.
54
