Annual Report 2016

Message from the President and CEO

Prepared for the future


We finished 2016 with the certainty that we overcame many challenges, and that we are ready to start a new cycle of achievements in the company. At the beginning of the year, we inaugurated the Embraer Corporate Office (ECO) in São Paulo, with the goal of concentrating the company’s corporate activities in one central unit, in search of greater synergy and a global vision. This period has been marked by adverse conditions and a deterioration of the competitive landscape: emerging markets’ commercial activity continued in deceleration and global political and economic instabilities have affected sector demand. In this context, our company has been diligent in adjusting costs and expenses to the current market scenario and launched “Challenge 200,” in search of US$200 million in annual savings throughout our operations—these are fundamental adjustments to ensure the growth of our strength and competitiveness in the coming years.

Revenues for the year were US$6.2 billion, up from US$5.9 billion the previous year. In our order portfolio, we have accounted for US$19.6 billion in firm orders (backlog) and we have achieved an adjusted net profit of US$290.5 million, with positive operational margins for our three business units – a result we will seek to intensify in the upcoming years.

Our programs have consistently progressed, ensuring proper execution of their schedules and budgets. Earlier this year, we celebrated the inaugural flight and the start of the certification campaign for the E190-E2, the first second-generation jet of Commercial Aviation’s E-Jets family. Since its launch, the aircraft has received 275 firm orders and 415 letters of intent, options and purchasing rights, a total of 690 commitments from airlines and leasing companies. The model’s first units will be delivered in 2018.

The KC-390, a multi-mission military aircraft, successfully completed its first international mission: it has traveled more than 30,000 kilometers in Africa, Europe and the Middle East, in addition to the long transatlantic ferry flights. This is the largest aircraft ever to be manufactured in Brazil, and it sets new standards for the category opening up the opportunity for us to expand the globalization of the Defense & Security business. The program’s current focus is on solely on the certification campaign, scheduled to be completed in the second half of 2017, with the first delivery planned for the following year.

In Executive Aviation, we have continued to invest in the improvement of the Phenom 100 and Phenom 300 (the world‘s best-selling business jet for the fourth consecutive year) and of the Legacy 450 and Legacy 500 jets, in addition to enhancing the Legacy 650. We also delivered the 1,000th executive jet, a Legacy 500, and we were recognized by U.S. publications Aviation International News (AIN) and Pro Pilot Magazine in the rankings for product support and customer support, respectively. This strengthens our position in customer loyalty, which must be achieved through every relationship opportunity, from prospecting to after-sales. At the end of the year, we announced the creation of a business unit focused on services and customer support. With the start of operations scheduled for the first half of 2017, the unit will be responsible for the development of support solutions for products and services, both current and new, as well as for managing the associated processes and resources.

This was also the year of the conclusion of the investigation into misdeeds in four transactions conducted abroad, between 2007 and 2011. We deeply regret these events, but we are certain that we have grown with this experience. We entered into agreements with Brazilian and U.S. authorities and we have turned the page, focusing on the continued strengthening of a sustainable culture that is founded on the pillars of integrity and business ethics. With improved processes and controls, we have advanced in our trajectory of success, which has been recognized throughout our 50 years, with more than 8 thousand aircraft delivered to the market, in 90 countries.

We are prepared for the future, with modern products and adjusted operations. We continue to focus on the company’s sustainability and we reaffirm our commitment to the United Nations (UN) Global Compact. For the same reason, we are celebrating one more year of listing on the Dow Jones Sustainability Index (DJSI) and on the BM&FBOVESPA’s Corporate Sustainability Index (ISE, in Portuguese).

We believe that the secret to Embraer’s longevity are the people who are part of the company, to whom we are extremely grateful. Together, we remain confident that we will always generate value for customers, shareholders and communities.

Paulo Cesar de Souza e Silva
President and CEO