Fitch Ratings has upgraded Embraer’s (NYSE: ERJ; B3: EMBR3) credit rating from “BB+” to “BBB-,” citing improvements in the company’s production and delivery profiles, enhanced profitability, and a reduction in gross debt. These factors have driven Embraer’s credit metrics to levels more aligned with the higher rating, and the outlook remains stable.
Fitch noted that Embraer’s strong competitive position in both the commercial and business jet markets, along with a substantial backlog of $21.1 billion, contributed to the upgrade. The company’s diversified product portfolio, which includes defense programs and a solid services and support segment, further bolsters its financial standing. Embraer’s robust liquidity, primarily held outside Brazil, along with significant export revenues and offshore operating cash flow, also supports its enhanced rating.
“Embraer has an excellent product portfolio, updated to the market needs, and our focus on operational efficiency and financial discipline ensures sustainable business growth, profitability, and cash generation. This recognition from Fitch clearly demonstrates the success of our strategy and years of hard work,” said Embraer’s CFO, Antonio Carlos Garcia.
This upgrade marks Embraer’s second investment-grade status this year, following a similar upgrade by S&P in February. As a leading manufacturer of commercial jets with up to 150 seats and Brazil’s largest exporter of high technology, Embraer is well-positioned across all operational segments. The company boasts a modern and competitive portfolio in Commercial Aviation and Executive Jets, alongside the international expansion of its C-390 Millennium program and its Services & Support segment.
With an order book at its highest level in seven years, totaling $21 billion as of the second quarter, Embraer projects revenues between $6.0 billion and $6.4 billion for 2024. This represents a remarkable 49.8% increase since 2020, according to figures from Q2 2024. The adjusted EBIT margin, which was negative (-2.7%) in 2020, is expected to reach between 6.5% and 7.5% by the end of 2024.
