Embraer Bets on Brazil Market as Global Sales Lag, Aguiar Says

Empresa Brasileira de Aeronautica SA, the world’s fourth-largest aircraft maker, expects to increase its share of sales to Brazil in 2010 to compensate for the lack of improvement in global demand, Chief Financial Officer Luiz Carlos Aguiar said.

Embraer, as the company is known, will sell a record $600 million to the domestic market in 2009, or about 10 percent of total sales, Aguiar said in a telephone interview from headquarters in Sao Jose dos Campos. The company last week forecast a 10 percent decline in total sales in 2010.

The global aviation market “has not shown significant improvement yet,” Aguiar said.

Embraer fell 0.2 percent to 9.18 reais yesterday in Sao Paulo. The shares have gained 4.2 percent this year through Dec. 22, compared with an 80 percent jump in the benchmark Bovespa index.

Embraer’s results have been hurt by a 30 percent surge in Brazil’s currency against the dollar in 2009, the biggest gain among major currencies tracked by Bloomberg. As much as 95 percent of Embraer’s sales are dollar-denominated and 25 percent of costs are in reais, Aguiar said.

“The past two years were like a seesaw,” he said. “The currency strategy had to change very quickly in the face of the drastic moves we saw.”

Embraer expects an exchange rate in 2010 that is “close to what is in right now,” Aguiar said, while declining to give the exact rate. Brazil’s real gained 0.2 percent to 1.7809 per dollar yesterday.

The company has gradually increased its real-denominated cash position this year to about 45 percent of total, he said.