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Merrill Lynch
   7th Annual Global
 Industries Conference

                                   May 10th, 2005




         ...
Forward-looking Statement

 This presentation includes forward-looking statements or statements about events or
 circumsta...
Aerospace Industry Fundamentals


                              SUCCESSFUL
                               BUSINESS




Hig...
Global Business

Operations in Brazil, United States, Europe and Asia



                                               Fr...
Product Portfolio
Commercial Aviation            Defense               Business Aviation
                                 ...
Regional Jets - A Dynamic Tool

                       When markets are strong…
                        RJs expand catchme...
Regional Jets - A Dynamic Tool

                     … and when markets are weak
                        RJs help to defen...
ERJ 145 Family Orderbook




                                                              Firm
                 Firms   O...
Beyond the Current Model...

                                             There is a need for a new TOOL
 RASK / M




   ...
The E- Jets Family



                                                                                        Certificatio...
EMBRAER 170/190 Recent Announcement




THE INFORMATION CONTAINED HEREIN IS PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR...
EMBRAER 170/190 Family Orderbook




                                                               Firm
                 ...
Jet Deliveries Forecast

Aircraft Deliveries as required by market demand




                             160    161
    ...
Backlog

In 1st Quarter 2005 - US$ 24,9 billion in total orders,
including US$ 9,9 billion in firm orders
  US$ billion

 ...
Defense Market Products

Integrated Market Approach




 Systems      Training   Intelligence,      Combat   Transport
 & ...
ACS – Aerial Common Sensor




  • Embraer will be responsible to supply the new Intelligence and Reconnaissance
    Aircr...
Embraer in
Business Aviation
Business Aviation Market Size
                                         33.6
                                          3.3
...
Embraer Competitive Factors

Solid position in the commercial aviation market
    Enterprise expertise
    Ability to iden...
Embraer Competitive Factors

Solid position in the commercial aviation market
    Enterprise expertise
    Ability to iden...
General Aviation Experience




                                Seneca

        Minuano




                              ...
Embraer Competitive Factors

Solid position in the commercial aviation market
    Enterprise expertise
    Ability to iden...
The world discovers the Legacy




         49 aircraft, 12 countries, the right choice
Legacy Landmarks
                       2002                      2003                    2004                     2005


...
Legacy Landmarks




                                                                         EVS


                      ...
Legacy Authorized Sales Representative Network


                              United Kingdom and Ireland




       Sub –...
Super midsize category market share

                          80% of 2005 production sold


                             ...
Vision



  To become a major player in the Business Aviation Market
  within 10 years by providing innovative and differe...
Understanding the market

In-depth assessment of the Business Aviation Market


     4 advisory board meetings
     4 glob...
Integrated solution




              Comprehensive training program
         Outstanding support and total care programs
...
Truly revolutionary products – design drivers




        Premium comfort           Docile flying qualities
        Outsta...
Truly revolutionary products




    Very Light and Light Jets by Embraer
Very Light and Light Jets

Program Data


Item                    Embraer VLJ                      Embraer LJ


Price     ...
Product portfolio expansion

       Global

  Ultra-Long Range

       Large

   Super Mid-Size

      Mid-size

      Mid...
Financial
  Data
Net Revenues and Gross Margin

            6.7%                                                  •    91% of sales are exp...
Income from Operations

    US$ Million



                                                                  22.3%
       ...
Net Income

    US$ Million                                     16,7%



                                12,8%
           ...
PP&E and R&D – Cash Flow
    US$ million



     200
                                                               173
  ...
Thank you!
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2005* Merrill Lynch 7th Annual Global Industries Conference Embraer Presentation

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2005* Merrill Lynch 7th Annual Global Industries Conference Embraer Presentation

  1. 1. Merrill Lynch 7th Annual Global Industries Conference May 10th, 2005 Luís Carlos Affonso Senior Vice-President Corporate Aviation Market
  2. 2. 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.
  3. 3. Aerospace Industry Fundamentals SUCCESSFUL BUSINESS High Qualified Global Cash Flexibility Technology People Presence Intensiveness Customer Satisfaction Backbone of our entrepreneurial action
  4. 4. Global Business Operations in Brazil, United States, Europe and Asia France USA Le Bourget Villepinte Nashville Palm Beach Gardens China Beijing Fort Lauderdale Jacksonville Portugal Harbin Alverca Singapore Brazil Singapore Gavião Peixoto Botucatu São José dos Campos Eugênio de Melo ELEB
  5. 5. Product Portfolio Commercial Aviation Defense Business Aviation Intelligence Surveillance & Reconaissance The Legacy ERJ 145 Family Combat Training New products Transport EMBRAER 170/190 Family
  6. 6. Regional Jets - A Dynamic Tool When markets are strong… RJs expand catchment areas by adding more spokes to carrier hubs in addition to: • increasing route frequency • supplementing mainline jet capacity • introducing secondary-to-secondary market service • opening new “long & thin” routes with small, low-risk capacity.
  7. 7. Regional Jets - A Dynamic Tool … and when markets are weak RJs help to defend an airline’s competitive market position by: • maintaining high route-frequency • preserving network integrity and overall market presence • replacing unprofitable mainline jet capacity service • rightsizing aircraft capacity to match demand.
  8. 8. ERJ 145 Family Orderbook Firm Firms Options Total Deliveries Backlog ERJ 135 123 2 125 108 15 ERJ 140 94 20 114 74 20 ERJ 145 681 211 892 634 47 Total 898 233 1,131 816 82 (as of 1st quarter, 2005)
  9. 9. Beyond the Current Model... There is a need for a new TOOL RASK / M Regional Airlines Network Airlines Low Cost Carriers E-Jets Capacity THE INFORMATION CONTAINED HEREIN IS PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR DISSEMINATED WITHOUT EMBRAER’S WRITTEN CONSENT
  10. 10. The E- Jets Family Certification Mid 2006 Certification Mid 2005 Certified CTA / EASA TC Mid 2005 Certified CTA / FAA / EASA THE INFORMATION CONTAINED HEREIN IS PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR DISSEMINATED WITHOUT EMBRAER’S WRITTEN CONSENT
  11. 11. EMBRAER 170/190 Recent Announcement THE INFORMATION CONTAINED HEREIN IS PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR DISSEMINATED WITHOUT EMBRAER’S WRITTEN CONSENT
  12. 12. EMBRAER 170/190 Family Orderbook Firm Firms Options Total Deliveries Backlog EMBRAER 170 172 137 309 56 116 EMBRAER 175 15 - 15 - 15 EMBRAER 190 155 230 385 - 155 EMBRAER 195 15 20 35 - 15 Total 357 387 744 56 301 (as of 1st quarter, 2005)
  13. 13. Jet Deliveries Forecast Aircraft Deliveries as required by market demand 160 161 148 145 145 131 96 101 59 32 4 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005E 2006E
  14. 14. Backlog In 1st Quarter 2005 - US$ 24,9 billion in total orders, including US$ 9,9 billion in firm orders US$ billion Firm Orders 28,1 27,6 24,9 Options 24,1 23,4 22,1 10,6 10,1 17,7 11,4 10,7 9 15 6,4 17,5 17,5 13,2 4,1 12,7 12,7 11,3 9,9 3,0 0,6 1,2 3 4 0,6 1,2 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1Q05
  15. 15. Defense Market Products Integrated Market Approach Systems Training Intelligence, Combat Transport & Services Surveillance and Reconnaissance
  16. 16. ACS – Aerial Common Sensor • Embraer will be responsible to supply the new Intelligence and Reconnaissance Aircraft to the U.S. Army and U.S. Navy.
  17. 17. Embraer in Business Aviation
  18. 18. Business Aviation Market Size 33.6 3.3 6.0 23.4 Fractional Ownership 1.9 4.5 Charter and Aircraft Management 4.1 2.6 FBO 1.2 3.8 MRO Completion and 2.2 Refurbishment 1.0 16.0 Airframe / OEM 10.5 (2004 US$ billions) Source: AT Kearney and Embraer estimates 2004 2014
  19. 19. Embraer Competitive Factors Solid position in the commercial aviation market Enterprise expertise Ability to identify market and product opportunities Development of differentiated products at competitive costs Industrial efficiency Global customer support and services
  20. 20. Embraer Competitive Factors Solid position in the commercial aviation market Enterprise expertise Ability to identify market and product opportunities Development of differentiated products at competitive costs Industrial efficiency Global customer support and services Business Aviation Market experience General Aviation previous experience
  21. 21. General Aviation Experience Seneca Minuano Xingu Carajá Ipanema More than 2,500 aircraft delivered
  22. 22. Embraer Competitive Factors Solid position in the commercial aviation market Enterprise expertise Ability to identify market and product opportunities Development of differentiated products at competitive costs Industrial efficiency Global customer support and services Business Aviation Market experience General Aviation previous experience Worldwide acceptance Continuous market understanding and product enhancement Unmatched reliability levels
  23. 23. The world discovers the Legacy 49 aircraft, 12 countries, the right choice
  24. 24. Legacy Landmarks 2002 2003 2004 2005 41,000 ft Enhancements Short Runway Ceiling Performance LCY Operation Maintenance Plan Range New Interior Certification CTA / FAA / JAA / CIS
  25. 25. Legacy Landmarks EVS LED lighting EFB Enhancements 9,500 ft Take-off Landing Altitude to come HSD Window Shade Promises made … promises delivered
  26. 26. Legacy Authorized Sales Representative Network United Kingdom and Ireland Sub – Saharian African Countries Belgium Monaco Netherlands Côte d’Azur Luxembourg Growing Sales Structure
  27. 27. Super midsize category market share 80% of 2005 production sold 15% 11% 11% 8% 2002 2003 2004 2005-2014 Consistent deliveries performance
  28. 28. Vision To become a major player in the Business Aviation Market within 10 years by providing innovative and differentiating product and service solutions with added value to our customers and shareholders.
  29. 29. Understanding the market In-depth assessment of the Business Aviation Market 4 advisory board meetings 4 global market surveys 3,000 operators surveyed 9 concept-aircraft tested + 6 under evaluation
  30. 30. Integrated solution Comprehensive training program Outstanding support and total care programs Extensive service centers coverage Aircraft exchange facilitation Third-party financing packages FBO and aircraft management partnerships Truly revolutionary products
  31. 31. Truly revolutionary products – design drivers Premium comfort Docile flying qualities Outstanding performance Next generation engines Low operating cost Designed for high utilization Human factors High Availability
  32. 32. Truly revolutionary products Very Light and Light Jets by Embraer
  33. 33. Very Light and Light Jets Program Data Item Embraer VLJ Embraer LJ Price US$ 2.75 million US$ 6.65 million Entry into Service mid 2008 mid 2009 Investment US$ 235 million Preliminary data
  34. 34. Product portfolio expansion Global Ultra-Long Range Large Super Mid-Size Mid-size Mid-light Light Entry Very-light
  35. 35. Financial Data
  36. 36. Net Revenues and Gross Margin 6.7% • 91% of sales are exports (2004) Customer Services & Others 76.1% 6.9% Airline Corporate Market Market 10.3 % US$ million Defense Market 39,6% 39,4% 37,7% 34,1% 32,0% 32,0% 28,2% 3.440,5 2.762,2 2.927,0 2.525,8 2.143,5 1.837,3 1.353,5 1998 1999 2000 2001 2002 2003 2004 CAGR 14% Annual growth 77% 36% 50% 6% -14% -15% 60% THE INFORMATION CONTAINED HEREIN IS PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR DISSEMINATED WITHOUT EMBRAER’S WRITTEN CONSENT
  37. 37. Income from Operations US$ Million 22.3% 20.0% 18.6% 16.7% 15,8% 12.7% 12.3% 651.4 462.1 469.6 543,9 368.0 264.8 171.7 1998 1999 2000 2001 2002 2003 2004 CAGR 18% Annual Growth 250% 114% 26% 41% -28% -41% 105% THE INFORMATION CONTAINED HEREIN IS PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR DISSEMINATED WITHOUT EMBRAER’S WRITTEN CONSENT
  38. 38. Net Income US$ Million 16,7% 12,8% 11,2% 11,10% 10,7% 8,8% 380,2 320,7 328,4 6,3% 234,5 222,6 145,3 136,0 1998 1999 2000 2001 2002 2003 2004 CAGR 15% Annual Growth 4,618% 61% 37% 2% -32% -39% 180% THE INFORMATION CONTAINED HEREIN IS PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR DISSEMINATED WITHOUT EMBRAER’S WRITTEN CONSENT
  39. 39. PP&E and R&D – Cash Flow US$ million 200 173 180 158 152 160 143 140 114 119 120 111 100 PP&E 100 77 R&D 80 70 64 66 59 60 50 40 20 0 2000 2001 2002 2003 2004 2005 E 2006 E Gross R&D amounts THE INFORMATION CONTAINED HEREIN IS PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR DISSEMINATED WITHOUT EMBRAER’S WRITTEN CONSENT
  40. 40. Thank you!

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