S&P lifts Embraer

S&P said it raised its ratings on Embraer SA and its senior unsecured notes to BBB- from BB+ and withdrew the recovery ratings because of the upgrade.

“We think Embraer SA generated more cash in 2023 than we had expected, helped by higher deliveries, cost cuts, and efficiency measures. Our expectation is that these factors led to free cash flow in 2023 that was considerably stronger than the company's public guidance (above $150 million).

“We expect the company to continue its focus on lean operations, which, combined with its robust backlog, should support solid cash flows in coming years. We forecast an EBITDA margin of 10.5%-11.5% and debt to EBITDA consistently below 1.5x in the next two years,” S&P said in a press release.

The agency noted Embraer ended 2023 with an $18.7 billion backlog, which is a 7% boost from the end of 2022.

The outlook is stable.

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