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Air forces worldwide rely on Embraer’s Defense and Security segment

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Embraer’s second-largest segment

Embraer’s Defense and Security segment is the company’s second-largest segment, with 26% of the company’s total revenues in 2013.

The company’s Defense and Security segment deals with the research, development, production, and modification of defense aircraft as well as systems and software design. It provides state-of-the-art electronics, reliability, and high mission effectiveness in combination with low acquisition and operation costs. The segment’s success can be measured by the fact that more than 20 air forces around the world rely on Embraer’s defense systems for surveillance, combat, and training missions. Embraer has successfully produced and delivered more than 100 light-attack aircraft for the Super Tucano to the Brazilian Air Force and other forces worldwide. Embraer is also designing one of the most modern and complete aircraft in its category, the KC-390.

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Segment performance

Embraer’s Defense and Security segment recorded a 14% revenue growth in 2013. However, Embraer’s profit for the same period fell by -20%. Similar segments in rivals Lockheed Martin (LMT), Boeing (BA), and Raytheon (RTN) showed -2.42%, -0.17%, and -11% revenue growth, respectively. All these are a part of the iShares Select Dividend ETF (DVY).

Recently, the segment has performed well. Embraer rolled out the first prototype of its KC-390 military transport aircraft, which is expected to be its next big success jet. The jet will take its first flight this year end. The company also rolled out the first A-29 Super Tucano built in its Jacksonville facility for the U.S. Air Force Light Air Support program. The segment also received contracts for the sale of six Legacy 500 jets to the Brazilian Air Force, which will be used to perform flight inspection missions, and three radars to the Brazilian Navy.

In the next article, we’ll look at various types of executive jets before we analyze the company’s executive jets segment.

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