Embraer has raised its fiscal 2026 profitability and cash flow guidance after posting a 23% growth in revenue in the second quarter (Q2) driven by the Defence & Security segment.
The company now forecasts adjusted earnings before interest and taxes (EBIT) margin of 10.0% to 10.6% for the year, up from 8.7% to 9.3%, and adjusted free cash flow excluding Eve of $400m or higher, up from $200m or higher.
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Consolidated revenue guidance was left unchanged at $8.2bn to $8.5bn.
In the second quarter of the fiscal, Embraer’s Defence & Security revenue reached $304m, up 38% from $221m, driven by higher KC-390 revenue recognition tied to customer mix and product stage under the percentage of completion method.
The segment’s gross margin improved to 20.6% from 19.5%, while the adjusted EBIT margin rose to 11.9% from 9.2% on operating leverage.
During the quarter, defence backlog grew faster than any other unit, rising 42% year on year to $6.1bn from $4.3bn.
Among others, this growth was driven by the United Arab Emirates Air Force’s acquisition of 10 C-390 Millennium aircraft.
The deal also includes options for 10 more, marking the largest single international order for this model and its first entry into the Middle East market.
As a result, the Defence & Security segment reported a book-to-bill ratio of 2.6 over the past 12 months.
There were no Defence & Security deliveries during the quarter, Embraer said.
Overall, the company’s firm order backlog reached $34.5bn, up more than 16%, with Commercial Aviation up 15%, Services & Support up 12% and Executive Aviation up 5%.
