is hoping to secure two key Brazilian government contracts this year as it looks to expand its defense and security activities.
One is the Sisfron domestic security program, estimated at $4 billion, for which Embraer wants to serve as prime contractor and integrator for diverse elements such as radars, unmanned aircraft, communications and other systems, says Luiz Carlos Aguiar, CEO of Embraer Defense and Security, at the Fidae air show here.
The other effort is concluding the deal with the Brazilian government for a $400 million geostationary communications satellite program. Embraer and Telebras signed a memorandum of understanding in November to jointly pursue the program.
Embraer has built its 2012 financial forecast without assuming those deals are secured. The company expects to grow revenue this year to $900-950 million, from $851.1 million in 2011, with backlog to grow slightly to $3.4 billion from $3.3 billion. But, Aguiar notes, the backlog projection is a conservative forecast and does not reflect Sisfron or satellite work.
In 2012, revenue out of Brazil is expected to dominate, largely owing towork growing to 39% of revenue from less than 20%. Revenue in 2011 was more evenly split between sales to Brazil and exports.
The 60 letters of intent for KC-390s are not yet in the backlog. Securing those sales is planned for next year as the design firms up and the company shifts to building the aircraft in advance of first flight in 2014.
Long-term growth also will rely on its Super Tucano program, where Embraer sees a market for 350 aircraft through 2025. The value is around $5 billion.
The company also sees around $1.6 billion in future modernization business building on its F-5 work; 44 of the 46 aircraft being modernized on a first contract have been delivered, with 11 to be upgraded later. Two prototype A-4s being modernized for the Brazilian navy also are in the works to launch the wider upgrade effort.
In terms of acquisitions, Aguiar indicates 2012 may not see major deals, but the focus will instead be on integrating acquisitions made last year, strengthening those businesses and looking for synergies.
Embraer and Elbit also are looking at adjustments in their joint-venture shareholding structure to come into compliance with Brazil’s new rules on defense companies. Embraer may have to slightly increase its stake beyond the current 51%, but Aguiar says that is not certain and any adjustments would be minor.