Embraer (EMBR3), a Brazilian aircraft maker, revealed a record order backlog of US$29.7 billion at the end of Q2 2025, up 40% year on year and 13% quarter on quarter.
Driven by large new orders from SkyWest (60 E175S) and SAS (45 E195-E2S), the number was above Itaú BBA’s previous US$28.6 billion estimate.
Analysts at BBA estimate that nearly half of Embraer’s revenue could be subject to the tax, and shares were up just 1.50 per cent at R$69.14 when the Tuesday (July 22) session opened, as positive data was tempered by new worries over a US move to slap 50 per cent tariffs on Brazilian imports.
Commercial aviation drives portfolio expansion
According to local media outlet InfoMoney, the quarterly backlog increase was primarily driven by commercial aviation, which saw a 31% increase.
The segment’s backlog reached US$13.1 billion, the largest amount in eight years.
In terms of aircraft, the backlog increased from 336 to 437 units, indicating high customer demand.
Analysts at Bradesco BBI cited the delivery mix, which includes a higher share of E1 models, as a potential margin increase.
The segment’s book-to-bill ratio increased to 1.8x over the last year, indicating strong sales momentum.
XP Investimentos highlighted that the trailing ratio indicated around US$600 million in commercial aviation revenue, which is consistent with internal forecasts.
BBI anticipates more visible results from Embraer’s production levelling efforts, which begin in 2026, as the company seeks to improve manufacturing efficiency and maintain margins.
Executive aviation and defence maintain steady performance
For the new executive aviation division, EMBR 1.SA shipped a quarter of its annual delivery goal in Q2, above the five-year average of 21%.
The company has already delivered a solid first quarter and will have to deliver 89 jets in the second half to reach the midpoint of its guidance, up 5% versus 2024 levels.
Delivery volumes still tracked above historical levels, even if the segment’s backlog declined by 2%.
The Defence and Security segment also had a good improvement.
Total division backlog increased 3% from the previous quarter and doubled from the same year-ago total, reaching US$4.3 billion.
Other major movers were Lithuania selecting the C-390 and Portugal’s order of a sixth KC-390 Millennium aircraft.
The backlog at this time does not include further orders placed in Sweden, Slovakia, Portugal and Panama, which BBI considers as evidence of continued demand, particularly for NATO markets.
Tariff threats cloud investor sentiment
Despite strong fundamentals, US trade worries continue to weigh on market morale.
According to Itaú BBA, Embraer’s robust backlog supports the company’s long-term outlook.
However, the likelihood of 50% tariffs on Brazilian exports limits the stock’s near-term gain.
BTG Pactual shared this caution, warning that even with expected margin improvements—particularly from increasing deliveries of the more profitable E2 jets—the uncertainty around tariffs could dissuade a stronger market reaction.
JPMorgan had a similar sentiment, adding that while the backlog indicates excellent year-over-year increase, it fell short of the bank’s projection of US$33 billion.
Including unbooked defence purchases would bring the total closer to US$32 billion, but the market’s cautious reaction reflects larger geopolitical uncertainty.
Valuation and forward outlook
According to JPMorgan, Embraer trades today at 0.31x EV/Backlog.
It trades at a 2026 estimated EV/EBITDA multiple of 7.8x, well below peers such as Boeing (24.7x), Airbus (11.9x) and Bombardier (10.3x).
To be announced Q2 2025 earnings, August 5, before market open.
XP Investimentos, on the other hand, stated that there were zero commercial aviation order cancellations in the quarter amid harsh macroeconomic conditions, and the net firmed up 120 new orders of aircraft.
However, analysts broadly believe the biggest risk to the stock’s path remains investor attention on the U.S. tariff issue.
Bradesco BBI, BTG Pactual and JPMorgan maintained buy calls with targets of R$97, R$94 94 and R$93, respectively.
The target for ADR was maintained at US$62.50, with a recommendation of buy, by Itaú BBA.
Though Embraer’s fundamentals are solid and diversified across segments, we do not believe its shares will fully reflect that strength without more clarity on US trade policy.
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