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Embraer SA's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Shifting gears to defense and security, we – this business is growing as predicted, it’s showing the robustness in its growth. So in this quarter, it went 20% of the revenues of the company and our outlook for the year is 16%. So it’s probably going to stay between 15% and 20% throughout the year, this is our expectation. We have the first flights of the second AEW 145 for Indian aircraft of the three so the performances keep moving.

We also announced during the Dubai Air Show, three new customers for the Super Tucano all of them in Africa. And also I think important to emphasize, we acquired participation of EADS has in OGMA. So by taking OGMA in Portugal now with 65% remaining 35 in the hands of the Portuguese Government.

So a bigger bounce here about financials, we have slight deflection in our backlog and our revenues, we reached $1.16 million two-thirds of that coming from the area of commercial aircraft business, 20% to France and 13% business to US. Our gross margin is more or less where we thought, it should be, now at 23% showing a consistent behavior as for as last two quarters.

With that, we also really achieve in operating margin of 7.4% which is $86 million result is 1.15 revenues. Our SG&A is going back to life, our SG&A, we broke that the trends which are throughout last year in our growth, in our increasing of cost in SG&A. So we are able to reduce both in riyals and US dollars and this is clearly a focus for us not to allow you to keep growing but rather stable or in more and more efficient as we go.

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