São Paulo – Brazil's exports of machinery and equipment to the United Arab Emirates (UAE) experienced remarkable growth, soaring 400% this January compared to the same month last year. The jump from USD 4 million to USD 23 million was highlighted during a recent online press conference by the Brazilian Machinery and Equipment Industry Association (Abimaq). While this singular growth point stands out, the broader picture presents mixed results for Brazil's machinery sector.
According to Abimaq, total machinery exports amounted to USD 818.3 million last month, marking a decrease of 22.3% from January 2024 and down 25.5% from December 2024. Notably, the declines were most acute for shipments to major markets such as Mexico and the United States. Patrícia Gomes, Abimaq’s Executive Director of Foreign Markets, expressed concerns about these trends, stating, "We hope it’s just for January." She also indicated potential factors at play, including strikes and updated compliance practices involving the Federal Revenue Service.
Despite the decline in exports overall, the revenue for manufactured machinery and equipment hit BRL 20.49 billion (approximately USD 3.55 billion), representing a commendable 19.5% increase compared to January 2024. This positive trend is attributed mainly to surges within the consumer goods machinery, renewable energy, and oil sectors.
Gomes noted, “Imports are a cause for concern because this shows the industry has lost competitiveness over the years, and this is difficult to recover.” The inflationary pressure from increased imports, which rose by 19.3% year-on-year to USD 2.7 billion, was signaled as particularly troubling for Brazil’s machinery industry. China remains Brazil's largest source of imported machines, accounting for 35.7%, followed by Germany at 14.1% and the United States at 13.3%.
On the agricultural front, there was optimism as the industry reported a 23.3% sales increase compared to January of last year, achieving BRL 4.2 billion (USD 727 million). Pedro Estevão, the president of Abimaq’s Agricultural Machinery and Implements Sector Chamber, noted this rise was influenced by last year's adverse conditions, primarily drought.
The projections for the upcoming year appear brighter for the agricultural machinery sector, with estimates indicating exports could rise by around 8% through 2025, against the previous year’s figures.
Switching gears to the aviation sector, Embraer delivered optimistic forecasts for 2025, with expectations for net revenue between USD 7 billion and USD 7.5 billion—up from USD 6.4 billion the previous year. The company anticipates delivering 145 to 155 jets to the executive aviation market and between 77 to 85 commercial jets. CEO Francisco Gomes Neto spoke confidently about the company's growth, stating, "We’re very optimistic for this year, even after beating records for revenue, sales, and backlog.”
These predictions hint at profitability challenges, as Embraer expects its EBIT margin to decrease compared to 2024. Factors behind this shift include the unique circumstances of receiving USD 150 million from Boeing last year, which buffed profit margins. Gomes Neto pointed out anticipated free cash flow will be around USD 200 million this year, significantly less than the USD 676 million generated the previous year due to client payment timings. Despite this, he noted, "This will be distributed more evenly across the year, with expectations of strong performance in the later quarters.”
The outlook certainly shines brightly on Embraer, which just announced its most significant order ever—182 executive jets for Flexjet and 15 commercial aircraft for Japan’s All Nippon Airways—illustrative of the growing demand for air transportation.
Nevertheless, challenges remain, particularly the persistent supply chain issues impacting the aviation sector. Gomes Neto remarked on proactive measures being implemented to mitigate such challenges, including the hiring of new personnel to strengthen relationships with key suppliers and investments aimed at enhancing supplier management systems. He emphasized the proactive approach, indicating, “I myself have three to four meetings each year with our suppliers to understand how we can help them improve their capacity.”
On another note, Cosan reported a staggering R$ 9.3 billion loss for the fourth quarter, attributed to significant impairments from their investment position and other financial challenges triggered by management changes within their energy subsidiary, Raízen. CFO Rodrigo Araujo described the quarter as pivotal, stating, "This is a quarter to turn the page for the company." He elaborated on the strategic steps being taken to improve the company’s financial framework moving forward, showing commitment to refining their structure for the year 2025.
Brazil’s economic indicators reflect both potential and challenges. Ensuring sustainable growth requires strategic planning and adaptability amid fluctuated global economic conditions. Industries from agriculture to aviation envelop challenges synchronously with opportunities, necessitating focused efforts to bolster Brazil's competitiveness on the world stage.