By Carlos A. DeJuana SAO PAULO, Brazil, May 13 (Reuters) - Brazil's Embraer (ERJ) (EMBR4), the world's No. 4 maker of commercial aircraft, on Monday posted a 19.4 percent drop in its first-quarter net profit, hurt by shrinking demand for its regional jets. As expected by analysts, Embraer delivered only 30 of its ERJ 135/140/145 airplanes in the first three months of the year given a continuing slump in the aviation industry following the Sept. 11 attacks on the United States and a still sluggish recovery in the world economy. The deliveries of its jets, which are used mainly for the regional air travel market, fell from 42 in the first and 34 in the fourth quarters of last year. Embraer's net profit fell to 176 million reais ($74.1 million) from the 219 million reais a year earlier, after net sales slid by 12.9 percent to 1.2 billion reais. On an operating level, earnings before interest, taxes, depreciation and amortization (EBITDA) slipped to 302 million reais from 465 million reais a year-ago. "It was a little less than I expected," said Carlos Albano, an analyst at Unibanco, who had expected Embraer's defense sector products to contribute more to earnings. EBITDA margin, a measure of profitability, fell to 22.7 percent from 30.5 percent a year earlier since Embraer was also unable to benefit from the currency depreciations that plagued Brazil last year and boosted dollar-based exports. Brazil's real was practically stable against the dollar in the first quarter of this year but depreciated 9.4 percent in the same period last year, under pressure from a financial crisis in neighboring Argentina. Analysts said the low number of deliveries in the first quarter means Embraer will have to pick up the pace in coming quarters to reach its year-end goal of making 135 deliveries. "They have to deliver a minimum of 35 planes per quarter now, so with five extra planes they are at least going to be improving revenues each quarter (over the prior quarter)," Albano said. CASH POSITION OUT OF THE RED Like its main competitor in the regional aircraft market, Canada's Bombardier (BBDb)(BBDa), Embraer was forced to cut staff and production last year after the Sept. 11 attacks threw an already weak global aviation industry into a full-fledged crisis. It slashed its year-end delivery forecast to 135 planes from 205. The ensuing aviation crisis also forced Embraer to dip into its own pocket last year to help finance deals with customers due to tight market conditions, prompting its cash position to plunge to a negative $23 million at the end of 2001 from a positive $732 million at the end of 2000. Embraer said its net cash position at the end of March rose to a positive $38.5 million as it reduced inventories and struck financing deals with its suppliers for its new EMBRAER 170/190 line of jets. Analysts welcomed the move. Privatized in 1994, Embraer is the country's largest exporter. Its small and mid-sized aircraft, seating up 70 passengers, are popular with the regional plane market and customers like Swiss airline Crossair AG (CROZn). Embraer's preferred shares finished down 0.22 percent on the Sao Paulo Stock Exchange on Monday, outperforming the benchmark Bovespa (BVSP) index, which ended down 1.05 percent. They have also outperformed the index so far this year, rising 4.5 percent versus the Bovespa's 11.6 percent dip. ©2002 Reuters Limited.