Positive business performance will enable the company to meet, a year early, its 2016 Outlook targets announced at the Investors' Day
- EBITDA rose 5.8% to €5,341 million in the first nine months of the year, driven by the 16.2% growth in international business, in contrast to the 2.1% drop in Spain
- Regulated activities already account for almost 75% of EBITDA, with a growth rate of 15.5%
- Investment rose 6.7% to €2,096 million, of which 61% is allocated to growth projects
- The company's financials continue to improve, with leverage at 41.1% down from 42.2% in the third quarter of the previous year
- These results reinforce Iberdrola’s commitment to offering shareholders a minimum annual remuneration of €0.27 gross per share
- The Board of Directors approved a free share capital increase for a new edition of the ‘Iberdrola Flexible Dividend’ scrip dividend plan, payable in January 2016, with a minimum guaranteed fixed price of €0.125 gross per free subscription right
Iberdrola recorded a net profit of €1,919.7 million in the first nine months of 2015, up 8.5% on the same period of last year. Recurrent net benefit, before non-recurring expenses, improved by 8.5% and stands at €1,672.8 million.
EBITDA reached €5,430.7 million by September 2015 (+5.8%). Of that amount, 75% comes from the regulated businesses: Networks, Renewables and Generation Mexico. The good performance in these areas achieved overall EBITDA increases of 15.5%.
Operating cash flow (FFO) increased by 9.1% to €4,308.9 million, exceeding net investments in all businesses, which stood at €2.095.7 million, up 6.7% compared to the first nine months of 2014. Of that amount, 61% went to projects geared towards company growth.
87% of investments were allocated to the regulated businesses: €1,087.1 million to Networks, €514.1 million to Renewables and €211.7 million to Generation Mexico.
Revenues over the period were €23,689.6 million, up by 6.7%, while gross margin grew by 7.3% to € 9,523.9 million. Also, Iberdrola continued to improve its efficiency with net operating expenses dropping by 0.2%, excluding the negative effect of the exchange rate.
Results by businesses: the international area grows 16.2%
The 5.8% increase in EBITDA in the first nine months of year, to €5,431 million, was driven by the positive performance in the international businesses where EBITDA grew by 16.2%. However, there was a 2.1% drop in operations in Spain.
By business, Networks grew by 10.5%, reaching an EBITDA of €2,684.2 million. This result is mostly due to the improved performance of operations in all regions and to the increase in the value of the regulated assets.
The Renewables business increased its EBITDA by 22.7%, rising to €1,126.5 million, driven by higher outputs in the UK and Latin America, the good performance in offshore wind power generation and higher overall prices, offsetting the lower wind power generated in the United States.
These results also offset the worse performance in Generation and Retail, which recorded an EBITDA of €1,735.2 million, down 7.4% on the first nine months of 2014. This drop is mostly due to the lower output in Spain (-10.5%) as well as regulatory obligations and CO2 prices in the United Kingdom.
The Generation business in Mexico improved its EBITDA by 38.5% to €340 million.
Investments up by 6.7% to continue growth
The investments made by IBERDROLA between January and September 2015 totalled €2,095.7 million, up 6.7% on the same period of 2014.
Of that amount, 61% went to projects geared towards growth, including the following:
- Offshore wind power: Construction work is ongoing at the Wikinger wind farm in the Baltic Sea, which has a capacity of 350 megawatts (MW). The company plans to commence East Anglia I (714 MW) in 2016 and progress is ongoing at the Saint Brieuc offshore wind farm, with 496 MW capacity. These facilities will be commissioned in 2017, 2019 and 2022, respectively.
- Onshore wind power: Iberdrola is developing projects with a total capacity of 1,225 MW of which six new wind farms are already under construction in the United Kingdom, four in the United States - with 100% of the energy under long-term contracts - six in Brazil and two in Mexico.
- Regulated generation in Mexico: The company is currently working on the construction of two combined cycle power plants (CCGT), Monterrey V and Baja California III, with a combined installed capacity of 594 MW, to be commissioned during 2016, and it is also building three new cogeneration plants which will begin operations in 2016 and 2017. Additionally, it was awarded construction, operation and ownership of the 890-MW Escobedo combined cycle plant. Overall, more than 1,800 MW will be commissioned by 2018.
- Networks in the United Kingdom and United States: The new regulatory frameworks approved in the United Kingdom for transmission and distribution will allow for an increase in the asset value. Meanwhile, there are significant opportunities for growth in transmission infrastructure in Maine and New York State.
- New retail products in Spain: Iberdrola has launched new retail products, such as Smart Solar, designed to promote self-supply through solar photovoltaic energy or tailor made plans, A Tu Medida, that include an array of solutions to meet the different customer needs. It has also set up a protocol for protecting vulnerable customers which it is implementing with various Public Administrations.
Financial strength and shareholder remuneration
As well as making the investments listed above, the Group's management has enabled it to maintain financial strength.
Thus, Iberdrola's debt at the end of September stood at €26,159 million, €94 million less than in the same period of the previous year. Financial leverage improves to 41.1% from 42.2% in the same period of the previous year. These figures include €146 million relating to financing the tariff deficit in Spain.
Financial ratios have also continued to improve: net debt/ EBITDA is 3.6 times; the ratio of funds from operations (FFO) to net debt is 22.2% and the retained cash flow (RCF)/ net debt ratio is 19.7%.
Iberdrola’s strong liquidity position at the end of the third quarter of 2015, exceeding €8,100 million, is equivalent to more than 27 months of the company’s financing needs.
This solid balance sheet enables Iberdrola to reaffirm its commitment of offering its shareholders an annual remuneration of at least €0.27 gross per share.
With the new capital increase approved yesterday by the Board of Directors for a new edition of the Iberdrola Flexible Dividend scrip dividend programme, Iberdrola will be offering shareholders opting for the rights purchase commitment undertaken by the company, the possibility of receiving at least €0.125 gross per free allocation right. The amount will be paid in January, as scheduled.
The remaining amount - to complete the aforementioned €0.27 gross per share - will be paid throughout 2016 by means of a new edition of the Iberdrola Flexible Dividend plan and a complementary dividend in cash, if approved at the Annual Shareholders’ Meeting.
Iberdrola also plans to launch a share repurchase programme to maintain stock capital at 6,240 million shares.
2016 Outlook targets met a year early
The good operational performance by the businesses and the Group's management mean that Iberdrola is in a position to reaffirm its goals for 2015: to end the year with higher EBITDA and net recurring profit than in 2014 and with better financial ratios than those of the previous year.
Iberdrola is on track to meet, a year early, the targets set for its 2016 Outlook as presented in February 2014. In fact targets for FFO/net debt and RCF/net debt have already been met.
In order to continue advancing its commitments, the Group will carry on developing a business model around three key pillars: growth, financial strength and sustainable shareholder remuneration.
The last quarter of the year will also be particularly important as regards the merger between Iberdrola USA and UIL Holdings.
The transaction is expected to be completed by the end of 2015, having already secured all necessary Federal approvals and made progress towards obtaining the relevent authorisations in the States of Connecticut and Massachusetts.
IMPORTANT INFORMATION
This communication does not constitute an offer to purchase, sell or exchange or the solicitation of an offer to purchase, sell or exchange any securities. The shares of Iberdrola, S.A. may not be offered or sold in the United States of America except pursuant to an effective registration statement under the Securities Act or pursuant to a valid exemption from registration.
FORWARD-LOOKING STATEMENTS
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ADDITIONAL INFORMATION AND WHERE TO FIND IT
Iberdrola USA, Inc. will file with the United States Securities and Exchange Commission (“SEC”) a registration statement on Form S-4, in which a proxy statement will be included as a prospectus, and other documents in connection with the proposed merger. The UIL Holdings Corporation (“UIL”) proxy statement/prospectus will be sent to the stockholders of UIL. STOCKHOLDERS OF UIL ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS, AND ANY OTHER FILINGS THAT MAY BE MADE WITH THE SEC IN CONNECTION WITH THE MERGER WHEN THEY BECOME AVAILABLE, AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER. The registration statement and proxy statement/prospectus and other documents which will be filed by Iberdrola USA, Inc. with the SEC, when filed, will be available free of charge at the SEC’s website at www.sec.gov, on Iberdrola USA, Inc.’s website athttp://www.iberdrolausa.com or by contacting Iberdrola’s Investor Relations Department. Such documents are not currently available. You may also read and copy any reports, statements and other information filed by Iberdrola USA, Inc. and UIL with the SEC at the SEC public reference room at 100 F Street N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at (800) 732-0330 or visit the SEC’s website for further information on its public reference room. Certain executive officers and directors of UIL have interests in the proposed transaction that may differ from interests of stockholders generally, including benefits conferred under retention, severance and change in control arrangements and continuation of director and officer insurance and indemnification. This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to appropriate registration or qualification under the securities laws of such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.