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Iberdrola Lifts Net Profit 16% To €922 Million In First Quarter


Effective management and a solid business model drove improved results for the first three months


Ebitda rose 11.6% to €2,178 million driven by the Group’s well-diversified business mix


  • Positive trend in Spain, in Renewables and in Brazil, and also in regulated and renewables businesses which made up  59% of Ebitda
  • Production rose 15.4% to more than 42,400 million kWh, reflecting an increased contribution from CO2 emission-free generation
  • Operating cash flow rose 17.1% in the period  and efficiency improved 8 percentage points


  • Iberdrola maintained its strong financial foundations in the quarter and has confirmed its A rating, enabling it to reduce financial costs~
  • The Group reduced debt by €2.1 billion and financial gearing improved to 45.6% from 52.2% in the first quarter of 2009
  • Targets for the quarter were exceeded and prospects remain positive for improving 2010 Ebitda and recurring net profit

IBERDROLA recorded a net profit of €922 million in the first quarter of 2010, an increase of 16.2% over the same period last year. The improvement was driven by the Group’s diversification in geographical and business areas where growth in some allowed it to compensate for uneven performance in others.

Increased production and improved efficiency in the quarter offset a negative trend in prices and led to Ebitda rising 11.6% to €2,178 million, Ebit by 7.8% to €1,536 million, gross margin by 9.2% to €3,224.5 million, revenues by 0.6% to €7,688 million, recurring net profit by 10.6% to €847.6 million and operating cash flow by 17.1% to €1,491.7 million.

Regulated and renewables businesses contributed 59% to total Group operating profit in the quarter, with a solid performance from traditional business in Spain, as well as from Renewables and Brazil. Ebitda from Renewables rose 30.4% while energy business in Spain contributed 33%, ScottishPower 24%, Iberdrola Renovables 20%, Iberdrola USA 9%, Latin America 10% and others 3%.

Global energy production rose 15.4% to 42,454 million kilowatt hours (kWh), reflecting increased CO2 emission-free generation, especially hydroelectricity which increased 135%, wind (+26%) and nuclear (+5%). The Company again diversified and expanded its generating assets, with low CO2 emissions and flexible costs, to a total of 43,728 megawatts (MW).

During the quarter, IBERDROLA prioritized efforts to consolidate its strong financial ratios. Efficiency improved 8 percentage points across all businesses, with a positive movement of 230 basis points in like for like terms in the ratio of operating expenses to gross margin.

Liquidity remained comfortable at €7.8 billion and Standard and Poor’s recent decision to maintain the Company’s A rating consolidated the Company’s financial foundations. IBERDROLA reduced its gearing to 45.6% from 52.2% at the end of the same period last year, while cutting its net adjusted debt by €2.1 billion to €29,094 million (€25,310 million excluding the tariff deficit).

The Company expects an improvement in its balance sheet structure following approval of the Royal Decree on the Tariff Reduction Securitization Fund, which is expected to be created in the near future as one of the final steps towards recovering this debt.

The positive results achieved in the first quarter endorse the strategy followed over recent years during which the Company has invested more than €62 billion between 2000-2009 and achieved leadership in the sector. IBERDROLA has tripled its installed capacity, multiplied production by 2.7, doubled quality of service ratios, increased clean energy generation by 11, provided employment to 33,000 people as well as 35,000 indirect jobs, register €27 billion in purchases, and invest €100 million a year in R+D.

The Group has a presence in more than 40 countries and has diversified its business into more liberalized sectors and those markets best positioned to recover from the global crisis. The company is the leading Spanish energy group, the fourth largest Spanish company on the IBEX 35 share index, world leader in wind power and one of the largest global electricity companies.

Projections for 2010

For the full year, the Company expects higher Ebitda and recurring net profit as a result of the expected improvement in economic conditions, with demand stabilizing, installed capacity rising, new efficiency gains, adjusting investments to the levels of cash flow generated, securitization of the tariff deficit in Spain and improving the debt profile.

These measures, in addition to a generation mix that largely unaffected by cost movements for raw materials and a diversified portfolio of generating assets, leave IBERDROLA well-placed to deal with current economic instability.

In the next few years, IBERDROLA aims to consolidate its industrial growth strategy based on sustainable and high added value energy projects in its key markets in the Atlantic area. The Company will focus on zero CO2  emitting energy projects including renewables, hydro and nuclear, smart grids and the electric vehicle.

IBERDROLA projects investments of €18 billion between 2010-2012, of which €9 billion will be in renewables (fundamentally wind power), €6.3 billion in improving and expanding networks and €2.7 billion in electricity generation and energy distribution throughout the world.

Key operating aspects in Q1


IBERDROLA benefitted during the quarter from an improvement in Spain with a 5.2% rise in demand and from increased electricity production with zero CO2 emissions, especially hydro and wind.

Production rose 28% to 21,723 million kWh, with major contributions from hydro (+157.6% to 8,069 million kWh) and renewables (+35.2% to 3,744 million kWh). Nuclear power stations produced 6,285 million kWh and combined cycle gas plants 2,754 million kWh.

Emissions fell 47%, from 147 grammes of CO2 per kWh to 78, as a result of which 83.3% of IBERDROLA production in Spain was CO2 emission free.

Overall, IBERDROLA increased Ebitda from traditional business in Spain by 21.5% to €716 million in the quarter, of which €491.7 million came from liberalised business (+40.6%) and €253.6 million from regulated business which increased earnings by 1.7% due to greter efficiency despite lower revenues. The positive impact of energy sector liberalisation enabled the Company to make better use of forward markets, as a result of which it had the bulk of expected 2010 production sold at an average price above €50 per MWh.
In addition, the final steps have been towards resolving the issue of tariff deficits, following approval of the Royal Decree covering the Securitization Fund. A total of €3,784 million corresponds to the Group, which it expects to receive in the coming months.


The international diversification strategy followed in recent years by IBERDROLA and an increased contribution from clean energy generation saw total electricity production rise 15.4% to 42,454 million kWh. This was achieved in a context of a modest increase in global demand (+3.4%), with an increased contribution from clean generation technologies, responding to current Group strategy.

A highlight of the period was the strong advance in hydro production which rose 135.1% to 8,840 million kWh and made up 20.8% of the total. Renewable energy production also continued to rise (+26.2% to 6,812 million kWh), as did its weighting which stood at 16%.

Emissions came to 231 grammes of CO2 per kWh at Group level,  21.4% less than in the same period last year. As a result, nearly 52% of total IBERDROLA production was CO2 emission free.

IBERDROLA continued to diversify and extend its generating assets around the world during the period, with a total installed capacity of 43,728 megawatts (MW), compared to the 43,669 MW at the close of March 2009.

By technology, combined cycles accounted for 30.1% of the total, hydro for 22.5%, renewable energy for 25.8% - surpassing 25% for the first time – thermal 10.8%, nuclear 7.6%, cogeneration 2.8% and fuel oil 0.4%.

The Company will continue to prioritize clean energy in the coming years, with several renewables and hydro power stations coming on stream both in Spain and abroad.


The Company, world leader in wind power*, increased net profit by 37% in the first quarter to €156 million, reflecting increased production and capacity, as well as a growing contributing from international business. Ebitda rose 30.4% to €441 million in the period, while gross margin was 27.6% higher at €574.4 million.

Iberdrola Renovables raised electricity generation by 26.2% to 6,812 million kWh, more than half of it outside Spain. It also increased operating capacity by 22% to 10,789 MW, while installed capacity stood at  11,294 MW, with another 913 MW under construction.

During the quarter, prices rose across the board as a result of sales contracts negotiated and efficiency increased with a 6% improvement in cost per megawatt. The subsidiary also expanded its project pipeline by 2,700 MW to 61,100 MW with new offshore wind projects.


ScottishPower Ebitda came to €526.6 million (-0.5%), reflecting a worse performance from liberalised business that was partially compensated by increased revenues from networks as a result of investments carried out.

IBERDROLA increased its installed capacity in the UK by 1.4% during the quarter to 6,838 MW, as a result of new renewables installations coming on stream. Electricity production came to 7,483 million kWh, down 6.2%.


Iberdrola USA contributed 9% of Group Ebitda, representing €202.4 million or an 11% decline which reflected currrency factors and accounting adjustments. IBERDROLA’s presence in the United States was strengthened by the significant growth in its renewable energy subsidiary there. The Group has a total installed capacity in the country of 4,776 MW, a rise of 811 MW on the previous year, of which 3,827 MW is wind power.
As a result of this greater capacity, IBERDROLA increased production by 23.4% to 3,103 million  kWh. Energy distributed in the country came to 7,815 million kWh, or 14.6% of the Group total. The Company is currently active in 25 states, carrying out regulated business (electricity and gas distribution), gas storage, conventional generation and wind power.


Gross operating profit in Latin America rose 20.2% to €225.8 million, accounting for 10% of total IBERDROLA Ebitda in the period. This was driven largely by an 8.5% rise in demand in Brazil and improved exchange rate factors in this country.

With an installed capacity of 5,555 MW, the Company generated 9,534 million kWh (+7,2%) in Latin America, 22.4% of total Group roduction. Distributed energy rose 7.2% to 8,193 million kWh, 15.3% of the total.

* Source: Bloomberg New Energy Finance

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