Iberdrola’s 1Q2020 results include EBITDA growth, performance in Spain, COVID-19 and the company’s outlook for 2020.
- EBITDA grew by 5.8% to €2.75 billion: the 5500 MW commissioned in the past 12 months drove the Liberalised and Renewable businesses, which improved by 26.5% and 6.1% respectively, while the Regulated business fell by 4.7%, affected by accounting adjustments in the US and by the reduction in revenue in accordance with the regulatory framework in force in Spain.
- Performance down in Spain: mainland demand for electricity fell by 3.2% year on year and wholesale market prices were down by 37%, both influenced by the state of alarm declared as a result of COVID-19. EBITDA of Iberdrola España fell by 3% and net profit by 7%. Investments increased by 51% compared with 1Q2019, both in networks and in the acceleration of new renewable projects.
- Positive non-recurring item: the sale of the company’s 8.07% stake in Siemens Gamesa generated proceeds of €1.1 billion and a capital gain of €484 million in the quarter, bringing reported net profit, which includes non-recurring results, to €1.26 billion. This one-off positive effect will help to mitigate any negative impacts of the COVID-19 crisis throughout the year.
- Impact of COVID-19: the impact of the pandemic will be largely cushioned by several factors including the strength of the diversified business model based on networks and renewables, the Group’s ability to maintain operations through the crisis and the benefits of 8500 MW of new capacity currently under construction.
- Outlook for 2020: the group is maintaining the growth forecast for its net profit and dividends thanks to the contribution of the €10 billion of investments planned for the year together with the capital gain obtained in 1Q2020 from the sale of Siemens Gamesa.
Iberdrola delivered ordinary net profit of €968 million in 1Q2020, 5.3% more than in the same period of 2019. EBITDA increased in line with this, growing by 5.8% to €2.75 billion. These results were underpinned by the record investments that Iberdrola carried out in its operations between the beginning of 2019 and the end of 1Q2020, amounting to €9.88 billion. Of this amount, €1.73 billion was invested in the first three months of 2020, representing an increase of 24.2% compared with 2019. 91% of investments were committed to the Renewables and Networks businesses: €810.2 million and €765.9 million respectively.
The group continued to move ahead with 8500 MW of projects under construction worldwide. Between January and March alone the group installed 1200 new MW, and in the last 12 months it has added 5500 MW of installed capacity, reaching a total of 53 270 MW. At the same time cash flow increased by 3.7% to €2.11 billion.
During 1Q2020 the company activated its global action plan to respond to the pandemic, focusing attention on employees, suppliers and society at large. In terms of jobs, Iberdrola maintains its forecast of hiring 5000 new recruits in 2020. Safety measures for field personnel were strengthened, and 95% of office staff are working remotely, thanks to investments made in digitisation.
The impact of the pandemic will be largely cushioned by a number of factors. The strength of a business model based on networks and renewables, the continuity of business thanks to the additional measures put in place, the 8500 MW of new capacity under construction, as well as further mitigation actions.
Iberdrola also has solid financials, with a sound liquidity position, which at the end of 1Q2020 stood at €14.4 billion, enough to cover its financial needs for 30 months in a normal scenario. Its ability to access markets on the best terms was once again demonstrated with the recent issues of green bonds for €1.8 billion.
Support for industry has also been maintained. As well as record investments, the supply chain benefited from the acceleration in procurement, which has amounted to €3.8 billion in 1Q2020. The company also continues its work to reinforce the supply of electricity, particularly to essential facilities such as hospitals, and payment facilities have been made available to customers. Additionally, €30 million worth of urgently needed medical supplies has been donated, in coordination with the authorities.
Liberalised and Renewables offset downturn in Spain
Total group EBITDA amounted to €2.75 billion for 1Q2020, 5.8% up on the same period in 2019. This result was driven by the Deregulated and Renewables businesses, which improved by 26.5% and 6.1% respectively to €759 million and €725 million in EBITDA terms. The Regulated business EBITDA fell by 4.7% to €1.25 billion, due to accounting adjustments in the US and the lower remuneration in Spain in accordance with the regulatory framework in force.
Specifically, EBITDA of Iberdrola España fell by 3% and net profit fell by 7%. Investments in the country increased by 51% compared with 1Q2019, both in networks and in new renewable projects. Meanwhile mainland demand for electricity fell by 3.2% and wholesale market prices fell by 37%, in both cases being much affected by the state of alarm declared in respect of COVID-19.
Reported net profit, which includes non-recurring items, reached €1.25 billion. This amount reflects the positive impact of the sale of the company’s 8.07% stake in Siemens Gamesa, which generated proceeds of € 1.1 billion and a capital gain of €484 million in 1Q2020.
Iberdrola maintains the dividend and its profit outlook
The Board of Directors of Iberdrola has approved the implementation of a new edition of ‘Iberdrola Flexible Remuneration’, after the General Shareholders’ Meeting, attended by 77% of shareholders, approved all the proposed resolutions with an average of 98% votes in favour. In this way the Company fulfils its commitment to its more than 600 000 shareholders, who will receive a complementary dividend of at least €0.232 gross per share. This amount, added to the €0.168 gross per share paid in February, gives a total shareholder return on 2019 of €0.40 gross per share. The company thus reaches the dividend floor initially set for 2022 three years in advance.
Looking ahead to the rest of 2020, the scheduled investments of €10 billion, the measures adopted in response to COVID-19 and the effect of the non-recurring income from the sale of Siemens Gamesa allow Iberdrola to maintain its forecast for the year. The company therefore expects to grow in terms of both net profit and dividend.
Iberdrola is accelerating investments in order to drive the recovery of the economy and of employment. Iberdrola Chairman Ignacio Galán has stated that “there is complete consensus that the road to economic recovery must be green, with the fight against climate change at its core. The European Green Deal and the National Energy and Climate Plans across the EU already provide a clear pathway. Iberdrola is fully prepared to help deliver these targets.”
Read the article online at: https://www.energyglobal.com/special-reports/30042020/iberdrola-releases-1q2020-results/