Iberdrola reports record net profit in 2019, despite low hydroelectric production

Spanish utility Iberdrola reported a “record high” net profit of €3.4 billion (US$3.7 billion) in 2019, an increase of 13% compared to the previous year, despite recording the lowest hydroelectric production of the past few years.

A press release says this result was driven by record €8.16 billion (US$9 billion) in investments delivered during the year (+32%). And gross operating profit, or EBITDA, exceeded €10 billion (US$11 billion) for the first time (€10.1 billion), an increase of 8.1% on 2018.

“These results reflect the company’s broad strategic vision and its capacity for delivery, which have enabled us to be 20 years ahead of the current energy transition,” said Group Chairman Ignacio Galán.

Of the total investment amount, 44% went to networks and 41% to renewables, which experienced growth of 19% and 85% to €3.59 billion (US$3.9 billion) and €3.34 billion (US$3.7 billion), respectively. As a result, the company installed 5,500 MW of new capacity in all markets during 2019, compared with the 1,000 MW annual average in previous years. The company is currently building 9,000 MW in Spain, Portugal, the UK, the US, Mexico, Brazil and other new markets such as Australia, scheduled to be commissioned in 2021 and 2022. And Iberdrola has a project pipeline of over 40,000 MW worldwide in different stages of development.

One example is the Tamega pumped hydro power scheme, being built in northern Portugal, for which Iberdrola received a green loan from the Instituto de Credito Oficial in May 2019.

The investments made in the networks business have increased the value of the group’s regulated assets to €31 billion (US$34 billion), 6% more than in 2018.

When presenting results, Galán also stated how posting record profits was compatible with the group’s social dividend: “Iberdrola demonstrates year after year that its sustainable business model creates value for shareholders, employees and society at large. In 2019, we hired 3,500 people, purchased €20 billion worth of goods and services from 22,000 suppliers and paid €14 billion in taxes,” he said.

The latter figure is the sum of the €2.9 billion (US$3.2 billion) of taxes reflected in the group’s profit and loss account plus the €5.2 billion (US$5.7 billion) of taxes collected from its customers and employees, together with the impact of indirect taxes on its activities.

The generation and retail area showed a 21.1% EBITDA increase to €2.46 billion (US$2.7 billion) in the 12 months. This good performance was underpinned by the 2.6-GW in new generation capacity installed in Mexico, increased production growth in Spain and the good performance of global energy retail and digital services activities.

At €2.38 billion (US$2.6 billion), Renewables EBITDA was 2.4% down, with increased wind production partly offsetting low hydroelectric output, particularly in Spain.

The investment plan, the continuous increase in efficiency and the favorable operational prospects allow for a positive 2020 guidance, in terms of both results and shareholder return.

Specifically, Iberdrola contemplates investing more than €10 billion during the year, 40% more than the average for the past three years. This will translate into 4,000 MW of new installed capacity and an increase of around 4% in the regulated assets base.

Iberdrola has a total installed generating capacity of 52,084 MW, in Spain (26,627 MW), Mexico (9,532 MW), the U.S. (8,361 MW), Brazil (4,079 MW), the UK (2,520 MW) and other European countries (965 MW). The company’s renewable technologies include offshore and onshore wind, hydroelectric power, solar photovoltaic and combined cycle.

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