Iberdrola, which already holds a 39% stake in Neoenergia, will as a result become one of the largest electricity companies in Brazil. The transaction, agreed with current owner AEI, is pending approval from Brazilian regulator ANEEL.
Elektro is one of the major electricity providers in Brazil, operating (see map) in the states Sao Paulo, where it is the third largest distributor, and Mato Grosso. It has 2.17 million customers supplying more than 11,000 GWh in 2009 through a network of 105,792 kilometers.
The transaction is fully consistent with current strategy focussed on continued international expansion in markets with high growth protential and regulatory stability (such as United States, Brazil, United Kingdom, Mexico), offering greater predictability regarding revenues and also low risk.
This strategy has also been reflected in divestment of non-strategic assets during 2010, including U.S. gas subsidiaries in Connecticut and Massachusetts and other assets in Chile and Guatemala. The Company has redirected activity towards key projects for future development such as the Maine transmission project upgrading connections between this state and Canada, (MPRP) and the purchase of Elektro.
The acquisition reinforces Iberdrola’s presence in a country whose growth potential is among the highest in the region and positions it to take advantage of future business opportunities in Brazil, where it has had a presence since 1997.
Pro forma 2009 results for Neoenergia and Elektro show combined revenues of more than 14.4 billion reais, Ebitda of 3.399 billion and net profit of 2.072 billion. Together, they have 10.9 million points of electricity supply.
The impact on Iberdrola accounts, based on pro forma 2009 figures is significant. Revenues rise 7.3% to €26.349 billion, Ebitda by 9% to 7.149 billion, and net earnings by 7.6% to nearly 3.04 billion. The customer base would have stood at 25.9 million (+8.6 million).
Consolidating Elektro accounts for 2009 raises the pro forma proportion of Ebitda coming from regulated businesses to 66% from 64% otherwise, and would also have altered the breakdown of contribution by business and geographical area.
Iberdrola built more renewable capacity in 2010 than any other utility in the world, bringing 39 new wind energy facilities on stream in eight countries with total capacity of 1,780 megawatts (MW). This has helped strengthen the company’s status as the global leader in renewable energies by capacity and output.
Close to 60% of capacity additions were in the US, where Iberdrola commissioned 18 new wind power plants in 2010 with combined capacity of 1,043 MW.
The company also entered into long-term power purchase agreements (PPAs) for 700 MW of its wind farm output, ensuring revenues from these plants going forward.