Revenues rose 10% in the period to €9,331 million and gross margin by 4.1%
Operating cash flow was 1.9% higher at €1,820 million
Ebitda outside Spain rose 20.4% to €1,271 million, driven by regulated and renewables businesses
Gross operating profit in Spain however fell 10.1% due to recent regulatory changes and adverse climate factors
The Royal Decree Law of March 30 has been an additional factor in the share price drop, as well as in a rating downgrade by S&P to BBB+ although with a stable outlook
Group liquidty stood at €9.7 billion, enough to cover funding requirements for the next 24 months
IBERDROLA raised €1.8 billion from the markets in the first quarter
Debt is projected to stand below €30 billion by the year end
The results allow shareholder remuneration policy to maintained
IBERDROLA’s first quarter net earnings rose 0.7% to €1,022 million with Ebitda up 4.1% at €2,365 million, driven by international growth and despite a decline in Spain where recent regulatory decisions have had a negative effect.
Revenues rose 10% to €9,331 million, while gross margin was up 4.1%. Net operating income (Ebit) rose 1.3% higher at €1,623.7 million and net recurring profit was up 3.1% at €933.7 million. Ebitda rose in all businesses, regulated by 8.9%, liberalised by 2.7% and renewables 2.8%.
By region, Ebitda from international business rose 20.4% to €1,271 million boosted in particular by regulated and renewables businesses which rose 25% and 17% respectively. Ebitda in España fell 10.1% to €1,094 million, affected by recent regulatory measures and adverse climate factors.
Measures approved by the Government in Royal Decree Law 13/2012, of 30 March are not helping share prices in the sector. The consequences will be higher financial costs and for the Group as a whole the negative impact of the decree/law is estimated at €256 million in 2012.
In addition, a 0.9% fall in electricity demand in Spain, as well as deteriorating hydro and wind conditions in the quarter, have affected Group production which fell 3.1% to 38,145 gigawatt hours (GWh). In Spain, output dropped 18.4% to 15,333 GWh, with a 63.4% decline in hydro, 51.2% in combined cycles and 9.4% in renewables.
Production nevertheless rose in other regions, with a 3.2% increase in the United Kingdom, 29.2% in the United States, 7.7% in Latin America and 24.3% in the rest of the world.
Energy prices in Spain were 10% below the average of European countries, as was remuneration for distribution. But electricity bills in Spain continue to be above the European average, because 50% of the items included in the bill are unrelated to the cost of supply.
Balance sheet strength
In the current economic crisis, IBERDROLA continued to place priority on maintaining solid finances. At the end of the first quarter, Group liquidity stood at €9,696 million, enough to meet financing needs for the next 24 months. Equity stood at €33,558 million.
Net adjusted debt for the Group – excluding the €2,011 million pending from repayment of the tariff deficit – stood at €29,649 million at the end of the period. A total of €3.3 billion of the deficit had been securitized between January and March, of which €986 million correspond to IBERDROLA, and it is hoped the Government will shortly resume the bond programme.
The Company obtained €1.8 billion from the markets during the period, including the largest bond exchange ever achieved by a European utility, an operation in March which lengthened the average life of its debt to 6.2 years. IBERDROLA projects Group debt below €30 billion at the end of 2012, enabling it to maintain the solid financial ratios it has enjoyed in recent years.
Shareholder remuneration maintained
IBERDROLA expects to at least maintain dividends for 2012 at the 2011 level of €0.326 per share gross. It plans to launch a new edition of its Iberdrola Flexible Dividend scrip dividend programme, both for the final 2011 dividend in July and also the 2012 interim dividend expected in December or January 2013.
Through this programme the Company offers its shareholders the possibility of receiving free shares with no tax burden or of selling their subscription rights to the Company at a guaranteed price, or at market.
Key operating aspects in the first quarter of 2012
1) Regulated business: elektro compensates for decline in Spain
Ebitda from regulated businesses rose 8.9% to €1,071.5 million, although in Spain it fell 15.1% to €339.1 million as a result of a 9% fall in revenues and of higher levies and local taxes which rose 18.5% against the same period last year.
This was largely offset by a €119 million contribution from Elektro, which helped achieve a 105.9% rise in Ebitda from Brazil to €288.9 million. Excluding Elektro, Ebitda from Brazil would have risen 20.2%.
In the UK, Ebitda from regulated businesses rose 4.8% to €229.9 million as a result of new investments and cost control. In the U.S., regulated business contributed €213.5 million to Ebitda, 5.1% below last year’s figure.
2) Liberalised business rose 2.7%
Ebitda from liberalised business increased 2.7% to €828.3 million, with a 0.1% rise in Spain to €541.4 million. This slight improvement partly reflects decisions taken in the Spanish courts and also a 0.9% decline in demand and tighter margins.
In the UK, liberalised business was helped by a partial recovery in retail business which saw Ebitda stand at €212.7 million. In Mexico, where IBERDROLA is the leading private sector generator, Ebitda rose 3.5% to €92.8 million.
3) Renewables business again registered gains
Ebitda from renewables business rose 2.8% to €441.5 million, with installed capacity exceeding 14,000 megavatios (MW), a 9.4% rise on the same period last year. During the latest quarter, IBERDROLA installed 345 MW of which more than 75% was outside Spain.
Operational renewables capacity now stands at 13,398 MW, an increase of 6.5%.
IBERDROLA progressed with its offshore wind programme during the quarter in the UK and Germany as well as with licenses recently awarded in France. In consortium with EOLE/RES, it was awarded rights to build an operate an offshore wind farm in the Saint/Brieuc zone with 500 MW installed capacity. In the UK, IBERDROLA has approved investments for the 389 MW West of Duddon Sands wind power project in the Irish Sea, and has awarded contacts for 108 wind turbines to be supplied for the wind farm.