Iberdrola Spanish pain continues

Net profits at Spanish energy giant Iberdrola fell 13% to €1.5bn ($2bn) in the first half of 2014, as the world’s largest wind-power operator continued to be hit by regulatory changes in its domestic market.

Like many other Spanish generators, Iberdrola is feeling the pinch from drastic government changes to support measures for renewables and the imposition of new taxes on output.

Iberdrola saw profitability from its Spanish renewables operation fall 50% in the January to June period compared to the first half of 2013, despite record production by its wind assets there.

The global renewables business recorded earnings of €712.8m before interest, tax, depreciation and amortisation (Ebitda), down 20.3% as stronger performances internationally mitigated the effect of the Spanish profits slump.

The company told financial analysts the Spanish reforms will cost it an estimated €643m this year, 56% of that related to renewables. The measures, designed to close the country's "tariff deficit" have amounted to a €1.4bn hit on Iberdrola since they were first introduced in 2011.

However, the company said visibility is improving and it sees no prospect of further unpleasant surprises in the second half of the year.

“No further significant impacts from regulatory decisions in Spain are expected in renewables for the rest of the year,” Iberdrola told investors.

CEO Ignacio Galan said: "In Spain uncertainty on regulation is clearing, as the reform of renewables has been concluded."

The company also stressed its strong global profile, which allowed international operations to help offset the impact of the Spanish changes.

UK renewables Ebitda rose 11% thanks to an 11.2% rise in production, helped by increased capacity.

US Ebitda was 8% higher year-on-year, while the figure soared 80% in Latin America, thanks to a doubling of installed capacity in Brazil.

Iberdrola confirmed its forecasts for 2014 as a whole.

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