Iberdrola hit in Spain, spends abroad

Energy giant Iberdrola said it will invest €9.6bn ($13.2bn) by the end of 2016 – 22% of it in renewables – as it confirmed its growth focus will be outside its native Spain, where it took an €801m hit on regulatory changes last year.

Iberdrola – the world’s largest wind power owner with 13.83GW in place – named the US, UK, Brazil and Mexico as its key growth markets for the 2014-16 period, and said it will make investments in new renewables capacity in all of them

The UK – where Iberdrola is making significant offshore wind investments – will attract 41% of total investment, Latin America 23% and the US 17%, with Spain set for just 15% share of the cake.

The impact of Spanish regulatory changes hurt Iberdrola’s full-year operating figures for 2013, which it unveiled today, helping to cut profits by 7% to €7.2bn before interest, taxes, depreciation and amortisation (Ebitda).

The changes were introduced by the Spanish government in a bid to close the country’s “tariff deficit” and have hit renewables operators in the country with extra costs.

Iberdrola said the new regulations hit pre-tax profits by €801m pre-tax and indicated that it – like other Spanish companies – is looking at legal action over some of the changes.

Iberdrola CEO Ignacio Galan said the fact that Iberdrola could look to the next few years with confidence was due to the fact that its recent strategy had focused abroad.

The company is looking to make investments in countries where the regulatory framework is stable or predictable – or moving in that direction, he said.

Galan said he expected 2014 to represent an "earnings floor" for Iberdrola, after which its investment programme will lay the foundation for sustainable growth.

The company is looking to post-2015 compound annual growth rates of about 4% in both Ebitda and net profits.