Spanish utility Iberdrola has credited an “acceleration” of capital expenditure as it posted a €2.5bn ($2.78bn) net profit for the first nine months of the year, a better than 20% uptick compared to same period in 2018.
The group, which invested almost half (€2.2bn) of a total €4.7bn spend on new renewable capacity, a year-on-year increase of 81%, expects to end 2019 having added 5.2GW of new plant, having commissioned more than half of the 13GW planned for 2022 in the last two years.
“These achievements provide us additional room for new investments, creating a virtuous circle of growth and financial strength,” said Iberdrola group chairman Ignacio Galán, who highlighted the impact of “the acceleration of investments and the early achievement of our efficiency and asset turnover targets for 2022”.
Gross operating profit (EBITDA) to the end of September reached almost €7.9bn, up 11.6%, driven by the “good performance” of its Networks, and Generation and Supply divisions, which offset the impact of lower hydropower output in Spain in the Renewables business unit.
Renewables posted a €1.67bn EBITDA, a 4.5% decrease from the first nine months of 2018. Iberdrola, which was among the developers shut out of the recent UK Contracts for Difference round, highlighted the positive contribution of bringing its $3bn East Anglia One offshore wind farm coming on stream off the UK, as well as the “positive performance” of on its German power production, which rose 53%, of its Wikinger project.
Announcing the Q3 results, Iberdrola also underlined that it had completed a €3.5bn asset rotation plan for the 2018-2022 period three years ahead of schedule, following the sale of a minority stake in East Anglia One for €1.7bn.
“Asset rotation, together with positive cash flow which amounted to €5.28bn (+10.8%), has led to further strengthening of credit ratios,” the company said. “Net debt to EBITDA has improved by 40 basis points to 3.5 times, and the ratio of operating cash flow to net debt has increased by 120 basis points to 22.2%.”
“The results obtained in the first nine months of the year reflect the success of Iberdrola’s model for sustainable value creation: the acceleration of capital expenditure to drive the energy transition generates an increase in cash flows which strengthens the company’s financial solidity, so that the group can continue to invest in growth.”
Iberdrola noted the Q3 figures confirmed its full-year guidance, with Net profit for 2019 expected to show “double-digit growth”.