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Iberdrola plans to invest 47,000 M up to 2025 to reach a profit of 5,400 M

  • Nov 9, 2022
CE Noticias Financieras

Iberdrola plans investments of around 47 billion euros in the period 2023-2025 to achieve a net profit of between 5.2 and 5.4 billion euros at the end of the period, according to figures presented on the occasion of its Capital Markets Day, which is being held this Wednesday in London.

This total investment figure includes 11 billion euros for the acquisition of U.S.-based PNM Resources, a deal that the energy company expects to be unblocked next year. Of the investment, 6 billion will be earmarked for Spain, in line with what has been in place since 2018. The US and the UK will receive 47% and 16% of the investment, respectively, more than the 13% that Spain will take.

The energy company chaired by Ignacio Sánchez Galán forecasts that its gross operating profit (Ebitda) will reach 16,500-17,000 million euros at the end of the period, with an average annual growth of 8-9%, while net profit will increase to those 5,200-5,400 million euros, with an average increase of 8-10% per year.

By 2022, the group estimates a net profit of between 4.0 and 4.2 billion by 2022, thus boosting its earnings by almost 29% compared to this year. This represents growth of 10% per year. To this end, it plans to implement efficiency measures of 350 million per year.

As for the dividend, it will grow in line with net profit, representing65-75% of the pay-out, with a forecast of 0.55-0.58 euros per share in 2025, with a floor of 0.46 euros in 2023-24 and 0.50 euros in 2025.

Of the group's E47 billion investment effort in the period, 80% will be allocated to 'A' rated countries, with stable regulatory frameworks and ambitious electrification targets.

In this regard, Iberdrola's chairman assured that they have taken a prudent position in the strategic plan and called for regulatory stability in the midst of a clash with the government. Sánchez Galán himself assured in the last presentation of results that if the Government approves the tax on energy companies, they will go to court.

47% to the US and 13% to Spain

By countries, the group will allocate 47% of its investments to the United States -including organic investments and the integration of PNM Resources-, which is the main expansion market for the next three years.

In second place is the United Kingdom, with 16%. Iberdrola is also promoting geographic diversification through an additional focus on countries such as Germany, France and Australia, to which it will allocate 13% of total investment.

In Spain, investments will amount to 6,000 million euros over three years, 13% of the total, a figure that the group indicated is "in line with the average of recent years". With this investment approach, the company will contribute to the employment of 85,000 people in Spain by 2025.

By business areas, the energy company will allocate 27,000 million euros to networks and 17,000 million euros to renewables. For the company, networks are the backbone of the integration of new renewable capacity and will enable the implementation of new solutions and distributed services.

By investing in this area, the company is ensuring predictable frameworks and protection against macroeconomic uncertainty. Thus, it will reach a regulated asset base of 56 billion euros in 2025, which represents a 44% growth compared to the 39 billion euros estimated for this year.

85% of organic investments in this area are practically assured, as they are made in projects with tariffs already closed or with advanced negotiations and known conditions. Around 20% of investments in transmission will go to the United Kingdom, the United States and Brazil.

17,000 M to renewables to reach 52 GW

17,000 million, focusing growth on assured, high-quality projects with the best risk/return ratio.

Of this amount, 46% will be focused on offshore wind in France, Germany, the United Kingdom and the United States. In the remaining technologies, onshore wind will account for 25% of the investment, photovoltaic for 24%, hydroelectric for 2% and batteries for 3%.

With these investments, the company will increase its installed renewable capacity by 12,100 megawatts (MW) to 52,000 MW in 2025 - 3,100 MW onshore wind, 6,300 MW photovoltaic, 1,800 MW offshore, 700 MW of batteries and 200 MW of hydro - compared to the 40,000 MW planned for this year. The group has already secured 50% of the new capacity and around 95% of production will be contracted by 2025.

The energy company emphasized that this strategic plan is orchestrated within "a careful financial soundness, which allows the company to preserve its credit rating levels". Thus, the energy group expects its net debt/EBITDA ratio to stand at 3.4 times at the end of the period.

75 billion from 2026 to 2030

Iberdrola also reaffirmed the outlook for 2030, driven by growth in all markets and the acceleration of electrification, with investments of E65 billion to E75 billion in 2026-30 to exceed 100 gigawatts (GW) of installed capacity and E65 billion in network assets.

Moreover, Iberdrola plans to hire some 12,000 people over the next three years, and by 2030 its activities will support "more than 500,000 jobs globally across our supply chain," Galán said.

In addition, the plan makes the company's growth in renewables and networks compatible with the goal of becoming carbon neutral by 2030 in its generation plants and its own consumption and in all its activities by 2040. Iberdrola will also have a net positive impact on biodiversity by 2030. To achieve this, the company will promote the planting of 20 million trees by 2030.



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