Iberdrola Posts Net Profit Of €2.804 Bn (+3,7%); Positive Impact Of €1.284 Bn From US Tax Reform

Iberdrola reported net profit of 2.804 billion euros in 2017, up 3.7% from a year earlier. Consolidated EBITDA fell by 7.8% to 7.318 billion euros last year. Whatsmore, the company’s gross margin rose 3.3% year-on-year to 13.363 billion euros.

In its results report lodged with the Spanish Stock Market Regulator (CNMV), the energy firm highlights the good performance of its networks business “tanks to the US and Brazil – positively affected by the incorporation of Neoenergy) – as well as the weather conditions in Spain and how the liberalised business in the UK has developed.

Net financial debt stood at 32.856 billion euros. This ajdusted financial leverage rose to 43.4% from 42% at end-December 2016. “Mainly as a result of the integration of Neoenergia and the investments carried out in 2017,” Iberdrola explains. Net investments over the period rose to 5.890,9 billion euros, up 38.1% from a year earlier. Of the total, 88% was earmarked for its networks business, renewables and long-term contracted energy.

Amongst the positive and negative recurrent factors which have had an effect on the company’s accounts, the following is worth highlighting:

On the one hand, Iberdrola has benefitted from the tax reform in the US. This regulation change has resulted in a non-recurrent positive impact of 1.284 billion euros on net profit.

“This one-off impact has been taken advantage of to implement measures which will improve the company’s business profile, like the restructuring of the gas business in the US, after considering that this asset is available for sale. Also the implementation of efficiency plans registered under Net Operating Cost,” Iberdola explains.

Meanwhile, the company has also seen a one-off positive impact on its accounts from the merger of Gamesa with Siemens. This process has contributed 251 million euros to net profit.

On the downside, Iberdrola flags that the operating conditions in Spain have been extremely difficult, with 2017 being one of the driest years recorded (10,4 TWh less than last year). Whatsmore, the generation business and clients in the UK have been affected by a very clement climate which has caused a fall in demand, non-repeatable problems on the operating side and defaults.

Iberdrola’s profit and loss account has also been hit by “the discontinuation of Iberdrola Ingeniería’s business. Its results are now registered via the participation method, which has led to losses of over 200 million euros,” the company said. Storms in the US have also affected results, to the tune of 109 million euros. The impact of the exchange rate is 186,4 million euros at the EBITDA level.