News

2017-07-20 00:00:00.0

During the period, the company hired 1,500 new professionals. The group’s net profit stands at €1.518 billion (+4.2%)

Iberdrola investment in the first half reaches €2.512 billion (+ 35%)

Ignacio Galán, presidente de Iberdrola. Día del Accionista

Ignacio Galán, intervención en Davos

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90% of investments – some €22 billion – planned for the 2016-2020 Strategic Outlook are already completed or under construction

Between January and June 2017, the group has hired 1,500 professionals bringing total number of employees close to 30,000

It has closed purchases amounting to €3.187 billion (+11.6%) with 13,800 suppliers

As a key part of the group, AVANGRID, affiliate of Iberdrola in the US, contributed to the company’s net profit with $359 million (+14%). Thanks to its positive performance in the New York Stock Exchange throughout the year, total shareholder return (TSR) exceeds 21%, twice that of the benchmark S&P 500 Utilities index

Iberdrola Flexible Dividend programme: final amount reaches €0.177 net per share. On 7 July, €0.03 gross per share was paid in cash with an additional €0.147 gross per share, in cash or new shares, to be paid before 28 July (+18.5% over July 20016). Thus, total shareholder remuneration for the year will reach €0.317 gross per share, nearly 11% more than previous year

Elektro’s integration into Neoenergia, the Brazilian companies in which Iberdrola has a stake, will give rise to the largest electricity utility in Brazil, of which Iberdrola will own 52.45%

The transaction was approved by CADE, Brazil’s competition authority, with approvals by the National Agency for Electrivity (ANEEL) and the National Development Bank (BNDES) scheduled for August

Expected business performance for the second half of the year anticipates net profit growth for 2017 consistent with that of the first half and maintaining the policy of increased shareholder remuneration in line with results

Iberdrola continued to expand investments to €2.512 billion during the first six months of 2017, up 35% from the same period the previous year. Out of that amount, over 91% was allocated to networks, renewables and long-term generation contracts.

Accordingly, 90% – some €22 billion – of investments planned for the 2016-2020 Outlook, which amount to €25 billion, has been earmarked for projects already installed, under construction or committed.
Iberdrola currently has more than 6,300 megawatts (MW) of renewables and contracted generation under construction, of which 1,350 MW will be in operation during the second half of the year, mainly renewables. By business units, main milestones of this first half year include:

Networks: Western Link, the subsea connection between Wales and Scotland, continues to advance its construction to be completed in the last quarter of the year. In Spain, 92% of smart meters for the STAR project have already been installed. For its part, Brazilian subsidiary Elektro was awarded six new transmission lines and three substations.
Renewables: half of the wind turbines and the first export cable have already been installed in the 350-MW Wikinger offshore wind farm, which will be operational by the end of the year in German waters of the Baltic Sea. In addition, the group is advancing the development of East Anglia One, its third offshore wind facility, for which 80% of the supply work has now been contracted. Also, it is working on its first offshore wind developments in the United States, after the acquisition of sites off the coasts of Massachusetts and North Carolina. In onshore wind, AVANGRID has signed long-term contracts for 501 MW – 401 MW for new projects and 100 MW for repowered facilities – as well as 589 MW in fixed price contracts for existing capacity.
Regulated generation in Mexico: the company has commissioned 336 MW of combined cycles in the first half of the year and is currently building a total of 3,505 MW; aiming at bringing total capacity in the country will to 10,000 MW by 2020.

As a consequence of all this activity, the group has hired 1,500 new professionals between January and June 2017, bringing total number of employees to 30,000. In addition, the company has made purchases worth €3.817 billion, +11.6% year on year, to 13,800 suppliers.

Improved profit

Iberdrola posted a net profit of €1.518 billion in the first half of 2017, an increase of 4.2% over the same period in the previous year.

Net operating profit (EBITDA) attained €3.752 billion, down 3.6% year on year. Compared to the 8.2% decrease in the first quarter of 2017, Ebitda shows signs of recovery throughout the year. Of the total amount, more than 80% comes from regulated businesses or from long-term contracts.

Ebitda for the period was underpinned by the networks business performing particularly well in the United States, while it was affected by the liberalised business in the United Kingdom and low hydroelectric and wind resources in Spain.

AVANGRID performance

The group’s US subsidiary, AVANGRID, 81.5% owned by Iberdrola and listed on the New York Stock Exchange, recorded a net profit of $359 million up until June, an increase of 14% (US GAAP).

As a result of the positive evolution of its share price over the year, total shareholder return (TSR) of the subsidiary exceeds 21%, twice that of the benchmark S&P 500 Utilities index.

It should be noted the good performance of AVANGRID in both networks and renewables, which have increased their net profit by 10% and 19%, respectively. These results confirm third quarter dividend for this company shareholders of $0.432 per share, payable on October 2.

Results by business: improvement in networks

Group revenue reached €15.167 billion euros, up 1.8% year on year while gross margin was €6.851 billion, up 1.1%. Operating cash flow was €3.275 billion, up 1.7%, with taxes growing 13% to €1.156 billion.

By businesses, networks achieved an Ebitda of €1.978 billion, up by 4.4% from the first half of 2016.

This good performance is mainly due to the area’s results in the United States and Brazil –which account for about 40% of the business– and compensates for the United Kingdom were earnings were impacted by milder weather conditions. In Spain, networks Ebitda fell 1.6% to €771 million due to lower recognised investments and €7 million cost resulting from storms during the period.

The generation and retail business has been affected by a worsening operating situation in Spain, with lower water levels and higher taxes, as well as weaker performance in the United Kingdom; resulting in an Ebitda of €984 million (-19.7%).

Performance has been very positive in Mexico, where Ebitda grew by 23.4% to $289.8 million, thanks to the additional operating capacity: 314-MW Baja California combined cycle for the Federal Electricity Commission (CFE), over 300 MW from the Monterrey V combined cycle plant for private customers and the Ramos Arizpe cogeneration plant.

The renewable business recorded €819 million Ebitda, down by 2% in a period marked by low wind power generation in Spain, which was largely compensated by the good performance in the United Kingdom and United States where Ebitda grew by 31.7% and 2.8%, respectively (in local currency). Higher prices and the revaluation of the Brazilian real have also boosted renewables business Ebitda in Latin America by 13%.

Shareholder remuneration and confirmation of outlook

Iberdrola has completed a new edition of the Iberdrola Flexible Dividend, what would have been the complementary dividend against 2016 earnings. The company has undertaken a purchase commitment of €0.147 gross per free allotment right, 18.5% more than the committed price in July 2016.

This amount, added to the gross €0.03 per share paid in cash, make total dividend for the month of July €0.177 gross per share. Together with the €0.135 paid in January and the General Shareholders’ Meeting attendance premium of €0.005 gross per share, annual shareholder remuneration against 2016 earnings is €0.317 gross per share, up by 11% from the previous year.

Expected business performance for the second half of the year allows for a similar net profit growth estimate and the continuation of the policy of increased shareholder remuneration in line with results.

Meanwhile, Iberdrola keeps delivering on its 2016-2020 Outlook with over 90% of investments already committed and new growth projects beyond 2020 focused on renewables, storage, and transmission and distribution networks.

Neoenergia–Elektro integration

Neoenergia shareholders (Iberdrola, Previ and Banco do Brasil) have reached an agreement by which the company integrates Elektro’s business and activities, creating a leading utility in Brazil and Latin America which will be focused on networks and renewables.

After completion, Iberdrola will hold a 52.45% stake in the resulting company that will have 13.4 million supply points and around 3,500 MW of contracted generation capacity in operation or under construction, mainly renewable energy.

The operation preserves the financial strength of the group, with no cash outflow and no capital increase, while strengthening Iberdrola’s position in a reputed company.

The transaction will be concluded after receiving the approval of the National Energy Agency (ANEEL) and the National Bank for Economic and Social Development (BNDES) estimated for August, having already secured the approval of the Administrative Council for Economic Defence (CADE).

Access to legal information

IMPORTANT INFORMATION

This document does not constitute an offer to purchase, sell or exchange or the solicitation of an offer to purchase, sell or exchange any securities in the United States of America or in any other jurisdiction. Iberdrola, S.A. shares may not be offered or sold in the United States of America, except pursuant to an effective registration statement under the Securities Act of 1933 or pursuant to a valid exemption from registration.

FORWARD-LOOKING STATEMENTS

This communication contains forward-looking information and statements about IBERDROLA, S.A.and AVANGRID, Inc. (“Avangrid”). Such forward-looking statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, investments, synergies, products and services, and statements regarding future performance. These forward-looking statements do not constitute historical facts and can generally be identified by the use of terms such as “expects”, “anticipates”, “believes”, “plans”, “estimates” and similar expressions.

Although Iberdrola, S.A. believes that the expectations reflected in such forward-looking statements are reasonable, Iberdrola, S.A. and AVANGRID, investors and shareholders are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Iberdrola, S.A. and AVANGRID that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the documents sent by IBERDROLA, S.A. to the Comisión National del Mercado de Valores and by AVANGRID, to the Securities and Exchange Commission, which are available to the public.

Forward-looking statements are not guarantees of future performance. They have not been reviewed by the auditors of Iberdrola, S.A. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date they were made. All forward-looking statements hereby made or otherwise attributable to IBERDROLA, S.A., AVANGRID or any of its members, directors, officers, employees or any representatives are expressly qualified in their entirety by the cautionary statement above. All forward-looking statements included herein are based on information available to Iberdrola, S.A. on the date hereof. Except as required by applicable law, IBERDROLA, S.A. does not undertake any obligation to publicly update or revise any forward-looking statements, even in the event of new information being published or new events occurring.

INFORMATION ABOUT AVANGRID

This document and the information contained therein have been prepared by IBERDROLA, SA in relation exclusively to the consolidated financial results of IBERDROLA, SA and have been prepared and presented in accordance with the International Financial Reporting Standards, "IFRS"). This document does not contain, and the information contained therein, does not constitute an announcement, a statement or a publication relating to the benefits of Avangrid or its financial results. Neither Avangrid nor its affiliates assume any liability whatsoever for the information contained herein, which has not been prepared or presented in accordance with accounting principles generally accepted in the United States of America ("United States Generally Accepted Accounting Principles" GAAP"), which differ from IFRS in many significant respects. Financial results under IFRS are not indicative of financial results under US GAAP and should not be considered as an alternative or as the basis for anticipating or estimating the financial results of Avangrid. For information on Avangrid's financial results for the nine-month period ended September 30, 2016, please refer to the press release published by Avangrid on October 25, 2016, which is available under Investors on its corporate website (www.avangrid.com) and on the website of the Securities and Exchange Commission (SEC) (www.sec.gov).