Sensitivity analysis

In an increasingly complex and changing environment, sensitivity analysis is an essential resource for anticipating uncertainty. Through simulations and modelling, it is possible to identify which factors have the greatest impact on results and how they could affect the business if economic, regulatory, operational or climate conditions change. In fact, this is often referred to as a “what if” analysis. This analytical capability helps Iberdrola design more resilient and sustainable strategies, aligned with its long-term goals and with its commitment to transparency and responsible risk management.

Net profit

On 24 September 2025, the Iberdrola Group held its Capital Markets Day with the presentation of the latest update of its strategic plan. The contextual study of the Group’s financial management sets out the following sensitivity analysis on the limited volatility of Net Profit.

Information from Capital Markets Day 2025: Financial Management [PDF].

 SEE INFOGRAPHIC: Limited Net Profit Volatility [PDF]

EBITDA 

During the 2025 Capital Markets Day, the sensitivity analysis on the limited volatility of EBITDA was also addressed.

Information from Capital Markets Day 2025: Financial Management [PDF].

 SEE INFOGRAPHIC: Limited EBITDA Volatility [PDF]

Impairment of non-financial assets

The IBERDROLA Group has performed several sensitivity analyses of the impairment test results carried out in a systematic way including reasonable changes in a series of basic assumptions defined for each cash-generating unit (or groups of cash generating units) that have goodwill assigned to them:

Electricity and gas retail supply in the United Kingdom and Brazil:

• Decrease of 10% in the unit margin. • No increase in the electricity and gas customer base. 
• Increase of 10% in investment costs. 

Electricity transmission and distribution in the United Kingdom, the United States and Brazil: 

• Decrease of 10% in rate of return on which regulated remuneration is based. 
• Increase of 10% in operating and maintenance costs. 
• Decrease of 10% in investment (resulting in a subsequent decrease in remuneration). 

Renewable energies in the United Kingdom, the United States, Brazil, Australia and France:

• Decrease of 5% in produced energy. 
• Decrease of 10% in total price per kWh, solely applicable to production for which there are no long-term sales agreements. 
• Increase of 10% in operating and maintenance costs. 
• Increase of 10% in investment costs. 

The IBERDROLA Group has also conducted an additional sensitivity analysis, in which it raised the applicable discount rate in the United Kingdom, the United States, Australia and France by 50 basis points and in Brazil by 100 basis points. 

The sensitivity analyses on the individual basic assumptions did not identify any significant impairment, except for the US onshore renewable energy cash-generating unit. This unit recorded a valuation adjustment in 2024, and any change would lead to further valuation adjustments. 

Information taken from the report Annual Financial Information – Iberdrola, S.A. and subsidiaries.

Financing and financial risks

The following sensitivity analyses show, for each type of risk (without reflecting the interdependence among risk variables), how income for the year and equity might be affected by reasonably possible changes in each risk variable at 31 December 2024 and 2023.  

Interest rates

To calculate the sensitivity of consolidated profit or loss to changes in interest rates, an increase or decrease of 50 basis points (equally in all currencies) is applied to the average balance of net floating interest rate debt, after taking into account hedges with derivatives. To calculate the sensitivity of equity, an increase or decrease of 50 basis points (equally across all currencies) is applied to the fair value of the outstanding cash flow hedges at year-end, the change in fair value of which is recognised in equity. 

The sensitivity of consolidated profit or loss and equity to interest rate fluctuations is as follows (in millions of euros): 

Information taken from the report Annual Financial Information – Iberdrola, S.A. and subsidiaries.

Exchange rates

To calculate the sensitivity of consolidated profit to variations in exchange rates, a depreciation or appreciation of 5% is applied mainly on the profit of foreign subsidiary companies whose operating currency is different to the Euro (net of economic hedges arranged), given that the risk originated from other transactions in foreign currency, either due to financing or business operations, is covered by exchange rate hedges. The sensitivity of equity to exchange rates is calculated by applying an appreciation or depreciation of 5% on net translation differences and on cash flow derivative hedges whose variation in fair value is recognised in equity. 

The sensitivity of consolidated profit or loss and equity to changes in the dollar/euro, pound/euro and Brazilian real/euro exchange rates is as follows (in millions of euros):

Information taken from the report Annual Financial Information – Iberdrola, S.A. and subsidiaries.

Commodities

The sensitivity of consolidated profit and equity to changes in the market prices of the main commodities is as follows (in millions of euros):

Information taken from the report Annual Financial Information – Iberdrola, S.A. and subsidiaries.

Real estate investments

The investment property owned by the Iberdrola Group relates primarily to properties used for leasing. The company has commissioned the independent expert to carry out sensitivity analyses on real estate investments for projects with a market value exceeding €1 million, considering as a key variable the “discount rate or IRR” required for each project and keeping the other variables unchanged. 

The following tables show the impacts on realisable value of these sensitivity analyses in response to 1% and 2% increases and decreases in the discount rate or IRR for 2024 and 2023(in millions of euros):

Information taken from the report Annual Financial Information – Iberdrola, S.A. and subsidiaries.

As at 31 December 2024 and 2023 the amount of fully depreciated investment property amounted to EUR 3 million and EUR 3 million, respectively. There are no restrictions on its realisation in any of the financial years. Furthermore, there are no contractual obligations for the acquisition, construction, development, repair or maintenance of investment property. 

Inventories

The Company has commissioned the independent expert to conduct sensitivity analyses on land and plots with no building permit valued at more than €1 million. The key variable considered is the developer profit required for each project, with all other variables remaining constant.

The following tables show the impacts on realisable value found by these sensitivity analyses in response to 10% and 15% increases and decreases in the developer profit required for each for 2024 and 2023 (in millions of euros): 

Information taken from the report Annual Financial Information – Iberdrola, S.A. and subsidiaries.

The Company has commissioned the independent expert to conduct a sensitivity analysis for land with planning permission pending in the planning management periods where such permission is required.

The following tables show the analysis of the sensitivity of the value of land and plots to increases and reductions of 20% and 40% in the pre-construction periods, for 2024 and 2023 (in millions of euros):

Information taken from the report Annual Financial Information – Iberdrola, S.A. and subsidiaries.

Valuation adjustments 

The change in this reserve arising from valuation adjustments to derivatives designated as cash flow hedges in 2024 and 2023 is as follows (in millions of euros):

Information taken from the report Annual Financial Information – Iberdrola, S.A. and subsidiaries.

Provisions for pensions and other obligations

Certain Iberdrola companies maintain a provision to cover specific commitments to their employees, separate from those mentioned above, which are funded through internal pension schemes.

The sensitivity at 31 December 2024 of the present value of the obligation under these commitments to changes in different variables is as follows:

Information taken from the report Annual Financial Information – Iberdrola, S.A. and subsidiaries.