Iberdrola profits hit by Spanish energy reform

Spain’s controversial energy reform took its toll on Iberdrola once again, as the country’s biggest power group reported a 13 per cent decline in first-half earnings to €1.5bn.

The Madrid-based group said the “solid” performance of Iberdrola’s international operations had helped offset the Spanish regulatory impact. It reiterated its full-year guidance. The group had said earlier this year that it expected to post net earnings of €2.3bn in 2014, and earnings before interest, tax, depreciation and amortisation of about €6.6bn.

Iberdrola added that it expected results to improve in the second half of the year, citing the receding impact of the energy sector overhaul in Spain and an improved business outlook for its operations in Brazil.

Revenues in the first six months of the year fell 4.5 per cent year on year to €15.2bn, while ebitda held steady at €3.7bn.

The Spanish government pushed through a sweeping reform of the energy sector last year, slashing subsidies for renewable power in an effort to reduce the vast tariff deficit that had built up in the system. The changes dealt a severe blow to Spain’s utilities, which had invested heavily in wind and solar parks to benefit from the high state-backed feed-in tariffs.

Iberdrola said the 2013 reform had cost the operator €369m at gross margin level in the first six months of the year. Ebitda from the group’s renewables operations declined by more than 20 per cent year on year to €712.8m in the first half. In Spain, ebitda from renewables dropped 46 per cent while earnings declined 50 per cent.

The group’s net debt stood at €25.7bn at the end of June, down from €26.8bn at the end of December.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.