Iberdrola: Weathering The Storm
BMI View: The r egulatory uncertainty that is plaguing Iberdrola's domestic market and heavy tax charges during the last six months have certainly taken a toll on the company's H113 financial credentials, but gains in renewables , a clamp down on investment and the sale of non-core assets have helped alleviate some of the company's troubles. Iberdrola's reduction of net debt is perhaps the most optimistic element of its results, highlighting the company's continued commitment to its cost-cutting strategy.
Iberdrola's financial results for H113 are indicative of the challenging operating environment the company continues to endure , as it is adversely affected by both macroeconomic and sector-specific issues. Net profits were down 2.0% and total revenues decreased by 0.9% (to 1.68EURbn) on H112 results. EBITDA was mostly stable; however , EBIT posted the most marked reduction - falling 65.3% y-o-y .
The r eduction in earnings (before interest and tax) is mostly due to accounting features linked to depreciation registered over the quarters, particularly with in the company's renewable energy project portfolio and also due to adjustments to asset values in the US and Canada . Although net profits were down, it was widely expected that the fall in profits would be more pronounced. However, corporate taxation laws that allowed for advantageous asset revaluations in Iberdrola's Spanish business portfolio helped to boost profits marginally.
|Iberdrola's Financial Results (EUR, mn)|