Iberdrola Q3 2024 $IBE (+1,12%)

Financial performance:

Iberdrola recorded a strong financial performance in the first nine months of 2024, with net profit increasing by 50% to €5.471 million compared to the same period last year. Recurring EBITDA increased by 11% to €11.551 million, driven by solid results in all business areas. The company's total cash flow increased by 69% to EUR 13.821 million, reflecting improved operational efficiency and strategic asset redeployment.

Balance sheet analysis:

As of September 2024, Iberdrola's total assets amounted to €154.965 million, compared to €150.033 million at year-end 2023. Equity increased to €62.110 million, indicating a solid capital base. Adjusted net debt decreased to EUR 46.697 million, improving the company's debt position. Liquidity remains strong, at over EUR 22 billion, sufficient to cover financial needs for more than 20 months.

Profit and loss account:

Revenue in the first nine months of 2024 amounted to EUR 33,116.8 million, a decrease compared to EUR 37,193.0 million in the same period of 2023. Despite the decrease in revenue, the gross margin improved to EUR 18,045.3 million due to better cost management and increased operational efficiency. Operating expenses as a percentage of the gross margin fell slightly to 25.4 %.

Cash flow analysis:

Iberdrola's operating cash flow was strong, with adjusted funds from operations (FFO) increasing to €11.801 million, up 6.3% year-on-year. The company effectively used its operating cash flow to support organic investments, which increased by 12% to EUR 8.6 billion. The cash inflows from investing activities were mainly used for the expansion of the network and renewable energy projects.

Key figures and profitability:

The ratio of FFO to adjusted net debt improved to 25.3%, indicating increased financial stability. The adjusted gearing ratio fell to 42.6%, further strengthening the company's balance sheet. The return on equity (ROE) rose to 14.56%, reflecting improved profitability.

Segment analysis:

The Network segment reported EBITDA growth of 11%, driven by tariff increases and a larger asset base, particularly in the US and UK. The Power Generation & Customers segment also recorded an 11% increase in EBITDA, supported by new offshore wind capacity. However, the segment recorded a 20% decline in EBITDA in the UK due to one-off problems.

Competitive analysis:

Iberdrola continues to strengthen its market position through strategic acquisitions and investments in renewable energies. The acquisition of Electricity North West and the purchase of Avangrid shares are expected to strengthen its presence in key markets. The company's focus on decarbonization and the expansion of its renewable energy portfolio is in line with industry trends towards sustainable energy.

Forecasts and comments from management:

Iberdrola has raised its full-year net profit guidance to around €5.5 billion, excluding capital gains from asset redeployment. Management is optimistic about future growth, driven by increased investment in networks and renewable energy. The company plans to triple its offshore wind capacity by 2030, underlining its commitment to sustainable growth.

Risks and opportunities:

Key risks include regulatory changes, particularly in Spain, and the potential impact of currency fluctuations. Opportunities arise from the expansion of capacities in the area of renewable energies and the use of strategic acquisitions to strengthen the market presence. The company's strong liquidity position and focus on long-term contracts also provide a buffer against market fluctuations.

Summary and strategic implications:

Iberdrola's financial performance in the first nine months of 2024 reflects strong growth in key metrics, supported by strategic investments and operational efficiencies. The company's focus on renewables and grid expansion positions it well for future growth. Although challenges remain, particularly in the regulatory environment, Iberdrola's robust financial position and strategic initiatives provide a solid foundation for continued success.one of the best electricity/energy/utility stocks for me.

Positive statements:

• Iberdrola reported a 50% increase in net profit to €5.471 million, supported by strong operating performances in all business areas.
• Recurring EBITDA increased by 11% to 11.551 million euros, driven by robust growth in the Networks and Power Generation & Customers segments.
• Iberdrola's investment strategy focused on long-term growth, with organic investments increasing by 12% to €8.6 billion, mainly benefiting the Networks.
• The company raised its full-year net profit forecast to around 5.5 billion euros, excluding capital gains from asset reallocations.
• Iberdrola's financial strength was underpinned by a 69% increase in total cash flow to €13.821 million and an improvement in the FFO to adjusted net debt ratio to 25.3%.

Negative statements:

• In the UK, EBITDA fell by 20% to GBP 1.079 million, impacted by one-off special effects.
• In Spain, EBITDA fell by 1.7% to EUR 1.226 million due to lower nuclear energy production and difficult market conditions.
• The contribution from currency effects (FX) was EUR 50 million lower in 2024 than in 2023, despite positive effects from currency derivatives.
• In Brazil, EBITDA decreased by 7.8% to BRL 1,240 million, as the contribution from hydropower plants and higher wind resources was not sufficient to offset the lower thermal power generation.
• Iberdrola's operating expenses, excluding the capital gain in Mexico, increased by 5.3%, indicating higher costs.