July 22, 2020 / 11:00 AM / 17 days ago

Iberdrola sees continued profit growth, extols EU recovery deal

MADRID (Reuters) - Spanish renewable energy giant Iberdrola lauded the green credentials of the European Union’s post-coronavirus stimulus deal on Wednesday as it pledged future profit growth, dividends and investments.

FILE PHOTO: Iberdrola CEO, Jose Ignacio Galan during a press conference, near Ribeira da Pena, Portugal, January 28, 2020. REUTERS/Pedro Nunes

With more than 32GW of renewable generation capacity in markets including Spain, the United States, Brazil and Britain, Iberdrola is seen as a prime beneficiary of drives to decarbonise economies around the world.

Chief Executive Ignacio Galan spoke highly of a package approved in Brussels on Tuesday that earmarks large sums for low-carbon investments. The bloc has a “Green Deal” plan to emit no more greenhouse gases than can be absorbed by 2050.

The stimulus “represents the consolidation of the Green Deal as a project for economic growth and for the economic recovery of the European Union ... it is magnificent news,” he said.

The response to the deal from climate advocates has been mixed, with some saying it does not do enough to stop the flow of cash to polluting investments.

Despite profound uncertainty around future demand and power prices linked to the pandemic, Iberdrola said it expected net profit to rise at a mid to high single digit rate this year.

“Our expectation is to continue delivering increasing results,” Galan said.

First-half net profit of 1.845 billion euros ($2.13 billion) would have been 153 million euros higher had it not been for lower demand and non-payments caused by COVID-19, the company said.

Returns from distribution networks dragged core earnings down a touch, and shares were down 1.47% in early trade, tracking Spain’s blue chip index IBEX [.IBEX].

A pick-up in its share price in line with the rest of Europe’s utilities has brought Iberdrola snapping at the heels of Zara owner Inditex, which it briefly overtook this week to become Spain’s biggest company.

With 10 billion euros of investment planned this year, Galan said he wanted to continue in the same direction in future.

Iberdrola is currently offering $636.69 million to buy Australian wind and solar firm Infigen Energy.

Reporting by Isla Binnie; Additional reporting by Jose Elias Rodriguez; Editing by Ingrid Melander and Elaine Hardcastle

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