Iberdrola H1 2025 presentation: €5B equity raise to fund Networks growth

Introduction & Market Context

Iberdrola SA (BME:IBE) presented its H1 2025 financial results on July 23, 2025, highlighting a strategic shift toward its Networks business and announcing a €5 billion equity raise to fund future growth. The Spanish utility giant reported mixed results across business segments while maintaining its full-year guidance for double-digit net profit growth.

The company’s stock has performed strongly over the past year, with a 42% return according to recent market data, despite a modest decline following its Q1 earnings release that showed an EPS miss of 16.7%. Currently trading at €15.96, the stock sits near its 52-week high of €16.77.

H1 2025 Performance Highlights

Iberdrola reported a net profit of €3,562 million for the first half of 2025, representing a 20% increase year-over-year when excluding the thermal generation asset divestment in H1 2024. The company’s EBITDA reached €8,287 million, with Networks now accounting for 52% of total EBITDA.

As shown in the following income statement summary, the company maintained solid performance across key financial metrics:

The company’s operating cash flow increased by 15% to €6,796 million, while consolidated net debt decreased by €3 billion in Q2 to €52.7 billion. This improved financial position is reflected in the FFO/net debt ratio of 24.2%, supporting the company’s commitment to maintaining its BBB+ credit rating.

Strategic Shift Toward Networks

The most significant development in Iberdrola’s strategy is its increasing focus on the Networks business, which saw EBITDA growth of 31% compared to H1 2024. This segment now represents 52% of the company’s total EBITDA, underscoring its strategic importance.

The following chart illustrates the geographical distribution of Networks EBITDA, with the United States contributing 33%, followed by Brazil (25%), and the United Kingdom (TADAWUL:4280) and Spain (21% each):

Investments in Networks increased by 14% to €3,082 million, with significant allocations to the UK (€965 million), US (€1,079 million), Brazil (€777 million), and Iberia (€261 million). The company’s regulated asset base (RAB) has already exceeded €50 billion and is projected to grow substantially in the coming years.

€5B Equity Raise Rationale

Iberdrola announced a €5 billion equity raise, primarily to fund unprecedented growth opportunities in its Networks business. The company expects Networks investments to reach approximately €55 billion in 2026-2031, representing a 75% increase compared to 2020-2025.

The following slide outlines the investment outlook and expected returns:

This strategic investment is expected to drive the company’s regulated asset base to more than €90 billion by 2031, nearly tripling its value over a decade:

Executive Chairman Ignacio Galan emphasized that the equity raise represents a "unique opportunity to accelerate our strategy and increase our networks profile," with no additional equity raises expected until at least 2030. The company anticipates attractive returns, with an average ROE of 9.5% from these investments.

Geographic Performance Analysis

Iberdrola’s total investments grew by 7% to €5,662 million in H1 2025, with more than 60% allocated to the UK and US markets. The following breakdown illustrates the company’s investment distribution by geography and business segment:

While the Networks business showed strong growth across all regions, the Energy Production & Customers segment experienced a 13% decline in EBITDA, partially offsetting the gains in Networks. This segment was particularly affected by lower prices and one-off system costs in the Iberian Peninsula.

The geographical distribution of Energy Production & Customers EBITDA shows Iberia contributing 49%, followed by the United Kingdom (21%) and the United States (12%):

Financial Position and Outlook

Iberdrola’s financial position remains strong, with liquidity above €19 billion covering 19 months of financing needs. The company has signed €11.4 billion of new financing in H1 2025, with 97% of this amount in sustainable transactions.

For the remainder of 2025, Iberdrola reaffirmed its net profit guidance of "double-digit growth" or "mid to high single-digit growth" excluding Networks cost recognition in the US:

The company expects continued strong performance in its Networks division, driven by double-digit growth in regulated asset base in the US and UK, higher contributions from rate cases, and full consolidation of ENW. In the Energy Production & Customers division, Iberdrola anticipates increasing production in H2, with hydro reserves at record levels of 9 TWh.

Forward-Looking Statements

Looking beyond 2025, Iberdrola’s long-term strategy centers on three core pillars: growth in Networks, dividend sustainability, and financial strength. The company plans to present more details at its Capital Markets Day on September 24, 2025.

As illustrated in the following slide, the €5 billion equity raise is positioned as a catalyst for accelerating the company’s strategic vision:

The company continues to advance its sustainability strategy, focusing on clean electrification and emission-free production. Iberdrola has been recognized for these efforts by inclusion in sustainability indices such as FTSE4Good and CDP.

In conclusion, Iberdrola’s H1 2025 results and strategic announcements reflect a significant pivot toward regulated Networks businesses, supported by a major equity raise to fund future growth. While the company faces challenges in its Energy Production & Customers segment, the strong performance in Networks and clear long-term investment strategy provide a solid foundation for continued growth.

Full presentation:

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