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Iberdrola SA (BME:IBE) reported strong first-quarter 2025 results, with net profit increasing 26% year-over-year to €2,004 million, excluding the thermal generation divestment in Q1 2024. The Spanish utility giant’s EBITDA rose 12% to €4,643 million, driven by its expanding regulated networks business and higher production across key markets.
Quarterly Performance Highlights
Iberdrola’s Q1 performance demonstrates the company’s successful execution of its strategic plan, with networks now contributing 52% of total EBITDA. The company reported cash flow growth of 11% to €3.5 billion, maintaining financial ratios consistent with its BBB+ credit rating despite recent acquisitions.
"Our first quarter results reflect strong operating performance across our businesses, particularly in networks where we continue to increase our regulated asset base," said Ignacio Galán, Executive Chairman of Iberdrola, during the presentation. "The strategic shift toward regulated assets provides stability and visibility to our future earnings."
The company’s EBITDA breakdown shows geographic diversification, with Iberia representing 32%, the United States 27%, the United Kingdom (TADAWUL:4280) 20%, Latin America 16%, and other European markets and Australia accounting for 5%.
As shown in the following EBITDA breakdown chart:
Organic investments increased 14% to €2,720 million, with networks representing 53% of total investments. The company also highlighted the addition of 2,600 MW of new installed capacity over the past 12 months, including 660 MW of offshore wind, and the signing of new power purchase agreements (PPAs) totaling 4 TWh per annum.
Strategic Focus on Networks
Iberdrola’s strategic pivot toward regulated networks is evident in its investment patterns, with networks investments up 18% to €1,432 million in Q1 2025. The company’s transmission and distribution investments are primarily concentrated in the UK and US, which account for more than two-thirds of network investments.
The following chart illustrates the growth in networks investments:
A significant milestone in Q1 was the closing of the Electricity North West (ENW) transaction, which increased Iberdrola’s UK regulatory asset base to €15.5 billion. This acquisition aligns with the company’s strategy to expand its presence in markets with stable regulatory frameworks.
The company’s regulated asset base (RAB) increased 14% to approximately €49 billion, driven by higher investments and the ENW acquisition. Iberdrola projects its RAB to exceed €51 billion by the end of 2025, with the US and UK representing 60% of the total.
The RAB evolution is illustrated in the following chart:
Renewable Energy Growth
While networks remain the primary focus, Iberdrola continues to invest strategically in renewable energy, with investments up 7% to €1,064 million in Q1 2025. Two-thirds of these investments are concentrated in the UK and US markets, with offshore wind representing 51% of renewable investments.
The company’s renewable investment strategy is shown in the following breakdown:
Iberdrola emphasized that 85% of its renewable investments are in projects with power purchase agreements (PPAs) or Contracts for Difference (CfDs), providing revenue stability. The company also addressed concerns about potential impacts from new tariffs, stating that there would be minimal impact thanks to its supply chain management approach.
The company’s supply chain strategy is detailed in the following slide:
Cash Flow Generation and Financial Outlook
Iberdrola highlighted that its cash flow generation is set to increase significantly as large renewable projects enter operation, with renewable work-in-progress expected to reduce by 50% by 2026. Projects starting full operation in 2025-2026 are projected to generate annualized EBITDA of €1.6 billion per annum from 2027.
The company maintains a strong liquidity position of €20.9 billion, covering 19 months of financing needs. Financial ratios remain solid, with FFO/Adjusted Net Debt at 22.3%, supporting the company’s BBB+ credit rating even after the consolidation of ENW.
"Our investments are focused on networks, which are immediately incorporated into our regulated asset base and mostly contribute from the first year," explained José Sainz, Chief Financial Officer. "This approach ensures that 90% of our 2025-2026 investments will produce cash from the first year, supporting our financial stability."
Forward-Looking Statements
Looking ahead, Iberdrola expects to invest more than €13 billion in networks during 2025-2026, with an increasing share directed toward the US and UK markets. The company also anticipates that its renewable projects starting operation in 2025 (approximately 4,000 MW) and 2026 (over 3,000 MW) will contribute around €850 million and €750 million in annual EBITDA, respectively.
The cash flow impact of these renewable projects is illustrated in the following chart:
Iberdrola’s network investments across different regions are expected to generate immediate returns, as shown in this strategic overview:
The company’s Q1 2025 results and strategic initiatives position it well to achieve its medium-term targets, building on the momentum from its strong performance in 2024, when it reported a 17% increase in net profit to €5.6 billion for the full year.
Trading near its 52-week high of €15.91, Iberdrola shares have shown resilience amid market volatility, reflecting investor confidence in the company’s regulated business model and growth strategy focused on networks and renewables.
Full presentation:
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